STEEL WINS, YOU LOSE

Chicago Tribune: The U.S. International Trade Commission has determined that the steel industry is being hurt by cheap imports, and consumers are going to be punished for that.
That may not be fair. But why shouldn't you pay a little more for your next car or refrigerator so the nation's 200,000 or so steelworkers can hang onto their jobs a little longer?
The steel industry certainly didn't word its complaint that way -- nor did the Bush administration when it asked the ITC to determine whether imports were the main cause of the steel industry's woes.
But, once import quotas or tariffs are imposed on foreign steel, that will be the result.
Why the ITC failed to take into account the growth of more efficient domestic competitors, the rising cost of energy, the strength of the dollar or the slowing economy as factors hurting steel is unknown. But they all play a role at least as important as foreign competition.
Old-line steelmakers: Take, for instance, the growth of so-called mini-mills, that segment of the steel industry that makes steel from scrap rather than from iron and coke. In 1970, these mills accounted for less than 10 percent of all U.S. steel production. Today, these profitable firms have nearly half the market. They continue to be among the most competitive steelmakers in the world. And they are eating the lunch of the behemoth old-line steelmakers, which account for the bulk of the more than two dozen steel companies that have filed for bankruptcy over the last several years.
The head of the United Steelworkers of America, the union that represents workers primarily at the big behemoths, wants tariffs imposed on foreign steel to give the U.S. industry time to stabilize.
But just how much time should the U.S. steel industry get, particularly when it is at the expense of the overall U.S. economy? The Consuming Industries Trade Action Coalition estimates there are 50 steel-consuming jobs for each steelmaking job. Yet, the protectionist policies that will result from this ITC ruling -- something by the way U.S. trade officials decry in other countries -- will protect the steelmaking jobs at the expense of all those others.
The Cato Institute's Dan Ikenson points out that the industry has been unable to stabilize despite three decades worth of help through "voluntary" import restraints, triggers on import prices; outright quotas; and hundreds of antidumping and countervailing duty cases.
Global steel production last year increased 7 percent. Demand, meanwhile, continues to decline. The problem with the steel industry is there is too much capacity everywhere. In other industries, the natural course of events is consolidation and shutting down excess capacity.
But that doesn't happen with steel because the healthy competitors want nothing to do with taking over the enormous legacy costs of the old behemoths. There are an estimated 10 retired steelworkers for each one still working. So the big old companies with immense pension and health care liabilities limp along -- in or out of bankruptcy -- waiting for the government to try to ride to the rescue again. It's an impossible task and we all pay the cost.