Steel competition dashes windfall hopes
Jason Norris oversees fields of steel pipe destined to carry natural gas from Marcellus and Utica shale wells to processing plants, distribution systems and eventually homes and businesses.
Two years ago, his family-owned company, Dura-Bond Inc., opened a plant in Duquesne to apply rust-preventing epoxy to this line pipe — mostly manufactured a few miles away at U.S. Steel Corp.'s plant in McKeesport.
But now the plant will be closing in August, the victim of surging imports of pipe from South Korea and other nations.
“It's going to have a negative effect on our business, there's no two ways about it,” said Dura-Bond's Norris. “There definitely will be a slowdown for us.” But he is uncertain how it will ultimately affect his plant.
The steel industry was expected to benefit greatly from the domestic boom in oil and gas drilling. But the anticipated windfall from supplying drilling companies with tubular steel for oil and gas pipelines is being undermined by a flood of cheap imports. American steelmakers have blamed foreign dumping for causing a severe oversupply and depressing prices.
Steel imports are at record levels — 28 percent of the United States market in May — and are largely to blame for one of the industry's worst crises in a decade. It comes at a time that steel is facing increased competition from aluminum in the auto industry.
Nearly 600,000 American jobs, including 35,300 in Pennsylvania, could be at risk from surging imports, according to a recent study by the Economic Policy Institute, a Washington think tank that focuses on the needs of low- and middle-income workers.Charles Putz Jr., a utility technician, and Allyson Wright, a crane operator, are among 175 workers at U.S. Steel's McKeesport plant who will be out of work next month.
“Many say they just want a job to take care of their family,” said Putz, 44, of McKeesport. Most want to get back into U.S. Steel, but promises of openings at its plants in West Mifflin and Clairton can't be counted on, he said.
The truth, says Wright, 27, of Pleasant Hills, a two-year employee, “is Korea and others are undercutting what we're making here. It's all dependent on the government, and there will be a domino effect with other plants.”
Other countries, mainly in Asia, backed by aggressive government support, continued to add production capacity as demand stagnated during the Great Depression, according to the study by the Economic Policy Institute. The United States has become the dumping ground for the excess.
Steelmakers have called for new import penalties and have filed the highest number of trade complaints in more than a decade. According to the U.S. Trade Representative, there are 40 anti-dumping and injury cases pending on steel products.
A final decision expected Friday by the Department of Commerce on imports of oil country products from South Korea and eight other countries won't save the steel jobs in McKeesport, but it could change what happens to Dura-Bond's 75 workers, said Norris, vice president of operations.
An estimated 4,184 workers in eight states lost their jobs to the import surge since the beginning of 2012. Nearly 1,000 steel jobs have been lost in the first three months of 2014, the Economic Policy Institute study said.
U.S. Steel Corp., working to cut costs and restructure after five years of annual losses, feels especially hard hit.
“We have undertaken the difficult but appropriate steps of righting our own ship,” said CEO Mario Longhi. Those include $290 million in annual cost cuts and undisclosed layoffs.
But Longhi said the “foreign companies are gaming the system and distorting the market with products dumped with the sole purpose of undercutting and harming the industry in general and my company specifically.”
Plant closings in 2013 caused by steel imports include Evraz Claymont Steel's plate plant in Claymont, Del., where 375 worked, and Republic Steel's bar plant in Massillon, Ohio, with 85. In 2012, RG Steel closed plants in Wheeling, W.Va., and Fort Payne, Ala., with 2,010 total employees.
For McKeesport, the closing is “a setback,” says Maury Burgwin, president of the Mon Yough Area Chamber of Commerce. “Everybody is saddened by this decision, but we all understand business.”
Among trade cases filed in 2013 was the one by U.S. Steel, Houston-based TMK IPSCO, and 13 other steel companies over imports of oil country tubular products from South Korea and other nations. TMK IPSCO has plants in Ambridge and Koppel in Beaver County and in other states.
They are hoping this week's decision by the Commerce Department imposes anti-dumping penalties on pipe from South Korea, which avoided them in February. Those preliminary findings showed that Korean prices weren't below what steel was being sold for in the American market.
“We want a level playing field,” said Dave Mitch, CEO of TMK IPSCO, with 730 workers at plants in Ambridge and Koppel. “It's very important for American manufacturing jobs.”
Pipe imports forced his company to cut production and workers' hours by 30 percent to 40 percent at line-pipe plants in Iowa, Arkansas and Kentucky, where 20 were laid off. At the Koppel and Ambridge plants, the company has maintained production of pipe for wells, but cut prices to compete, which hurt profit and capital investment, Mitch said.
The case against South Korea and other nations came when imports surged to 1.76 million tons in 2013 from 840,313 tons in 2010, according to the American Iron and Steel Institute, the industry's trade association. South Korea alone shipped 894,300 tons to the United States in 2013.
“We created 75 jobs in Duquesne because of the demand, but nobody expected this to happen,” Dura-Bond's Norris said. “I don't understand how this country allows so many manufacturing jobs to be destroyed. Who ever thought U.S. Steel would be out of the line-pipe business — in the middle of the Marcellus and Utica shale?”
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Pittsburgh angles to keep Heinz headquarters in merger
- Heinz merging with Kraft in mega-deal; headquarters to stay in Pittsburgh
- Stop foreign dumping, U.S. Steel CEO Longhi tells Congress
- Pa. Gas & Electric agrees to $6.8 million settlement of polar vortex claims
- Michigan man takes Heinz to court over Dip & Squeeze ketchup packet
- U.S. Steel to idle Illinois plant, shed up to 2,080 more workers
- Federal government eyes regulation of payday lending
- Federal Trade Commission cracks down on crooked vehicle sales
- Energy Department OKs loan of $259M to Alcoa to promote clean energy
- Court approves LightSquared’s bankruptcy exit plan
- Stocks fall for 4th straight day; oil surges on Yemen strikes