As Obama Meets With G20, American Steel Workers Are Losing Jobs

Dave Johnson

Before “globalism,” countries kept a lot of their problems to themselves. But now they can easily spread the pain. “Free trade” is letting China disrupt the world’s steel industry.

China was booming. Investment in infrastructure, housing and industry was going gangbusters. So China increased its steelmaking capacity. Then China’s economy slowed, but China didn’t want to close factories and lay off steelworkers. So now China is making far more steel than it needs and is dumping it on other countries below cost.

April’s post, “The Big Fight Over Chinese Steel,” explained,

Meanwhile countries around the world are fighting their own slow growth with austerity policies that literally take money out of their economies – like cutting back on infrastructure maintenance and modernization. And their slowing economies mean less steel use.

.. So there is less demand for steel in China and around the world. Current global overcapacity is estimated at 700 million tons – more than seven times what U.S. steelmakers can produce.

… China, of course, wants to keep Chinese people employed. And China is a country that sees and does things as a country, not just a “market.” They have national industrial strategies that involve providing financing, low-cost energy, even free land to companies that operate according to the plan.

“Market” economy countries do not generally have national plans, so their companies compete individually against countries like China.

The Organisation for Economic Co-operation and Development (OECD) and others were going to address this. The U.S. administration was going to take this up with China. The result then? This from April, “China Says No To Fixing Steel Problem“:

This is, of course, affecting American steel jobs. A new report from Duke University, Overcapacity in Steel: China’s Role in a Global Problem, explains that, “Tens of thousands of Americans have faced layoffs because of steel overcapacity and dozens of U.S. steel facilities have closed.” From page 18 of the report,

The impacts of overcapacity extend beyond firm-level profitability, as weak profitability can lead to bankruptcies and job losses. In the current period, steel plant closures have already been announced. From January 2015 – June 2016, the U.S. steel industry lost 14,500 jobs due to significant increases in steel imports and decreases in steel exports. Similar effects regarding job losses are being experienced by steel companies in the United Kingdom and Japan.

Since April the problem has continued. A few examples:

● Cincinnati, May: “NKY steel mill undergoes fourth round of layoffs this year
● Lewiston, Pa., August: “Layoffs loom at Standard Steel“…

Too much steel there, too little demand here; a country that sees itself as a country, not a “market,” versus countries that refuse to see themselves as countries. Advantage: China.

China is exporting its steel overcapacity problem, and as Leo Gerard outlined in his column for OurFuture.org on Tuesday, so far is getting away with it. China doesn’t want to reduce production or lay off workers so they are exporting the layoffs, dumping steel on world markets at below-market prices. So far, more than 19,000 Americans have faced layoffs because of China’s steel overcapacity. Dozens of factories have shut down, affecting entire communities.

Right now President Obama is in China, meeting with the leaders of the “G20” countries. The steel companies and the Steelworkers union, along with the Alliance for American Manufacturing (AAM) ar asking people to send a message to President Obama while he is there: “Enough is Enough. Tell President Obama to Stand Up for American Workers — and Stand Up to China.”

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