The Greater Calne Chronicles:
The Steel Industry Of Coatesville And Steel Tariffs

April of 2018

ArcelorMittal - Coatesville.JPG

Coatesville is the site of one of the six steelmaking facilities of ArcelorMittal in the United States.

 

On March 23, 2018, the United States added a 25% tariff to many imported steel products.  In some cases, this new tariff will be in addition to other tariffs already in place on certain imported steel products.

One of the stated goals of these tariffs is to even the playing field among steel producers, both within the United States and those firms that export steel products into the United States. 

Coatesville, a city in Chester County in the American state of Pennsylvania, is likely to be one of the areas impacted by the new steel tariff.  Coatesville is home to an ArcelorMittal Steel Plant.  Steel has been produced in Coatesville for generations.  Though the ownership of the mill has changed through the years from the Lukens Family to Bethlehem Steel to International Steel Group to ArcelorMittal, all of the owners looked outward to sell quality products produced by Chester County workers.

 

One World Trade Center - Daytime - 50.JPG

Workers at ArcelorMittal in Coatesville produced steel plates and custom, flame-cut parts
that were used to construct One World Trade Center in the City of New York. 
This structure is the tallest building in the United States and rises 1,776 feet.

 

One World Trade Center - Nighttime - 50.JPG

A nighttime view of One World Trade Center in the City of New York.

 

One can travel from Long Beach, California, to Montreal, Quebec, on bridges built with steel from Coatesville.  You can see the sights of New York City from buildings constructed of steel manufactured in Coatesville.  Those serving in the United States military have seen first-hand how steel from Coatesville has protected their vessels both undersea as submarines as well as in ships plowing the oceans.

The economy of Coatesville is intertwined with both the national economy and the global marketplace.

Actions and re-actions to the new steel tariff will impact individuals and families throughout Chester County and beyond.

Specifically what those impacts will be is not certain at this time.  The steel tariff may help stabilize employment levels at the mill.  It may make it more economical to produce more steel at the Coatesville plant which may mean more employment opportunities for steelworkers.

The decision by the United States to implement an additional steel tariff is based on findings that certain countries are exporting steel products into the United States at prices below production costs through the use of subsidies, government ownership, and other activities.

This new steel tariff is explicitly based on the finding by the Federal Government that the steel industry is a critical component in the nation’s defense structure.  That military preparedness requires the ready availability of steel products needed by the armed forces.  In case of military actions, steel products from other nations may not be readily available when needed by the armed forces of the United States.

To remedy the situation, the United States is implementing this new tariff to encourage stability and growth prospects within the domestic steel industry.

A similar tariff – this one in the amount of 10% - is being added to imported aluminum products.

Not all imported steel and aluminum products will be affected by these new tariffs.  Steel and aluminum products imported into the United States from Canada and Mexico, for example, have been explicitly exempted from these new tariffs.  Both countries have strong economic ties with the United States through the North American Free Trade Agreement.  Canada also has extremely close ties with the United States in the area of mutual defense.

 

Verrazano-Narrows Bridge.JPG

The Verrazano-Narrows Bridge was built with steel products
manufactured in Coatesville.  The bridge connects Brooklyn
and Staten Island in the City of New York.

 

Through the years, steel tariffs have been one of those policy issues that cross political lines.  These new tariffs being issued by the Federal Government are no different.

Mr. Bob Casey, Jr. strongly supports the new steel tariff.  The Democrat representing Pennsylvania in the United States Senate issued a statement on March 1, 2018, commending the President for his decision.  “I urge the Administration to follow through and to take aggressive measures to ensure our workers can compete on a level playing field,” stated Senator Casey.  “When the playing field is level, Pennsylvania workers will outcompete any in the world."

The other individual representing Pennsylvanians in the United States Senate, Mr. Pat Toomey, does not support the new steel tariff.  Senator Toomey, a Republican, stated that "The administration invoking national security to impose tariffs on imported steel and aluminum is a big mistake that will increase costs on American consumers, weaken our economy, and invite retaliation from other countries on other products.”

 

World Trade Center.JPG

Steel trees were manufactured in Coatesville and utilized in
the construction of the World Trade Center in the City of New York.

 

One of the elected leaders in the House of Representatives supporting the efforts of President Donald Trump is Mr. Pete Visclosky of the American state of Indiana.  A Democrat, he represents a House district in the northwest part of that state.  Burns Harbor is one of the communities in his district.  Like Coatesville, Burns Harbor includes a steel plant operated by ArcelorMittal.

