Steel 'dumping' blamed for Iron Range layoffs

This photo taken Aug. 26, 2014, shows the Minntac taconite mine plant in Mountain Iron, Minn. U.S. Steel plans to idle part of its Minntac plant in Mountain Iron, resulting in layoffs for about 680 workers.
Glen Stubbe | Star Tribune via AP 2014

Politicians and mining company officials are blaming unfair foreign competition for more than a thousand recent layoffs in the state's iron ore industry.

U.S. Steel announced Tuesday that it would idle part of its taconite plant in Mountain Iron, Minn., starting on June 1. Earlier last month U.S. Steel announced plans to idle a plant in Keewatin, which will result in more than 400 layoffs. Magnetation also recently announced that it was closing an Iron Range plant and laying off more than 40 people.

The closing of plants and mills comes from a glut of steel supplies and the steady decline of prices over the last few months.

Following news of the most recent plant closing, Rep. Jason Metsa, DFL-Virginia, blamed the low prices on "foreign countries for dumping state-sibsidized steel on American shores." U.S. Steel officials have also pointed to illegal trade practices by Chinese companies.

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Dumping is a frowned upon international trade practice, said Tony Barrett, a professor of economics at the College of St. Scholastica. It's when a company sells steel abroad for cheaper than the cost to produce it because they don't need to make the same level of profits as American steel companies.

"If you have a state-owned steel company in China, their priorities are more staying in operation, keeping employment high, keeping their workers happy," Barrett said. "They don't need to make the profits that a U.S. Steel company would have to — we can't do it in this country because we have stockholders that wouldn't tolerate it."

Barrett said while it's almost certain that foreign companies are dumping steel in the U.S. market, the process for challenging the practice is long and complex.

"A company like U.S. Steel would have to go to court at the Department of Commerce and the International Trade Commission and claim they've been materially harmed by illegally dumped steel," Barrett said."It's time consuming to do."

The Minnesota Congressional delegation met with White House officials last week to discuss ways to shorten the amount of time it takes to determine whether foreign companies are dumping products in the U.S. market.

But Barrett said other sectors of manufacturing like the auto industry benefit from the availability of cheap steel, which could complicate the passage of any legislation streamlining the process.