REGIONAL— State political leaders are asking to meet with President Obama as soon as possible to urge quick action to stem the flow of foreign steel and save what they see as a critical domestic …
REGIONAL— State political leaders are asking to meet with President Obama as soon as possible to urge quick action to stem the flow of foreign steel and save what they see as a critical domestic industry poised on the brink.
Gov. Mark Dayton and Sen. Majority Leader Tom Bakk, DFL-Cook, signed the letter to the President this week following the announcement last week of layoffs at Northshore Mining in Babbitt and Silver Bay. It was just the latest shoe to drop in what has become one of the most difficult years in the steel and taconite industries in decades.
“We need to decide whether America wants to have a domestic steel industry or not,” said Bakk, who said the country has a national security interest in maintaining its steel sector. “If our steel industry goes down, it will have impacts across the country,” said Bakk. “If the plants and mines close, they won’t come back,” warned Bakk.
The push for a presidential meeting came as Rep. Rick Nolan, whose Eighth Congressional District includes the Iron Range, introduced legislation, known as the Save Our Steelworkers (SOS) Act, in Washington that would impose a five-year moratorium on the import of foreign steel. Nolan is also urging President Obama to use his executive authority to impose tough new tariffs that would effectively impose the equivalent of a moratorium on foreign steel imports. Nolan says the president has authority under Section 201 of the Trade Act of 1974, to take such executive action and noted that previous presidents, including President Reagan and President George W. Bush, have taken similar action in the past to protect key industries that were facing pressure from cheap foreign imports.
“We must confront and stop the illegal dumping of millions of tons of low-grade, foreign government-subsidized steel that has sent the Iron Range taconite mining industry – and America’s steel industry – into the steepest decline in decades,” Nolan said in a statement issued by his office on Wednesday. Nolan said previous presidential action to stem the flow of imports allowed the industry to quickly rebound. “If those dedicated ‘free traders’ could see the light and stand up for American jobs and American workers, there’s no reason President Obama can’t do the same today,” he added.
The downturn in the steel sector comes at a time when the rest of the U.S. economy is relatively strong. “Domestic steel consumption rose by 11.7 percent in 2014 alone,” said Nolan. “Unfortunately, foreign steel imports jumped by 36 percent last year, capturing their highest share of the U.S. market on record.”
The jump in cheap foreign imports isn’t happening in isolation— it’s part of a global downturn that has hit steel, copper, nickel, coal, oil, and other basic commodities as a result of slackening demand in China. The vast industrial growth in China and the resulting high demand for basic materials over the past decade prompted companies to bring new mines and new oil fields on line. Now, with growth slackening in China, demand is slack, leaving oversupplies that have sent the price of oil, iron ore, copper, and many other commodities tumbling.
Professor Jeff Manuel, an historian and author of the new book, “Taconite Dreams: The Struggle to Sustain Mining on Minnesota’s Iron Range, 1915-2000” sees parallels with the period immediately following World War II, when demand for basic materials that had fueled the war effort suddenly fell sharply.
While the 1950s is generally remembered as a period of strong economic growth in the U.S. as a whole, Manuel said conditions on the Iron Range were very difficult. “A lot of people today are comparing this to the 1980s, the most recent really bad downturn,” said Manuel. “But it really parallels the early 1950s. All through the 50s was a really down time,” he said.
Unlike the early-to-mid 1980s, when the U.S. economy struggled across the board, Manuel said the 1950s downturn in the state’s iron mining sector, which then included the Cuyuna and Vermilion ranges in addition to the Mesabi Range, coincided with relatively strong economic growth elsewhere in the U.S., a situation similar to today. And Manuel said those conditions can put extra pressure on localized economies, since better job prospects elsewhere often encourage people to leave a struggling region.
Even as the Mesabi Range downturn has intensified, it appears the worst of the layoff news may now be in the past. “Minntac’s still rolling along,” said Lowell Carlon, president of the Steelworkers Local 1938. While foreign imports are hurting demand for American steel, U.S. Steel still has demand to meet. As an integrated operation, U.S. Steel relies heavily on its own mining operations, particularly its flagship facility, Minntac.
Hibbing Taconite also remains in production and no major cutbacks are expected there for the foreseeable future. Arcelor-Mittal also remains in production.
But that still leaves U.S. Steel’s Keetac plant shuttered indefinitely, along with United Taconite, Northshore, and a number of smaller iron producers, such as Mesabi Nugget and Magnetation. All together, just over 1,700 of the roughly 4,200 mine workers on the Iron Range remain on layoff and most are not expected to return to work before the second quarter of 2016.
While members of Local 1938 remain on the job, Carlon said it’s clear something needs to be done or more layoffs are possible. “At some point, someone with power and authority needs to step up and say what’s really going on here,” he said. “These subsidized imports are killing us,” he said.