Dire warnings from the annual industry meeting in Salt Lake City.
John Ferriola, president and CEO of the Nucor Corporation, was elected chairman of the American Iron and Steel Institute (AISI) over the weekend.
Ferriola’s first order of business? To declare war.
O.K., not quite. But Ferriola didn’t mince words when describing what’s happening because of China’s massive industrial overcapacity:
“China has subsidized the growth of its steel industry through grants, low-interest loans, free land, low-priced energy and other raw material inputs. Simply stated, the Chinese government is a company disguised as a country and they are waging economic war on the United States, and they are winning.”
Ferriola isn’t alone in his assessment. Executives from major North American steel companies joined Ferriola at a press conference during the annual AISI general meeting in Salt Lake City, Utah. All of them were blunt about the negative impact of the steel imports crisis, which has led to more than 13,500 layoffs and mill closures nationwide.
The executives also called upon the Obama administration — and other steelmaking nations — to take concrete steps to eliminate global steel overcapacity, including by enforcing trade laws.
And they reaffirmed their united belief that China should continue to be treated as a non-market economy. ArcelorMittal North America CEO Jim Baske noted that while China thinks it is entitled to market economy status, it fails the market economy status tests put forth by U.S. statute and the Commerce Department, including government ownership of production.
“Nine of the 10 largest Chinese steel producers are state-owned and state-controlled,” Baske said.
Meanwhile, United Steelworkers President Leo Gerard is out with a new op-ed on HuffPost Business in support of a major trade case filed last week by U.S. Steel that seeks to block illegally traded steel products from entering the U.S. market. U.S. Steel says drastic action is necessary because of China's extensive trade cheating, which includes conspiring to fix prices, stealing trade secrets and mislabeling products to get around trade duties.
Gerard writes that "there's no amount of cost-cutting American steel companies could do to keep up with the illegal activity that's supporting the steel industry in China."
While Ferriola says China is waging economic war, Gerard compared the Chinese steel industry to a cartel.
"China wants to maintain civil peace and high unemployment by running its mills at rates that could not be sustained in a country that must worry about markets and profits. China will do anything to continue that," he writes. "When duties were imposed because of China's illegal subsidies, it contrived 'trans-shipping' to defraud duty collectors. To kill competitors, it formed a cartel. When it couldn't match quality, it stole secrets. There's no way to stop this but to stop all of it."