U.S. producers can make the steel. Just give them the work.
In a recent CNBC blog post, author Dan McNichol suggests that rebuilding America’s infrastructure will require the use of Chinese steel. And while admitting that American steel is "excellent," McNichol believes that U.S. steel capacity falls short of the projected demand for infrastructure work.
McNichol is wrong, though, according to some of America's leading steel authorities. In a response published today at CNBC.com, Thomas Gibson (President and CEO, American Iron and Steel Institute), Thomas Dancjek (President, Steel Manufacturers Association), and Roger Ferch (President, American Institute of Steel Construction) explain that America's steel producers do indeed stand ready to manufacture high-quality steel to meet the nation's needs.
For example, McNichol cites the example of the Oakland Bay Bridge, currently being constructed with Chinese steel. Gibson, Dancjek, and Ferch explain why McNichol is incorrect in supporting the outsourcing of this project:
Mr. McNichol is also wrong in asserting U.S. steel producers were unable to produce the quantity of steel needed for the Bay Bridge project. A consortium of U.S. steel fabricators was willing to build a new facility and steel mills around the country could have supplied the steel. The U.S. has plenty of steel capacity for this type of project. At a time of high unemployment, the Bay Bridge project could have been a much needed job creator for American workers.
Mr. McNichol also failed to mention the quality and delivery problems that occurred with the Chinese steel. The Chinese company selected had no bridge building experience prior to this project. Part of the rationale for choosing the Chinese company was that it would save $400 million, but that was before moving hundreds of employees and consultants to China. While still in progress, a third quarter 2011 report shows the contract that contains the Chinese steel has already increased by $293 million and the contractor has been given 29 months of extended time.
The three also cite China's repeated violations of world trade law:
The capacity that he argues is driving the use of Chinese steel is not caused by natural market forces. Instead, it is the result of 30 years of trade violations, well-documented Chinese government subsidization of its steel industry and an unwillingness by both political parties in this country to meaningfully enforce our trade laws.
The lack of a level competitive playing field in global steel trade has led to many U.S. steel companies going out of business. Consequently, America now has less steel production capacity and fewer good paying jobs. In 2011, overall US steel capacity utilization was under 75%.
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