US Steel Warns Of Layoffs In Arkansas And Texas As Trans-Pacific Partnership Looms

Print Friendly, PDF & Email

FA Note: The last para­graph pro­vides a clue as to how mega-cor­po­ra­tions will prof­it from this “21st cen­tu­ry trade agreement”.

Domestic producers have struggled amid a wave of Asian steel imports. In this photo, employees at a steel factory in Dalian, China. Reuters/China Daily

Domes­tic pro­duc­ers have strug­gled amid a wave of Asian steel imports. In this pho­to, employ­ees at a steel fac­to­ry in Dalian, Chi­na. Reuters/China Daily

Unit­ed States Steel Cor­po­ra­tion issued lay­off notices to 1,404 work­ers in the lat­est sign of strug­gle for the Amer­i­can steel indus­try. The mis­sives went out in recent days to work­ers pro­duc­ing pipe and tube prod­ucts that are used in the oil and gas sec­tor. Job cuts could come as ear­ly as June for 17 to 579 employ­ees at a plant in Lone Star, Texas, 166 at a fac­to­ry in Hous­ton, 255 at a mill in Pine Bluff, Arkansas, and 404 man­agers across the company’s tubu­lar oper­a­tions nationwide.

Since last June, the com­pa­ny has informed 7,800 employ­ees of poten­tial job cuts, a tal­ly from Pitts­burgh Busi­ness Times indi­cat­ed. U.S. Steel spokes­woman Sarah Cas­sel­la said the ongo­ing lay­offs are the result of “chal­leng­ing mar­ket con­di­tions and glob­al influ­ences in the mar­ket includ­ing a high lev­el of imports, reduced prices for oil and nat­ur­al gas and reduced steel prices.”

Loom­ing in the dis­tance is the Trans-Pacif­ic Part­ner­ship (TPP), a pro­posed trade agree­ment with 11 oth­er Pacif­ic Rim coun­tries that includes major steel pro­duc­ers like Japan and South Korea, and has the sup­port of the White House. Crit­ics say it could exac­er­bate domes­tic steel’s woes.

In the after­math of the reces­sion, cheap­er steel imports, many of them from Chi­na and oth­er Asian coun­tries, flood­ed U.S. mar­kets. From Jan­u­ary 2014 to Jan­u­ary 2015 alone, imports to the Unit­ed States surged increased by about a third to reach near­ly 4 mil­lion met­ric tons. The glut in for­eign-pro­duced steel has made it hard­er for Amer­i­can com­pa­nies like Pitts­burgh’s U.S. Steel to com­pete.

Mean­while, the recent decline in oil prices — about 60 per­cent since last June — presents anoth­er chal­lenge. As wary domes­tic oil and gas com­pa­nies scale back spend­ing and lay off work­ers, demand for pipe and tube sags.

The recent lay­off announce­ments join a geo­graph­i­cal­ly diverse list of pend­ing job cuts at U.S. Steel. Since March, the com­pa­ny has announced plans to idle tem­porar­i­ly a mas­sive fac­to­ry in Gran­ite City, Illi­nois, that employs 2,000 and a tubu­lar steel facil­i­ty in Ohio that employs 614 in addi­tion to oth­er plants in Penn­syl­va­nia and Min­neso­ta. U.S. Steel has 23,000 work­ers in North Amer­i­ca and 12,500 in Europe, fil­ings with the Secu­ri­ties and Exchange Com­mis­sion show.

Added to those con­cerns is the TPP. Last week, a bipar­ti­san group of leg­is­la­tors intro­duced a so-called fast-track bill that would lim­it Con­gress’ abil­i­ty to amend the ver­sion of the trade deal approved by negotiators.

Scott Paul, pres­i­dent of the Alliance for Amer­i­can Man­u­fac­tur­ing, said the cur­rent ver­sion of the deal fails to address ade­quate­ly cur­ren­cy manip­u­la­tion — a long-stand­ing con­cern shared by top steel indus­try employ­ers and labor unions in North Amer­i­ca. Domes­tic steel exec­u­tives voiced sim­i­lar con­cerns at a con­gres­sion­al hear­ing last month.

Paul said TPP sig­na­to­ry Japan — the sec­ond largest steel pro­duc­er after Chi­na — reg­u­lar­ly under­val­ues its cur­ren­cy as a means of arti­fi­cial­ly boost­ing exports, dumps the goods in the U.S. and faces lit­tle con­se­quence: “The way that many of these trade laws are struc­tured, you have to be in the eco­nom­ic equiv­a­lent of the ICU before you can peti­tion for relief and expect it to be successful.”

Sup­port­ers have laud­ed the TPP as a “21st cen­tu­ry trade agree­ment” that sets “high-stan­dard” rules for future trade deals. By the same token, if the TPP locks in low stan­dards on cur­ren­cy manip­u­la­tion and pro­vides insuf­fi­cient means to chal­lenge coun­tries on such grounds, the trade deal would help cement what’s already an uneven play­ing field for domes­tic steel pro­duc­ers and work­ers, Paul said. In oth­er words, that could mean more low-cost imports from Japan and South Korea — not to men­tion Malaysia and Viet­nam, which are also part of negotiations.

Paul wor­ries the TPP doesn’t include suf­fi­cient­ly rig­or­ous “rules of ori­gin,” which deter­mine how much domes­ti­cal­ly pro­duced con­tent some­thing must have before it can ben­e­fit from the trade deal. In oth­er words, a South Kore­an refrig­er­a­tor or a Japan­ese car made from Chi­nese steel could, in the­o­ry, could enjoy the pro­tec­tions and ben­e­fits of the TPP even though Chi­na is not part of the agree­ment. Paving the way for more inex­pen­sive Chi­nese steel to enter U.S. mar­kets can only hurt domes­tic pro­duc­ers, he said. (The full text of the agree­ment has not yet been made pub­lic, so the specifics of the rules of ori­gin sec­tion remain unclear.)

So long as the TPP does not address those con­cerns — and the deal, at the moment, does not appear to do so — it will have a “neg­a­tive effect on the steel indus­try,” Paul said.

The Unit­ed Steel­work­ers union, which rep­re­sents most of the North Amer­i­can labor force at U.S. Steel in addi­tion to work­ers in oth­er man­u­fac­tur­ing sec­tors, has helped lead the oppo­si­tion to fast-track leg­is­la­tion. More than 1,000 activists from envi­ron­men­tal groups and orga­nized labor ral­lied against the bill on Capi­tol Hill Monday.

Iron and steel work is a rel­a­tive­ly well-com­pen­sat­ed field. The rough­ly 60,000 steel­work­ers in the Unit­ed States make about $22 an hour, the Bureau of Labor Sta­tis­tics fig­ures show.