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Kiver: Rebuilding after Harvey, Irma & Maria proves need for Made-in-America steel

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In 1861, the Tredegar Iron Works in Richmond, Virginia was the third largest steel foundry in America, but despite its capacity, the South was doomed to lose the Civil War on the industrial battlefield waged over the production of pig iron and other industrial war necessities.

After the Civil War that the American steel industry expanded, making the United States the leading producer of steel, until the 1970s and 1980s, when the American steel industry was attacked by nations that dump cheap steel on world markets. The assault of cheap steel drove American steel off the grid and into the footnotes of history.

Candidate and President Donald J. Trump has been the biggest booster of American-made steel, since William McKinley, but all that rhetoric pales to the real-world case for domestic steel made by what the nation now faces.

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This year’s above-average hurricane season has inflicted billions of dollars of damage upon housing and infrastructure throughout much of the southeast. Hurricanes Harvey, Irma  and Maria have devastated many buildings in their path, but they could not destroy the American spirit that wonderful force that binds us together as we clean up and rebuild.

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It may turn out that this massive task of rebuilding will also lead to the rebuilding of the domestic steel industry.

The fact of the matter is that the damage to many ports and port facilities mean that imported steel cannot be off-loaded from the ships to the pier.

In 2016, the United States of America ranked fifth in the world in steel production according to the World Steel  Organization. As America’s production of steel was down 1.7 percent from June of 2016 to June of 2017. China has been No. 1 for many years in a row.

Looking at it another way, numbers from the American Iron and Steel Institute show the all time employment high at 655,000 workers in 1953.

In 2015, this number was down to 142,000 employees directly involved in the production of steel in America.

This loss of 75 percent of the steel workforce, coincided with the country’s population grew from roughly 160 million in 1953 to roughly 320 million today.

Free traders will tell you that the decline of the American steel industry was the natural way of things, but what really happened is that other countries targeted American steel by subsidizing their own steel industries.

The subsidies by the many nations who subsidize steel, not limited to China and India, has led directly to the decline of U.S. steel production. Every mill that has closed and job that has been lost is a direct result of unfair competition by other countries and their governments. It is simple economics that these countries flood the market with cheap steel and our steel mills cannot compete. Trump and the Republican-led Congress can counter this threat with meaningful trade practices if they chose to do so.

The Organization for Economic Cooperation and Development  is a unique forum where the governments of 34 democracies with market economies work with each other, as well as with more than 70 non-member economies to promote economic growth, prosperity, and sustainable development. They are the most respected data collection center in the world for economic data.  The OECD has found that steel production has increased rapidly over the past decade with the largest spike is happening in developing Asian economies and China.

India is calling for a curb in China’s subsidies and cheap steel while fighting to protect its own subsidies. India is also just ahead of the United States in raw steel production. India’s stance is not meant to help the U.S., but to get more of China’s share of the cheap steel market.

Getting back to the task of rebuilding after three major hurricanes, cheap steel from neither India nor China are shut off by a storm damage and just as Americans need steel now,  the country’s own steelmaking capacity cannot handle the demand.

Beyond the mission to rebuild, there is the matter of national security. The lack of steel producing capacity in America is a real military threat that needs to be taken seriously, especially when the next conflict could be in East Asia–a war that would threaten the supply of steel from China, even if the war is not against China.

In our current situation, if we became entangled in a conventional war our ability to mass produce rapidly, tanks, or ships, would be in grave doubt. Even before we were in WWII we had the Liberty Ship program. “Liberty Ship” was the name given to the EC2 type ship designed for “Emergency” construction by the United States Maritime Commission in World War II. The 2,711 Liberty ships were built to a standardized, mass-produced design. The 250,000 parts were pre-fabricated throughout the country in 250-ton sections and welded together in about 70 days. We as a country could simply not do this in 2017 because of our weakened steel industry.

Liberty Ship under construction (War Department photo)

We as a country could simply not do this in 2017 because of our weakened steel industry.

