Economy

Zekelman: ‘We Need to Protect Our Jobs from Unfair Trade’

Written by Tim Triplett


Editor’s note: Following is a response from Zekelman Industries CEO Barry Zekelman to remarks by Daniel Pearson of the Cato Institute published in Steel Market Update’s Sept. 5 newsletter. Zekelman comments on his position on imports and the current state of steel-related trade into the U.S.

During our exchange at the recent SMU Steel Summit Conference, Dan responded that he was surprised I advocated for “much of the same” when it comes to dealing with dumped steel and steel products. Nothing could be further from the truth! My suggestions were to change the system to better capture countries, products and schemes that are used to circumvent duties, and speed up the process, initiate these measures on the imposition of threat, broaden the product scope and definition of injury. Quotas should be imposed at the immediate sign of threat to injure (which China and many countries do) based on price erosion, job losses, volume reductions and plant closures. Duties are very difficult to enforce due to the lack of resources to collect them, mislabeling products to avoid duties, changing documentation to avoid disclosing the actual producing country, and just not paying the duties. All these cheating schemes harm the entire country that receives the unfairly sold product.

We also need to impose quotas on products made substantially from steel so that countries cannot use those products to circumvent fair trade and ultimately hurt our steel-consuming manufacturers. Dan argues that the steel-consuming sector would be “better off” with cheaper steel. Not if that means the domestic steel industry would shutter its doors. The American steel industry has been a model for efficiency and cost reduction. Look at thin slab casting and now direct sheet casting, look at the coiled plate mills of SSAB and Big River, look at the plate mills of Nucor and the beam mills of SDI. All these have revolutionized steel production, and if the market wasn’t flooded by imports, it would mean that more of these factories would be built. The competitive tension would ultimately lead to new developments and cheaper, more efficient production. The consumer, one of which is my company, would benefit from this, as would the rest of the steel-consuming sector along with the tens of thousands of offshoot jobs that support them. Our communities would also benefit with tax revenue, jobs, property appreciation, income tax, supporting businesses, etc.

The key is to make sure that the steel-consuming sector and companies like Zekelman Industries do not fall victim to dumped steel making its way in via downstream production, pipe and tube, fabricated assemblies, car parts, lawnmowers, scaffolding, washing machines, lockers, office furniture…you get the picture. All these businesses would not have to worry about offshoring if the system was changed to stop downstream dumping. More manufacturers in the U.S. would breed more innovation and competition and ultimately JOBS.

The foreign producers are NOT MAKING MONEY, and they don’t care because they are government owned. They don’t play by the same set of rules and they are hiding behind subsidies (for example, export rebates), currency manipulation, labor abuse and not paying workers a living wage, environmental atrocities (the World Health Organization estimates that seven million people die each year due to air pollution in China), all to gain access to our currency and decimate our country.

Dan, your theory is just that. You say that trade measures should have already worked but they haven’t. Imports are at all-time highs and steel production in the U.S., along with manufacturing, are at all-time lows. This is because we don’t have quick or effective enforcement. Manufacturing jobs are the heart and soul of America and provide fantastic wages and benefits, which would reduce the burden now placed on the government and local municipalities to help transition displaced workers. They have no way to replace these wages. If American workers don’t make money, how can they spend it? They ARE the consumer and they are getting hurt far more by lower wages than by higher prices.

We need to protect our jobs from UNFAIR trade and Make America Great Again!

Barry Zekelman

Chairman and CEO

Zekelman Industries

 

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