Regarding President Trump implementing this new steel tariff:  “I appreciate his action,” stated Representative Visclosky.

This member of Congress recently wrote an opinion piece further outlining his views on this issue.  Among his key points regarding the steel industry:  “Without American steel, the Department of Defense would be forced to rely on foreign imports, which would be unacceptable during a national emergency or military conflict.”

The Representative indicated that the United States Commerce Department has “212 current anti-dumping and countervailing duty orders in place on steel and steel-related products from [more than] 30 countries.”  He also indicated that twenty-seven additional investigations involving steel and steel-related products are currently in process.

Part of the underlying problem, according to the Congressman, is excess steel-making capacity globally.  In other words, more steel capacity exists than is needed to meet the needs of the users of steel within the global marketplace.  Congressman Visclosky quotes the Organization for Economic Co-Operation and Development in stating that excess steel capacity was 700 million metric tons globally in 2017;  that excess capacity is more than eight times the output of all American steel producers, according to the Congressman.

Representative Visclosky states that other countries employ a variety of techniques to utilize that excess capacity and move the finished products to the United States.  “Some countries are also very adept at masking the country of origin of a product and evading United States duty orders by simply routing their products through other countries.”

Will the actions of President Trump start a trade war? 

There are some leaders who have indicated that that is a very likely outcome of these additional tariffs on steel and aluminum.  Others, though, have a different take.  Congressman Visclosky concludes that “The evidence … shows we are already well into one.”

 

Peach Bottom Nuclear Reactor.JPG

Plate steel produced by workers in Coatesville was used in the
construction of the Peach Bottom Nuclear Power Plant
on the Susquehanna River in York County, Pennsylvania.

 

Leaders of American steel manufacturers strongly support the new steel tariff.  Among those firms is the company that operates the steel mill in Coatesville, ArcelorMittal USA.

“As the largest producer of steel plate for armored vehicles and naval vessels, we are proud of the contributions we make to the national defense,” Mr. John Brett, President and Chief Executive Officer of ArcelorMittal USA, stated at a hearing of the Congressional Steel Caucus on March 21, 2018.

“ArcelorMittal USA will be looking for opportunities to maximize our steel production and potentially undertake new investments to meet the needs of our customers. Our customers need our support, and your support, because these measures won't work if foreign steel just gets imported in a different form. But, with time, these measures should encourage U.S. investment, strengthen employment opportunities and improve the sustainability of the U.S. industry.”

Beyond support from individual steel firms, the American Iron and Steel Institute also supports the tariff being imposed by order of President Trump.  This organization represents 75% of the steel capacity within the United States as well as within North America.

“We are grateful to the President for his continued commitment to the steel industry and to ensuring the country's national security interests are defended by combating the flood of imports that have been eroding America's steel industry over the past several decades,” stated Mr. Thomas Gibson, President and CEO of the American Iron and Steel Institute.  “His recent proclamation imposing a 25% tariff on steel imports is key to doing that and putting steel workers back to work.  We look forward to working with the administration to ensure that negotiations for exemptions or exclusions include provisions that will preserve the effectiveness of the remedy.”

 

Walt Whitman Bridge.JPG

The Walt Whitman Bridge, connecting the City of Philadelphia
and Gloucester City, New Jersey, was built with steel produced in Coatesville.

 

While businesses that manufacture steel and aluminum strongly support the imposition of the new tariffs on most imported products, a number of businesses that make consumer products are adamantly opposed to the new tariffs.  These businesses generally cite an increase in costs for the production of their consumer products which force higher prices that then result in lower sales.

One of the groups opposed to the new steel and aluminum tariffs is the Precision Metalforming Association.  According to Mr. Roy Hardy, President of the Association, the new tariffs will likely cause customers of the metalforming industry to purchase finished products – that do not include the new tariffs – from other countries. “Our members went through this in 2002,” explained Mr. Hardy.  “When the U.S. government imposed tariffs on steel imports, [there was a] loss of 19 percent of all metalforming manufacturers in the United States.”  The Association indicated that this loss was “due to high steel prices and business lost to overseas competitors.”

In 2003, the then-head of the Precision Metalforming Association, Mr. Jon Jenson, was chairman of the Consuming Industries Trade Action Coalition.  A study founded by this organization detailed how 200,000 Americans lost their jobs when President George W. Bush imposed tariffs on a variety of steel products.  Tariffs placed on imported steel products ranged from 8% for stainless steel wire products to 15% for products like rebar to 30% for such products as steel plates.

