Steelmakers Push Pro-Manufacturing
Agenda to Nation’s Lawmakers
By Dan Markham, Senior Editor
When industry leaders gathered on Election Day in Chicago last month for the annual CRU North American Steel Conference, chief executives from three leading mills spoke with one voice as they called for more pro-business action in Washington to boost the struggling economy.
AK Steel’s James Wainscott, who led off the day’s presentations, offered a six-point plan on how legislators could create a better business environment, and in the process return the country to prosperity. His views were later echoed by Gerdau Ameristeel’s Mario Longhi and Nucor’s Daniel DiMicco.
Wainscott’s six-point platform:
n Employ commonsense regulation.
“We need a reasonable regulatory approach, not one that strangles our global competitiveness,” Wainscott said.
Among the areas he cited for reasonable regulation is climate change legislation, currently on the congressional backburner but still a concern for steel executives. “There is no unilateral solution to climate change,” Longhi said. “It is a world problem.”
From 1998 to 2010, DiMicco added, the U.S. lost 6.2 million manufacturing jobs, the result of failed trade policies and the increased cost of bureaucracy and regulations.
n Enforce existing trade laws.
“We have the greatest workforce and innovators in the world. Let’s turn them loose. We can compete with anybody, anywhere, anytime, including foreign competitors, but we shouldn’t have to compete with foreign governments,” Wainscott said.
While China is the frequent target of many trade violation claims, DiMicco said, the Chinese are just the latest violators. And the current crop of U.S. officials is just the latest to fail in protecting America’s trade interests. “From 1970 to today, there’s been a massive failure of our trade policies. We’ve allowed mercantilism to trump free trade for more than 30 years, first with Germany and Japan, then Korea and Taiwan, then Japan again, and now China and Korea,” he said.
DiMicco scoffed at the notion that the loss of domestic manufacturing jobs is the result of productivity gains. “The more productive you get, the better your cost structure and the more of the same widgets you should be making and sending to the rest of the world. Why aren’t we in a position of making 100 percent of our steel and exporting another 20 percent? It’s got nothing to do with productivity, nothing to do with labor costs, and everything to do with state-owned enterprises.”
n Form a comprehensive energy policy.
“Half of our trade deficit is energy,” DiMicco said. “We need to pursue gas, nuclear, our oils, and yes, renewables of all kinds, as we transition from a carbon-based to a lesser-carbon-based world.”
The key, all of the executives said, was developing a policy that keeps the U.S. from being so dependent on foreign providers of energy.
n Repair the infrastructure.
Several presenters noted that the American Society of Civil Engineers has assigned a grade of D- to our nation’s infrastructure system, including roads, bridges, ports, docks, dams and the electrical grid. “We need a real stimulus program in this country before we have another disaster,” Wainscott said.
Longhi expressed disgust at both the paltry level of spending on infrastructure in the previous stimulus and the modest plans for future investments. “We have a deficit of $2.2 trillion of infrastructure work that could add jobs immediately, and we’re talking about spending another $50 billion. I don’t know how to interpret an assumption like that, whether it’s truly naïve or offensive.
“For every billion spent, at least 25,000 jobs are created. It seems too obvious not to be pursued, but for some reason we’re having difficulty getting that obvious condition in front of the people who can make the call,” he added.
n Draft a modern tax policy.
“Let’s overhaul one of the most arcane, complicated, jobs-killing pieces of public policy we have in the U.S.,” Wainscott said. “After Japan, U.S. corporations pay the highest tax rates in the world, and higher tax rates translate into fewer jobs, fewer plants and less manufacturing in America.”
The backward nature of U.S. tax policies is on display in the nation’s capital, DiMicco said, where government employees continue to be paid better than their private sector counterparts, while remaining relatively unscathed by the recession. “Have you seen anyone in the federal sector take a 25 percent cut in pay?” he asked.
n Develop a pro-manufacturing agenda.
Manufacturing currently represents around 10 percent of GDP, down from 30 percent decades ago. Wainscott said the country should set a target of 20 percent by the year 2020. “Manufacturing is where real wealth is created and sustained. For a robust economy, we need to make things,” he said.
DiMicco said the U.S. has put its faith in a faulty business model, one that promotes service over manufacturing. “It’s a failed economic model. We have put policies in place that have forced the redirection of wealth, and the middle class has suffered. It has given us a bubble economy.”
Even the nation’s largest retailer is concerned, he noted “Even Wal-Mart customers can’t afford to shop at Wal-Mart anymore. Before you’re a consumer, you have to be a producer.”