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Steel companies seek level field of global competition
youngstown
Competition in the steel industry is intense, which is why problems arise when someone attempts to gain an advantage.
Over the past few years there have been allegations against China and South Korea of steel dumping, which is selling products at prices as low as or lower than the material costs, due to subsidies from foreign governments.
Sen. Sherrod Brown, D-Ohio, is among those leading the attempts to have tariffs placed against countries that dump steel into the U.S.
The effort started because companies and unions in the Mahoning Valley were talking about issues in the industry, he said.
“Our companies can compete when there is a level playing field,” Brown said.
The dumping of steel pipe for the oil and gas industry has directly had an impact on local jobs, he said.
“When other countries cheat, it costs us jobs, and when the market is fair, we grow jobs,” Brown said.
Not everyone agrees with Brown that any type of tariffs against South Korean steel producers will have a long-term positive impact on the U.S. steel industry.
These attempts against steel dumping might provide domestic steel producers a bump in the short term, said A.J. Sumell, professor of economics at Youngstown State University.
“I don’t think it’s a viable long-term strategy,” he said.
There is concern by the American Institute for International Steel, which opposes any potential decision against South Korea by the U.S. Department of Commerce. “These protectionist measures could exert downward pressure on imports — and upward pressure on prices,” according to AIIS.
But Todd Olson, from BOC Water Hydraulics in Salem, indicated that a short-term strategy might be enough.
“The industry is currently walking a fine line between staying competitive in a fierce global market while at the same time working to invest dollars to build strength for the future,” he said.
Other countries will come into the market using the same techniques, and it takes years to make one of these anti-competitive practice cases, Sumell said.
The issue is highly politicized, he noted. Tariffs will help domestic companies offset the cost advantage associated with imports.
“The key for American companies is to make a product that is highly technical and difficult to mimic,” Sumell said.
Most countries as they develop feel the need to create a steel industry, Olson said.
“The issue is that they tend to build over capacity,” he said.
Then these companies have too much product and they ship it to the U.S. market, Olson said. This development has led to the continuation of steel dumping into the U.S.
For example, in the 1960s and 1970s, France was running its steel mills to produce more than it needed for domestic consumption, said Dan Suchora, interim associate dean for research, YSU School of Graduate Studies and Research. The product was then shipped to other countries, such as the U.S., at lower prices than its domestic prices.
“Every country wants their workforce to work,” he said. “Some countries just subsidize their industries a lot more.”
There is a problem in the system when rules stop one country from dumping steel, but then another country just starts to engage in the same activity, eliminating any potential benefit, Brown said.
He believes the answer to that problem is to streamline the process so complaints can be handled more quickly.
“I understand the frustration, but we can’t just give up,” Brown said. “The steel industry we have here is worth fighting for.”