The report, entitled “The Unintended Consequences of U.S. Steel Import Tariffs:  A Quantification of the Impact During 2002”, highlighted major problems that occurred within the American economy because of these tariffs.

The Bureau of Labor Statistics of the United States Department of Commerce shows that there has been a substantial decrease in the number of workers employed in the Durable Goods – Primary Metal Manufacturing Industries (including steel production).   This is the case both nationally and in Pennsylvania.  (Separate statistics are not readily available for Chester County alone.)

In January of 1990, the Bureau of Labor Statistics indicated that 73,700 individuals worked in these industries in Pennsylvania.  In February of 1994, the number of individuals working in these industries was below 60,000 workers for the first time in recent history in Pennsylvania.  In January of 2002, employment dipped below 50,000 workers in these industries for the first time in recent history in Pennsylvania.  Seven years later, in January of 2009, less than 40,000 individuals were employed in these industries in Pennsylvania.  By May of 2009, it was less than 35,000 workers in Pennsylvania employed in these industries.  Since then, the number of workers in these industries has varied from 34,600 to 40,000 individuals.  In January of 2018, that number employed in these industries was 35,100 individuals in Pennsylvania. 

From January of 1990 through January of 2018, the decrease in employment in Durable Goods – Primary Metal Manufacturing Industries (including steel production) was more than 50% in Pennsylvania.

 

One Vanderbilt Construction Site.JPG

This is what the construction site for One Vanderbilt
looked like in August of 2017.  The steel plate being used
to construct this 58-story high-rise building in the City of New York
was manufactured by workers in Coatesville.  One Vanderbilt
is located near the Grand Central Station in Midtown Manhattan.

 

Mr. Vonie Long has seen this change in employment levels in the steel industry in Chester County.  He is currently the President of Local 1165 of the United Steelworkers Union.  The members of this union local work not only at the ArcelorMittal Steel Plant in Coatesville but also work at such Chester County businesses as Coatesville Scrap, Johnson Matthey, and Exton Nissan.

Mr. Long has worked as an electrician in the shipping and finishing department at the steel mill in Coatesville for 24 years.  Through those years, he has maintained a variety of equipment at the production facility for a number of corporate owners.

“As a veteran of the United States Navy, I served aboard the USS Nimitz,” explained Mr. Long.  “I am proud to have a minor role in supplying armor for our carrier fleet.”

One of the items mentioned by Mr. Long that many people would not notice is that the steel mill in Coatesville is actually one of the largest recycling facilities in the region.  A steel mill may not be the first thing most people think of when discussing a green economy, but it’s an accurate description, according to Mr. Long.  “We take in a variety of scrap metal and recycle that unneeded material into products that help build the infrastructure of our country and defend our shores.”

 

USS Ohio.JPG

The USS Ohio is one of many naval submarines and ships
built with steel manufactured in Coatesville.

 

The use of a steel tariff to help enhance national security is something strongly supported by Local 1165.  “This type of issue – competition with foreign nations – is and has always been a non-partisan policy issue for our union and for many political leaders.  We work together to try to create a level playing field for all.  Treat us fairly and we can compete.”

“I’m an advocate for my members and for my industry to employ more people like me.”

He brought up a point that goes to the heart of the issue of tariffs in the steel industry:  Do steel tariffs increase the cost of consumer products?  

Mr. Long acknowledges that costs will likely increase marginally for certain products made from steel and that there will likely be job losses within certain industries.  But Mr. Long argues that having a stable, healthy steel industry is critical to the national defense of the United States and to our overall economy.

He noted that when steel prices were lower in previous years, he had not seen consumer product companies highlight price reductions for consumer products made with steel.

“If steel tariffs increase consumer prices,” Mr. Long asked, “then why doesn’t the removal of steel tariffs decrease consumer prices?”

Mr. Leo Gerard, the International President of the United Steelworkers Union agreed with Mr. Long.  “Let’s remember that many of the consumer [product companies] did nothing to reduce prices to their customers when steel and aluminum prices dropped,” stated Mr. Gerard in testimony at a hearing of the Steel Caucus of the House of Representatives on March 21, 2018.  “They want to have it all – preserve profits when steel prices decline and get someone else to pay the costs if prices reach market-clearing levels.”

