American Iron and Steel Institute Chairman James L. Wainscott Discusses Challenges and Opportunities in the Global Steel Sector

Despite Challenges, Industry is Poised for Recovery Once Demand Picks Up

Phoenix, AZ, 5/5/2009 – In spite of the most serious U.S. and global economic crisis in decades, the steel industry is poised for recovery -- when demand picks up, James L. Wainscott, American Iron and Steel Institute Chairman (AISI) Chairman, and chairman, president and CEO of AK Steel Corporation, said at the Institute’s annual meeting.  With the meeting’s theme, Global Challenges – Global Solutions, leaders of the North American steel industry are meeting here to discuss the state of the global steel sector, market outlooks and challenges, opportunities that will shape the industry’s future and market trends that will be important to steel in the next 12 to 24 months.

“It is important to understand that this recession is not something unique to America or to the North American steel sector,” Wainscott noted.   “It is a global recession and our recovery is tied, at least in part, to economic recovery across the world.” He continued, “While we are hopeful that the markets we serve are at, or very near, the trough of the recession, for meaningful economic growth, we’re going to need to see several things: 1) Improved credit availability, 2) The return of consumer confidence, and 3) Rational government policy that serves as a catalyst for growth in American manufacturing and American jobs.”

Wainscott said AISI and its member companies believe that as federal agencies gear-up to use the stimulus funds that have been approved, “they need to ensure that federally-funded projects use American-made iron, steel and other manufactured products, if they are readily available and competitive. This in turn will be beneficial not just to the steel industry but also for the economy to turn the corner as American families and communities depend on a strong manufacturing base to improve quality of life and to create high-paying jobs.”

A recent Department of Transportation study reported that every $1 billion invested in federal highways supports nearly 35,000 American jobs.    And a recent economists’ report states that a concerted domestic procurement program could increase U.S. manufacturing job creation by 33 percent while ensuring that taxpayer dollars actually go directly to job creation.

Wainscott raised two main policy issues in his speech – climate change and trade – that have a phenomenal impact on the economy and the steel industry.

“Our industry is firmly committed to building a sustainable future for generations of Americans to come. But our ability to stay competitive in the world economy means we need fair and strong trade and climate laws that are rigorously enforced. In a market open to imports, such as ours, any legislation that undermines the competitiveness of U.S. mills will encourage steel production to leave this market in favor of markets with lower environmental standards,” he said, which would hurt both the U.S. economy and the environment.
He noted that any U.S. climate change regulations involving the steel industry must also provide that similar measures be taken by other major steel-producing countries such as China.

“It is a known fact that countries like China will not adopt measures to curb CO2 emissions as aggressively as we will, which will give them and other importers a tremendous competitive advantage. That is, unless U.S. climate policy provides offsets and border adjustment mechanisms to account for the cost burden placed on U.S. companies,” he emphasized.

America’s steel industry has achieved sizable CO2 reductions and the processes are limited by the laws of physics regarding further energy and CO2 reductions. In contrast, a study released by the Alliance for American Manufacturing shows that China is now responsible for at least 50 percentof total global steelmaking CO2 emissions generated, he said.

“It’s clear to me that, if we don’t get our climate policy right, we face the prospect of ceding another huge segment of America’s industrial prowess to the BRIC countries – Brazil, Russia, India and China. And that would mean further loss of our manufacturing jobs,” said Wainscott.

On trade issues, he emphasized the need for “enforcing trade laws and for our government to stand-up for our nation’s assets – our workers and manufacturing sector.”

“The issue of China’s rampant currency manipulation cannot be ignored. The Chinese government does not play by the rules when it illegally subsidizes its industry and controls its currency's exchange rate,” Wainscott added. “These actions enable China to evade market forces and falsely gain a 40 percent competitive advantage over U.S.-manufactured goods, which has greatly contributed to America's $256 billion trade deficit with China,” he said.

In a call to action, Wainscott urged Congress to enact legislation that treats China’s currency manipulation as a subsidy under our trade remedy laws.

Concluding his speech on a positive note, Wainscott said that despite these challenges, he is optimistic for the future of the steel industry. “My reason for optimism lies in the dynamic spirit of a great workforce, innovative products and an amazing material. We’ve all been through adverse times before and have emerged stronger.”

AISI serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the preferred material of choice.  AISI also plays a lead role in the development and application of new steels and steelmaking technology.  AISI is comprised of 24 member companies, including integrated and electric furnace steelmakers, and 138 associate and affiliate members who are suppliers to or customers of the steel industry.  AISI's member companies represent approximately 75 percent of both U.S. and North American steel capacity.  For more news about steel and its applications, view AISI’s Web site at www.steel.org.

Contact:
Nancy Gravatt
Vice President, Communications
American Iron and Steel Institute
Tel: 202.452.7115