U.S. steel industry, workers, say low-cost foreign steel puts U.S. jobs at risk

Aerial view
In this undated aerial file photo, the LTV Steel Mining Company which shut its doors Jan. 3, 2001, is shown near Hoyt Lakes, Minn. The PolyMet Mining Corp. wants to use the facility for its copper-nickel processing plant.
Mark Sauer/AP, file

Steel companies and union workers are claiming that the illegal dumping of steel into the United States at below-market costs by South Korea and other countries threatens thousands of American jobs — including those on Minnesota's Iron Range.

For many, the low-cost imports bring back painful memories. When a similar flood of cheap steel arrived in the United States about 15 years ago, thousands of steelworkers, and Minnesota iron miners, lost their jobs.

On Monday, Gov. Mark Dayton is expected to join hundreds at a rally in Virginia, Minn., to draw attention to the issue.

People in the tiny town of Hoyt Lakes will never forget the day when the CEO of the Iron Range's second largest taconite operation delivered this gut-wrenching news.

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"It is with sincere regret that we announce our intention to permanently close the mining and production operations at LTV Steel Mining company," CEO Richard Hipple said in May of 2000.

Mining rally
Miners and steel-industry supporters rally in Virginia, Minn., Monday morning, June 23, 2014.
Mark Sauer/Mesabi Daily News via AP

More than 1,300 workers lost their jobs. The giant plant has sat empty since. But PolyMet Mining hopes to reopen the plant to process copper, nickel and precious metals.

Hipple said then that the reasons for LTV's shutdown were many, from an aging facility to the declining quality of its ore. But those problems were exacerbated by an oversupply of steel that drove down prices. Nationwide 33 steel companies, including LTV, went bankrupt.

Some 15 years later, the United Steelworkers, U.S. Steel and other steel companies say jobs again are at risk. They accuse South Korea and eight other countries, including India, Thailand and Vietnam, of either selling steel for below what it costs them to make it, or, for illegally subsidizing production. They say the nine countries are violating international trade rules, and want the United States to impose tariffs on their steel. Steel imports increased 12 percent between 2011 and 2013, making it clear that U.S. steel companies face very tough competition. They lost $1.4 billion last year alone.

"We need the federal government to make sure there is a level playing field for both the importing countries and the companies here at home," said Scott Paul, president of the Alliance for American Manufacturing.

The alliance is a partnership between the United Steelworkers Union and many large manufacturing firms, including U.S. Steel and other taconite producers on Minnesota's Iron Range.

Paul said about half the world's steel companies are government-owned. They produce about 40 percent of the world's steel and operate more as job creators than profit generators, he said.

The companies churn out steel and sell it at discounted prices, Paul said, even when demand is down.

"It's not that the workers are any more skilled. It's not that the steel mills are any more efficient. It's not even necessarily that the environmental and labor laws are of lower standard than in the U.S.," he said. "A lot of it has to do with government support."

Mining rally
Minnesota Gov. Mark Dayton applauds while speaking to a rally of miners and steel-industry supporters Monday, June 23, 2014, in Virginia, Minn.
Mark Sauer/Mesabi Daily News via AP

The U.S. International Trade Commission is currently investigating 14 separate steel dumping claims.

But U.S. Steel and the steelworkers are focusing on one kind of product — the steel tubing used in the booming oil and gas industry. Demand has mushroomed in the past five years, but Rob Scott, an economist for the Economic Policy Institute, said U.S. steelmakers aren't reaping the benefits.

"Instead, much of the production that supports that industry has been shipped abroad," said Scott, who has testified before the U.S. International Trade Commission on behalf of American steel firms. "We are now importing a very large share of the pipes and tubes used to build the steel fracking network."

But that means oil and gas companies in the United States are getting a great deal on their steel, said College of St. Scholastica economist Tony Barrett.

"If another country wants to subsidize their exports, and we get to buy it cheaper, we should let them," Barrett said. "But, that comes at the cost of our domestic producers who aren't going to get those subsidies. And that's what they're fighting right now."

The challenge before the U.S. Commerce Department now, Barrett said, is determining whether that's illegal dumping, or just cutthroat global free trade. Its ruling is expected by July 10.

"It's really hard to tell if a country is selling its steel for less than cost, because it's very hard to tell what another country's costs of production are," he said. "That legal definition that it has to be below cost, that's tough to prove, and that's the challenge for the steel companies."

Earlier this month U.S. Steel idled plants in Pennsylvania and Texas that manufacture the oil and gas pipes, laying off 260 workers.

Jobs on the Iron Range also are at risk, said John Rebrovich, assistant to the president of United Steelworkers District 11. U.S. Steel employs about 1,900 mine workers at its two taconite plants, MinnTac and KeeTac.

"We're not going to have this," Rebrovich said. "What happened to us a dozen years ago, can't happen again, where we're going to lose jobs, and bankruptcies, and cause havoc on the Iron Range, and we're not going to put up with it — especially with countries that cheat."