“Stronger, Leaner” North American Steel Industry

“Stronger, Leaner” North American Steel Industry

The North American steel industry has recently undergone a metamorphosis due to extensive restructuring and consolidation, discloses Penn State’s Dr. Timothy J. Considine in his study released on Thursday (April 21). In the report commissioned by the American Iron and Steel Institute (AISI), Considine indicates that “steel is the most prevalent industrial material in North America.” He adds that steel has continued to improve on previous industry products manufactured only five years ago: “Today’s steel is stronger, lighter, easier to shape, and more durable.” The study highlights that the steel industry has demonstrated excellent foresight by investing in cutting-edge technologies that have dramatically improved energy efficiency and environmental sensitivity. For example, during the period between 1990 and 2002, the US steel industry improved energy conservation by 17%. Similarly, the Canadian sector saw an improvement of 25% between 1990 and 2001. Moreover, carbon dioxide (CO2) (a major greenhouse gas and contributor to the so-called “Greenhouse Effect”) emissions per ton of steel were reduced by a comparative amount. The Considine report also indicates that since 1990, labor productivity for the US segment improved an average 5.7% per year, which far outpaces the 3.9% growth in US manufacturing for the same period. To the north, the Canadian segment saw an impressive 6.8% growth per year, compared to 3.2% for its other manufacturing sectors. Considine claims in his report that the steel industry is leaner and stronger, “creating seven jobs in other economic sectors for every one direct steel industry job.” The report also cautions the industry about its vulnerability to non-market interventions in world steel markets. Even with such impressive gains in profitability, the industry will have to continue to make up for past losses sustained due to the “dumping” (selling products abroad at lower prices than at home) that occurred from 1997 to 2002. On the other hand, American Institute for International Steel (AIIS) president David Phelps told SteelOrbis that “decades of trade protection created a lethargic and high cost industry. Steel is the best example of why and how trade protection ‘breathing spaces’ do nothing to improve competitiveness. In the end, it was bankruptcy and real re-structuring along with a new labor agreement that did the job.”