Thomas J. Gibson Testifies at Congressional Steel Caucus Hearing on Stabilizing Steel During Difficult Economic Times

Identifies Critical Legislative Issues To Steel Industry’s Future Competitiveness

WASHINGTON, D.C., June 16, 2009 – Describing the domestic steel industry as “a healthy industry in a bad economy,” Thomas J. Gibson, president and CEO, the American Iron and Steel Institute (AISI) testified before the Congressional Steel Caucus today that the steel industry has had to make tough decisions during the unprecedented economic downturn, including layoffs, early retirements, reduced work hours, and idled facilities.   He said the industry is “poised for recovery” because of important restructuring it accomplished in recent years,  but identified three legislative areas Congress will consider this year that will impact the industry and are critical to its future competitiveness:  climate change, energy supply and transportation.
Read other testimony here.

The Congressional Steel Caucus held its hearing to listen to the concerns of local constituents, steel industry experts and steel industry officials regarding the current situation facing steelworkers and steel production facilities, and how Congress can best help the domestic steel industry during these difficult times.

“Steel, like other sectors of our economy, remains in the grip of the greatest economic downturn we have faced in many decades,” Thomas J. Gibson, president and CEO of the American Iron and Steel Institute (AISI) said in his testimony to the Steel Caucus.  “In the week ending June 13, 2009, domestic raw steel production was 1.1 million net tons and our capability utilization rate was 47.7 percent.  By comparison, one year ago our production was almost 2.2 million tons and our capability utilization was 90.3 percent.  This represents a 47.2 percent decrease from the same period in the previous year.”

“The steel industry in the U.S. has the lowest energy consumption per ton of production and the lowest CO2 emissions per ton of production in the world.” Gibson said.  But as the debate on climate change continues, he stressed that it is “a global problem that can only be addressed on a global basis.  Without this as a guiding principal, we will not actually lower CO2 emissions globally and will instead merely diminish the competitiveness of U.S. manufacturers in the global marketplace.”  Gibson urged the Caucus to support a strong allowance allocation system to ensure that manufacturing capability is not lost to non-carbon-regulated countries. 

Otherwise, he said an insufficient allowance program could result in a net increase in greenhouse gas emissions, “undermining the stated purpose of the legislation.”  Further, Gibson said “We appreciate the hard work of Congressmen Doyle and Inslee on this issue.  The rebate provisions in Title IV of the bill reflect the authors’ understanding of the challenges facing energy intensive industries and we are especially appreciative of Mr. Doyle’s efforts.”  He then provided several recommended modifications that must be made to avoid job loss and emission migration overseas:

• Energy intensive industries should be rebated allowances to recover consequential energy cost increases resulting from climate legislation and not just allowance costs;
• The bill should contain a meaningful border adjustment mechanism;
• Energy-intensive manufacturers should receive the same emissions allowance schedule that is applied to every other recipient of emissions allowances;

The clause in the bill that serves as a “cap within a cap” should be stricken.  According to the language, no sector could ever receive rebates greater than the number received for the prior year.  This additional energy efficiency language merely acts as a penalty and fails to consider business cycles or catastrophic events that affects a firm’s productivity and efficiency.

In terms of energy, Gibson said, “a sound energy policy is imperative for future growth and current industry recovery.  Reliable and reasonably priced energy is an essential element to the steel industry’s productivity and competitiveness.”  He also mentioned that steel has a vital role as we rebuild our energy infrastructure.  “The building of the new green grid will translate into putting orders for products on the books and steelworkers back to work.”  This includes new nuclear reactors, wind towers, solar panels and natural gas pipelines, which are all steel intensive.

The Institute has endorsed The Ameican Conservation and Clean Energy Independence act, sponsored by House Steel Caucus Vice Chairman Tim Murphy, which “moves forward with the leasing program of the Outer Continental Shelf (OCS), putting us on a path to energy independence,” Gibson said.

Regarding transportation, Gibson said it was essential for the U.S. to upgrade its crumbling infrastructure in order to be a global leader.  “Providing federal funds for infrastructure projects provides jobs and revenue to state and local communities, and has a positive impact on a wide array of individuals from steel producers, to suppliers, to manufacturers of goods, all which aid in the recovery of our national economy.”  Gibson also highlighted the importance of Congress taking action on the surface transportation reauthorization bill expeditiously, offering several recommendations:

• Improvements and expansion to “Buy America;”
• Research funding for modular steel bridge systems;
• Targeted research for steel bridges (non-modular); and
• Research funding on continuously reinforced concrete pavement.

In addition to Tom Gibson’s testimony, the following individuals also testified before the Congressional Steel Caucus:  Robert Scott, senior international economist,  Economic Policy Institute, Richard McCormack, editor and publisher, Manufacturing and Technology News, Ron Krupitzer, vice-president of automotive, AISI, Skip Hartquist, counsel for Specialty Steel Industry of North America, Thomas Danjczek, president, Steel Manufacturers Association, Roger Lindgren, chairman of the Committee on Pipe and Tube Imports and several local constituents from the steel companies.

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 our 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