October 2003

Upstream Steel Industry Suppliers are Strengthening

President Bush's Steel Program is Lauded by the Chairman of the American Steel Coalition as the Preserver of over 1.1 Million American Jobs

Washington— President Bush’s Steel Program has helped to preserve more than 1.1 million jobs and it must be maintained for the full three years intended, said Charles W. Connors, president and CEO of Magneco-Metrel in Addison, Illinois, and chairman of the American Steel Coalition, which represents small and medium-sized businesses who support the 201 steel tariff remedy.

Connors said while it has been estimated that since the tariffs, 16,000 steelworkers’ jobs have been restored at formerly closed mills, little attention has been given to the significant volume of upstream manufacturing companies that supply products and services to the steel industry and whose viability depends on having a healthy domestic steel industry. He said industry experts estimate these upstream manufacturers employ in excess of 1.1 million people in this sector.

“My company, which is a steel industry supplier and customer (employing 143 people in Illinois, northern Indiana and eastern Ohio), came close to bankruptcy, losing $2 million in 2001 and $300,000 in January and February 2002. One more month with such losses and we would have been out of business,” Connors said. He credits President Bush’s Steel Program, launched in March of 2002, with the survival of his company and thousands like it, and urges the President to keep the steel safeguard in place until March of 2005 as promised.

University of Maryland Professor and former Director of Economics for the U.S. International Trade Commission, Peter Morici, said the tariffs are having their intended effect as U.S. steelmakers are seizing on the three-year- program by revamping their operations to increase competitiveness.

“If you take away the tariffs now, a lot of the progress that has been made will be dashed, and consuming industries will be harmed,” Professor Morici said. “It is in the long term best interests of steel consumers to have a healthy domestic steel industry. Otherwise, ready availability of steel products at affordable prices, as we now have, will not be the case.”

“ ... Overall imports of steel are up since the tariffs were implemented and most steel prices are below 20-year averages,” Senator Evan Bayh (D-Ind) said in recent testimony before the International Trade Commission aimed at gauging impact of the steel tariffs. “Prices in the U.S. market are below those in most other major steel markets. These statistics are evidence that, however invaluable, the tariffs represent a modest remedy for the industry. When you take all of these factors into account, it is really remarkable what the industry has accomplished in 18 months.”

“President Bush warned steelmakers to restructure or lose the tariffs. As a consequence of the stability created by the tariffs, steelmaking assets were redeployed getting rid of burdensome legacy costs and improving work rules and plant floor efficiency, thus shifting the cost curve. Overall, the steel program benefited U.S. manufacturers and saved jobs in the long run by ensuring a steady supply of steel made at lower cost,” Morici said.

Despite what the critics have said, Connors insists that maintaining the tariffs is the best way to ensure the health of the domestic steel industry.

“Some users of steel products are clamoring to have the Administration end the sanctions early, saying they’re being hurt because they have to pay higher prices for raw materials,” Connors said. “But the latest global pricing data reveals that U.S. prices for domestic steel are among the lowest in the world.”