New York Times business editor, Louis Uchitelle wrote a provocative article covering the most recent bailout request – this time from the steel industry. Unlike the automotive bailout request, the steel industry, rather than asking for hard dollars in the form of loan guarantees or cash for operations, asked that any economic stimulus plan include at least one trillion dollars of infrastructure spending over the next two years for highways, bridges, the electric power grid, water treatment plants, schools, roads, and hospitals, according to the article. And though it appears that the Obama stimulus plan will contain infrastructure spending, the steel industry has publicly announced its ownÃ‚Â suggested planÃ‚Â to include:
- the $1 trillion in infrastructure stimulus
- a “buy America clause,” a requirement for all infrastructure spending
- a request for more mass transit projects which the industry says are “in the works” in many major cities
The articles goes onto discuss the plight of workers primarily at integrated steel mills who will bear the brunt of the nation’s layoffs, because the integrated mills do not run as efficiently at lower capacities as the mini-mills such as Nucor. And also like the domestic automotive industry, the mills can’t take their cost structure down easily. For example, a millwright and mechanic laid off at US Steel still collects $20/hour which is 80% of her base pay of $25.12 an hour, while the mill has been shut down. The Times article mentions the worker’s lost income of $7/hour which had been tied to the mills profits. That definitely hurts the worker but how can a company continue to pay its essentially, furloughed workers 80% of base pay, with both the mill shut-down and capacity down by 50% since the start of September?
Let’s hope Obama’s plan does include some infrastructure stimulus in the areas outlined by the steel industry (though we’d like to see the buy-American clause dropped, that’s a euphemism for shutting out steel imports) because that may ultimately cost less than the bailout of the automotive variety. Prior to September, the US steel industry did not produce enough steel to support US demand and imports were a necessity. Rest assured we’ll see many more anti-dumping claims in 2009. But for now, any economic stimulus in the area of heavy industry will not go unappreciated.