US Big Steel Jobs vs. US Manufacturing Jobs

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My local paper, the Chicago Tribune, had a great article yesterday on the state of the near booming (my words, not theirs) steel industry. There were several statistics in the article worth mentioning and of course, commenting on. Specifically, the US steel industry is operating at 90% capacity, which does not come as any big surprise since many of the non-profitable operations were closed over the past couple of decades. But prices as you all know are increasing and some are increasing by up to 50%, since the beginning of the year.

As we have been writing on this blog, the weak dollar has starved the domestic industry of steel imports so domestic producers are able to gain a stranglehold on prices. I say stranglehold because ArcelorMittal and US Steel Corp have 20% of the domestic market. ArcelorMittal just announced a 25% surcharge to existing contracts, according to the article. Luckily, some US manufacturers are able to turn around and export high value-add products also taking advantage of the low dollar.

But perhaps the most interesting part of the article relates to US steel jobs statistics (a hot potato in US politics of course) and a comment that the unions were in part responsible for the current boom due to prior concessions. “In 1980, 4.8 employees were needed to produce 1000 tons of steel. Last year only 1.2 employees were needed to ship 1000 tons, according to figures from the American Iron and Steel Institute.” And US Big Steel lobbyists love to point to how they are disadvantaged when compared to foreign suppliers.

But let’s just take a look at that 1.2 employees per 1000 tons of steel. How many employees do you think it takes to convert that 1000 tons of steel into value-add products for export? Answer: I think it is exponentially higher than the number of jobs the steel industry contributes to the US economy.

Perhaps it’s time to tell our government leaders that these steel anti-dumping cases are in fact garbage. The real losers are the value-add manufacturers…the ones holding the majority of US manufacturing jobs, not the US steel industry.

–Lisa Reisman

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