Steeling America

Even though President Bush has imposed high tariffs on steel imports, the U.S. steel industry continues to face hard times. But will such protectionism solve the underlying problems of U.S. steel makers? And why are they having such trouble competing globally. Our Globalist Factsheet examines the industry — and where its problems really lie.

Where is the world’s steel produced?

As of 1999, the top five steel producing countries were China (124 million metric tons), the United States (98 million), Japan (94 million), Russia (51 million) — and Germany (42 million).

(New York Times)

How many U.S. steel companies exist today?

As of December 2001, there are 70 steel companies in the United States.

(Washington Post)

Has U.S. steel production declined over time?

Over the last 120 years, the output of the U.S. steel industry has shrunk by a third.

(Washington Post)

What effects did that have on the labor force?

Back in 1960, over 500,000 people were employed in the U.S. steel industry. That number fell to just under 150,000 people by 2001.

(U.S. Bureau of Labor Statistics)

Have the industry’s wages also declined?

No. In 2001, hourly compensation for U.S. steel workers was $17 above the national average for private industry workers. It was also $14 above the average manufacturing wage and $10 above the average union wage.

(Institute for International Economics)

What else adds to the high cost of U.S. steel?

Legacy costs (pension liabilities and health claims) add between $40 and $80 per ton of steel — which sells at $300 per ton — for old integrated steel companies.

What has the U.S. steel industry done to offset such costs?

In the 1990s, the U.S. steel industry invested $50 billion in modernization — and cut 300,000 workers from its payrolls.

(New York Times)

Did these efforts succeed?

In 2000, the production of a ton of steel in a U.S. steel mill requires six-tenths of a man hour — compared to 14 hours back in the 1970s.

(Financial Times)

Has cost-cutting revived the industry?

Between 1998 and 2002 alone, 29 U.S. steel companies have filed for bankruptcy.

(Institute for International Economics)

How big is the largest U.S. producer?

The biggest U.S. steelmaker, USX-U.S. Steel Corporation, is only the 11th-largest in the world in terms of capacity.

(Wall Street Journal)

How important is the steel industry to the U.S. economy today?

In 2001, Amazon.com’s $5.7 billion valuation is larger than all U.S. steel companies combined.

(Washington Post)

What is being done to help U.S. steelmakers?

As of January 2002, 79% of U.S. steel imports are covered under antidumping provisions.

(Institute for International Economics)

Should the government do more to protect U.S. producers?

A bill pending in the U.S. Congress to reduce steel imports and protect domestic production could save 9,700 U.S. jobs. Yet, the annual cost to U.S. consumers is estimated to be about $360,000 per job saved.

(Wall Street Journal)

So who wants this bill passed?

As of 2001, more Washington trade lawyers work on steel disputes than on any other trade issue.

(Institute for International Economics)

March 5 , 2002