In April Trump called for  a “Section 232” investigation in the steel industry and the assaults upon it by foreign rivals. American steel mills owners expect the Department of Commerce to find that  our national security is threatened by cheap steel imports in its investigation, but the potential actions proposed may be subject to debate, according to a report by the American Iron and Steel Institute.

“We certainly look forward to working with the administration as they develop and finalize [trade actions], making sure it’s done in the right way so that it can be most effective. And I think there will need to be some fine tuning on that, but we don’t know exactly what’s being proposed yet,” said Kevin Dempsey, senior vice president of public policy for the AISI about the Section 232 investigation.

Most importantly, Trump has called for a revitalization of the steel industry in his America first agenda. Letting our economic as well as military adversaries know that we recognize and are addressing the problem in an important first step in rebuilding America. Once this is achieved we will be in a better position to handle all threats both natural and man-made.

If the United States does not increase its steel production capacity, the same capacity that was one of the factors that determined the fate of the Civil War, the United States may be in a very difficult situation responding to merging world threats like the current potential conflict between the United States and North Korea.  Once policy is changed to support domestic steel mills, the United States will also be better prepared to handle the recovery efforts after a natural disaster lik the one that just hammered the United States in the wake of Hurricanes Harvey and Irma.

Once the policy is changed to support domestic steel mills, the United States will also be better prepared to handle the recovery efforts after a natural disaster like the one that just hammered the United States in the wake of Hurricanes Harvey, Irma and Maria.

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Big League Economics

BACK TO WORK: Ford Motors Announces They Intend to Begin Reopening Plants on Apr. 6

Ford does not want to suspend production for months because of coronavirus.

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Ford Motor Co. announced on Thursday that they intend to begin reopening some of their plants on Apr. 6, as the iconic automaker hopes that the coronavirus pandemic will not sideline their business for long.

Ford said last week that they would be suspending all production at their facilities indefinitely. They made the decision along with General Motors and Fiat Chrysler Automobiles with union workers spooked because of potential exposure to the coronavirus.

While Ford wants to resume their operations as quickly as possible, their plans are not written in stone. They could re-evaluate their time frame if the coronavirus pandemic worsens over the next ten days.

“We will continue to assess public health conditions as well as supplier readiness and will adjust plans if necessary,” Kumar Galhotra, Ford’s president of North America, said in a statement.

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GM and Chrysler have not issued any possible schedule for resuming operations at the present time. If all goes according to plan, Ford will re-open the Hermosillo Assembly Plant on Apr. 6 for one shift. It would then open many more facilities across the country on Apr. 14.

The other corporate titans of Motor City may be skittish about reopening because of Michigan Gov. Gretchen Whitmer’s draconian restrictions on industry. Whitmer has issued an edict forcing all supposedly non-essential businesses to shutter until Apr. 13.

“The current trajectory we’re on seems a lot like Italy,” Whitmer said earlier this week. “We’ve got to do everything in our power to keep that from happening in Michigan.”

“This is an unprecedented crisis that requires all of us working together to protect our families and our communities,” she added. “The most effective way we can slow down the virus is to stay home. I know this will be hard, but it will be temporary. If we all come together, get serious, and do our part by staying home, we can stay safe and save lives.”

While public officials like Whitmer may have the best of intentions, their forced shut-down of the economy may cause more lasting damage to the country than the coronavirus ever could.

“The situation is fluid and can change week to week,” said Jim Cain, a spokesman for GM. “We don’t have firm return-to-work dates at this time.”

Americans are desperate to go back to work as the social safety net is strained like never before during these trying times. A dubious record was set for jobless claims filed in March, with three million Americans filing for unemployment benefits. President Trump hopes to have the country back on track by the Easter holiday.

“I think there are certain people that would like it not to open so quickly,” Trump said on Wednesday. “I think there are certain people that would like [the economy] to do financially poorly, because they think that would be very good as far as defeating me at the polls.”

He added: “I’m not going to do anything rash or hastily — I don’t do that. But the country wants to get back to work.”

It will not be easy for President Trump to pull the nation out of the grip of media-driven mass hysteria that has resulted from the coronavirus pandemic.

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