Once again the debate over steel imports comes to the forefront as ArcelorMittal announces the layoff of 150 positions in its Conshohocken, Pennsylvania mill claiming declining revenues brought about by unfair foreign competition.
Management has looked to Washington, D.C. to solve part of its problems by instituting protective tariffs to protect domestic worker’s jobs from unfair competition in the form of dumping where steel and steel products are sold below their production costs and at an artificially low price.
However, some economists point to the alternative benefits to be found in the redistribution of jobs as lower government infrastructure costs offset the loss of jobs in the steel industry with increases in jobs related to the build-out of government infrastructure.
Others point out the obvious, that any tariff imposed on steel importation is simply an additional tax on the American people, in the form of higher prices or the tariffs being paid ultimately by the end user. Of course, government loves tariffs which they pocket and use for their special interest projects or to purchase additional political support by directing the construction of projects in their own political districts or states.
The Trump Administration has promised to bring steel production and jobs back to America, somewhat hypocritically as Trump used foreign construction materials in his skyscrapers precisely because it was cheaper. And, in many cases, used pre-stressed concrete instead of steel in his buildings. And, it should not be forgotten that America’s domestic inability to produce sufficient steel for military applications can be a national defense issue.
But the problems faced by the steel industry are not limited to price protections. The declining use of steel itself is a major issue as new composite carbon-fiber materials are lighter and stronger than steel. Global over-capacity, especially in nations without strict environmental controls, is another major issue. And, let us not forget the ongoing standardization of steel specifications allowing for online business-to-business bidding, the increasing use of robotics in dangerous environments and the on-demand pre-processing of steel products using expert machine-guided tools also translates into fewer steelworkers.
Steel will remain a significant structural component, but it appears that the days of the well-paid, unionized steelworker may have gone the way of the well-paid worker in the automotive industry, one of steel’s largest customers.