If you go to Nucor's website (www.nucor.com) these days, you will see Chinese workers leaving their (presumably) steel plant wearing sanitary masks over their faces, against a background of ominous clouds of gas emissions rising into the atmosphere. Nucor makes several claims on its website, for example, that they can compete with any steel mill in the world but not with governments and that they are ahead of the Kyoto emission standards.
Pretty impressive but some comments are in order.
US steel mills also get indirect subsidies in the form of deferred taxes, low interest loans and preferential electricity rates all the time. Just witness the unconscionable bidding competition among different states for the new steel mill that ThyssenKrupp plans to build in the southern United States. State governments, such as the Illinois legislature, have given low interest loans to ailing steel mills in their states on a regular basis. A couple of years ago they helped out struggling Illinois-based Keystone in this manner.
Nucor is not quite as unprotected against the Chinese imports as their reference to competition with governments might imply. Three products, all vital to Nucor's business, have been protected from Chinese imports through long-standing antidumping orders. They are: cut-to-length carbon steel plates (since 2003), hot rolled carbon steel flat products (since 2001) and rebars (since 2001). Partly because of this protection, profits for Nucor have risen to record levels. Net profit in 2006 was $1.8 billion.
The "manipulated" exchange rate for the Chinese currency is a valid point. But a lot of American companies that have set up shop in China are benefiting from the currently undervalued Chinese RMB, not to mention the benefit to the US consumer in general.
It is probably true that the environmental standards in China are not up to the US level. But this has been and still is true for most developing countries. NAFTA partner Mexico comes to mind. Both through external and internal pressure, China will, in due time, introduce stricter emission standards. But the picture on Nucor's website showed the workers leaving on their bicycles, all of them. Not a single air-polluting car (much less SUV) is in sight. This is quite a different picture from a shift change at any Nucor mill in the US.
Last year's profits show that Nucor is not hurt by Chinese competition. So why are they displaying this statement on their website as a central issue?
The filing of US antidumping investigations has been significantly reduced in the last couple of years. Petitioning steel mills must prove material injury in order to win an antidumping order against imports, but most recent petitions have been rejected due to lack of damage to domestic industry. Public and political support for protectionism is weakening in the US, and Nucor wants to keep the issue in the spotlight for now, perhaps in preparation for the next downturn.