Thursday, April 23, 2015

Trade Deal Layoffs Ahead

Economic Armageddon not far behind
 
 
United States Steel Cor­po­ra­tion issued lay­off notices to 1,404 work­ers in the lat­est sign of strug­gle for the Amer­i­can steel indus­try. The mis­sives went out in recent days to work­ers pro­duc­ing pipe and tube prod­ucts that are used in the oil and gas sec­tor. Job cuts could come as early as June for 17 to 579 employ­ees at a plant in Lone Star, Texas, 166 at a fac­tory in Hous­ton, 255 at a mill in Pine Bluff, Arkansas, and 404 man­agers across the company’s tubu­lar oper­a­tions nationwide.
Since last June, the com­pany has informed 7,800 employ­ees of poten­tial job cuts, a tally from Pitts­burgh Busi­ness Times indi­cated. U.S. Steel spokes­woman Sarah Cas­sella said the ongo­ing lay­offs are the result of “chal­leng­ing mar­ket con­di­tions and global influ­ences in the mar­ket includ­ing a high level of imports, reduced prices for oil and nat­ural gas and reduced steel prices.”
Loom­ing in the dis­tance is the Trans-Pacific Part­ner­ship (TPP), a pro­posed trade agree­ment with 11 other Pacific Rim coun­tries that includes major steel pro­duc­ers like Japan and South Korea, and has the sup­port of the White House. Crit­ics say it could exac­er­bate domes­tic steel’s woes.
In the after­math of the reces­sion, cheaper steel imports, many of them from China and other Asian coun­tries, flooded U.S. mar­kets. From Jan­u­ary 2014 to Jan­u­ary 2015 alone, imports to the United States surged increased by about a third to reach nearly 4 mil­lion met­ric tons. The glut in foreign-produced steel has made it harder for Amer­i­can com­pa­nies like Pittsburgh’s U.S. Steel to com­pete.
Mean­while, the recent decline in oil prices — about 60 per­cent since last June — presents another chal­lenge. As wary domes­tic oil and gas com­pa­nies scale back spend­ing and lay off work­ers, demand for pipe and tube sags.
The recent lay­off announce­ments join a geo­graph­i­cally diverse list of pend­ing job cuts at U.S. Steel. Since March, the com­pany has announced plans to idle tem­porar­ily a mas­sive fac­tory in Gran­ite City, Illi­nois, that employs 2,000 and a tubu­lar steel facil­ity in Ohio that employs 614 in addi­tion to other plants in Penn­syl­va­nia and Min­nesota. U.S. Steel has 23,000 work­ers in North Amer­ica and 12,500 in Europe, fil­ings with the Secu­ri­ties and Exchange Com­mis­sion show.
Added to those con­cerns is the TPP. Last week, a bipar­ti­san group of leg­is­la­tors intro­duced a so-called fast-track bill that would limit Con­gress’ abil­ity to amend the ver­sion of the trade deal approved by negotiators.
Scott Paul, pres­i­dent of the Alliance for Amer­i­can Man­u­fac­tur­ing, said the cur­rent ver­sion of the deal fails to address ade­quately cur­rency manip­u­la­tion — a long-standing con­cern shared by top steel indus­try employ­ers and labor unions in North Amer­ica. Domes­tic steel exec­u­tives voiced sim­i­lar con­cerns at a con­gres­sional hear­ing last month.
Paul said TPP sig­na­tory Japan — the sec­ond largest steel pro­ducer after China — reg­u­larly under­val­ues its cur­rency as a means of arti­fi­cially boost­ing exports, dumps the goods in the U.S. and faces lit­tle con­se­quence: “The way that many of these trade laws are struc­tured, you have to be in the eco­nomic equiv­a­lent of the ICU before you can peti­tion for relief and expect it to be successful.”
Sup­port­ers have lauded the TPP as a “21st cen­tury trade agree­ment” that sets “high-standard” rules for future trade deals. By the same token, if the TPP locks in low stan­dards on cur­rency manip­u­la­tion and pro­vides insuf­fi­cient means to chal­lenge coun­tries on such grounds, the trade deal would help cement what’s already an uneven play­ing field for domes­tic steel pro­duc­ers and work­ers, Paul said. In other words, that could mean more low-cost imports from Japan and South Korea — not to men­tion Malaysia and Viet­nam, which are also part of negotiations.
Paul wor­ries the TPP doesn’t include suf­fi­ciently rig­or­ous “rules of ori­gin,” which deter­mine how much domes­ti­cally pro­duced con­tent some­thing must have before it can ben­e­fit from the trade deal. In other words, a South Korean refrig­er­a­tor or a Japan­ese car made from Chi­nese steel could, in the­ory, could enjoy the pro­tec­tions and ben­e­fits of the TPP even though China is not part of the agree­ment. Paving the way for more inex­pen­sive Chi­nese steel to enter U.S. mar­kets can only hurt domes­tic pro­duc­ers, he said. (The full text of the agree­ment has not yet been made pub­lic, so the specifics of the rules of ori­gin sec­tion remain unclear.)
So long as the TPP does not address those con­cerns — and the deal, at the moment, does not appear to do so — it will have a “neg­a­tive effect on the steel indus­try,” Paul said.
The United Steel­work­ers union, which rep­re­sents most of the North Amer­i­can labor force at U.S. Steel in addi­tion to work­ers in other man­u­fac­tur­ing sec­tors, has helped lead the oppo­si­tion to fast-track leg­is­la­tion. More than 1,000 activists from envi­ron­men­tal groups and orga­nized labor ral­lied against the bill on Capi­tol Hill Monday.
Iron and steel work is a rel­a­tively well-compensated field. The roughly 60,000 steel­work­ers in the United States make about $22 an hour, the Bureau of Labor Sta­tis­tics fig­ures show.

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