Previous steel tariffs imposed by order of President Bush helped stabilize the steel industry, according to Mr. Gerard and Mr. Long.  “We still saw cutbacks, but capacity and employment levels became more stable in the years after the steel tariffs were implemented in 2002,” stated Mr. Long.  “Unfortunately, those tariffs ended earlier than initially planned so their impact on our industry was not as beneficial as we believe the steel tariffs could have been.”

Mr. Gerard noted that “The measure [by the Bush Administration] stabilized the industry and provided the relief needed to spur new investments in plants, equipment and people.  Unfortunately, the World Trade Organization ruled against the United States and relief was terminated early.”

Technology and productively advances have reduced some of the need for labor at steel plants, Mr. Long acknowledges.  However, “you still need human beings on the shop floor.  Steel workers will always be needed to operate a safe and efficient factory.”

Mr. Long is hopeful that the new steel tariff implemented by President Trump will result in greater investment in the facilities in Coatesville and result in more employment opportunities for people in the area.

“If we can get more sales on a level playing field,” Mr. Long stated, “We have the ability to produce more product here at Coatesville.”

An area of concern for both the national union and the local involves foreign steel producers moving product into countries that may earn waivers from the new steel tariff.

“We’re concerned that one country that is faced with the steel tariff will move its product into a country that does not face the steel tariff,” explained Mr. Long.  “We might see a few of the bad actors attempt to circumvent the new steel tariff.  We’re hopeful that the Trump Administration will stop such activity as it may take place.”

Mr. Gerard acknowledges that there may be times “where there is truly a product that is unavailable here in the United States [that is] needed by a steel user, [where] we would support time-limited waivers of the tariffs that are subject to renewal.”

“The goal must be to promote our national security so products that are presently not made here but are needed will be produced domestically in the future,” continued Mr. Gerard.   “Our producers should have time to restart facilities and product lines, or invest in new ones, to meet these demands.   In the interim, certain imports might be allowed.”

One of the difficulties facing the steel industry is how society has changed in its views of work.  “I’m a fourth-generation steel worker,” Mr. Long explained.  “But many younger people don’t seem to want to enter this type of work.  If the company needs you to work a late shift or on the weekend, my generation saw it as an opportunity to earn more money to support our families.  For many younger people, they don’t necessarily see it the same way.  They may want to spend their nights or weekends doing other things.”

For someone with a high school education, opportunities exist in places like Coatesville that may not exist in other communities.

“Our wage scale is about $21.00 an hour to start and tops out at about $28.00 an hour,” explained Mr. Long.  “There’s a training wage for people starting out at the plant.  A worker can earn up to a 20% premium based on production incentives.  We have good benefits – not as good as they historically were, but good benefits nonetheless.”

“I’m hopeful that younger people will see steelworking as a job that can help provide them with a decent living.”

Governor Cuomo Bridge.jpg

Traffic is seen here crossing the first span of the new
Governor Mario M. Cuomo Bridge in 2017.  Eventually, a second span
will be built parallel to this first span over the Hudson River.  Steel plate
manufactured in Coatesville is being used in both of the two news spans. 
This new bridge is designed to replace the two spans of the
Tappan Zee Bridge, seen to the left in this photo. 
Overall, according to the New York State Thruway Authority,
a total of 220 million pounds of steel is being utilized to build this bridge.

 

Credits:

The top photo of the ArcelorMittal facility in Coatesville is courtesy of Google, 2017.

The photo of One World Trade Center at nighttime is courtesy of Antony-22, 2016.

The photo of the Verrazano-Narrows Bridge is courtesy of the National Iron & Steel Heritage Museum.

The photo of the World Trade Center is courtesy of the National Iron & Steel Heritage Museum.

The photo of the Vessel #3 for the Peach Bottom Nuclear Power Plant is courtesy of
the National Iron & Steel Heritage Museum.

The photo of the One Vanderbilt construction site is courtesy of Yeti-Hunter, 2017.

The photo of the USS Ohio is courtesy of the National Iron & Steel Heritage Museum.

The photo of the Walt Whitman Bridge is courtesy of the National Iron & Steel Heritage Museum.

The photo of the Governor Mario M. Cuomo Bridge is courtesy of the
New York State Thruway Authority, November of 2017.

 

Do you have questions about the steel industry? Governmental regulations?  Company operations?

Your questions may be used in a future news column.

Contact Richard McDonough at greatercalnechronicles@gmail.com.

 

© 2018 Richard McDonough