Recently, Sen. Mark Pryor joined me in visiting a steel mill I used to manage here in Magnolia, but this visit was more than a photo-op during a re-election campaign. He was there to see firsthand the toll an international trade dispute with Turkey and Mexico has taken on the Commercial Metals Company (CMC) mill and the hardworking steelmakers who work there.
Last year, CMC had to lay off about one-third of the employees here. I took it personally. Having worked for CMC in Arkansas for 13 years, eventually managing the Magnolia mill, I was proud to increase its work force in those years to almost double the size it was when I arrived at the plant in 1991.
For me, the workers at the Magnolia mill aren't just names on a list. They're friends, and before I moved to CMC's central office, they were my neighbors. Some were the parents of my children's classmates.
Unfortunately, the remaining jobs still are under threat because of declining demand for our products, especially rebar, due to unfair trade. Rebar is reinforced steel that is used in construction to strengthen concrete for roads, bridges, stadiums and other projects.
American steelworkers can compete with anyone in the world so long as the competition is fair. But this has not been the case.
U.S. rebar producers have been hard hit by unfair competition from Turkey and Mexico. Together, these countries have seized almost 20 percent of the U.S. market for rebar. That's almost three times their market share from as recently as 2010. A coming decision by the U.S. Department of Commerce investigating those countries' trade practices is critical to the future of the Magnolia mill and the U.S. rebar industry as a whole. Members of the Arkansas congressional delegation are on our side in these cases.
If Turkey and Mexico had won their market share by making a better product at lower cost, American steelmakers couldn't complain. But Turkey and Mexico are using unfair trade tactics.
Turkish and Mexican rebar producers are "dumping" rebar onto the U.S. market by selling it at prices below home market pricing. Moreover, the Turkish government is unfairly subsidizing its rebar industry with energy subsidies, export and tax credits and preferential loans.
Turkey follows a simple strategy for seizing its share of the American rebar market: Buy scrap metal from the U.S. Ship it to Turkey. Use it to make rebar, with hefty subsidies from the Turkish government. And then ship it back to the U.S. at artificially low prices.
The U.S. steel industry isn't Turkey's only target. The Canada Border Services Agency recently found evidence that Turkey is dumping and subsidizing rebar exported to Canada, and even countries such as the Dominican Republic and Egypt have also taken action.
Meanwhile, Mexico's market remains essentially closed to U.S. rebar, while the U.S. market is wide open. In 2013, Mexican rebar exports to the U.S. totaled more than 300,000 tons. But Mexico's trade barriers limited U.S. exports to 13,000 tons. That's a 23-to-1 trade imbalance.
Because these cases are clear-cut and so much is at risk, the Rebar Trade Action Coalition, consisting of five major U.S. steel manufacturers, including CMC, has petitioned the U.S. government to conduct an investigation of these unfair practices and take action against them.
As did the U.S. International Trade Commission, the U.S. Department of Commerce has issued a preliminary finding that Turkish and Mexican producers are dumping rebar on the U.S. market.
But the Commerce Department inexplicably determined that Turkey's energy subsidies to its rebar industry were of little or no value. Since rebar production is energy-intensive and Turkey has no natural advantage except for government subsidies, the Commerce Department's preliminary ruling makes no sense.
We're asking the U.S. Department of Commerce to find the facts and enforce the laws. Nothing more. Nothing less.
Americans play to win, and we play by the rules. With a level playing field and fairly enforced rules, American steelmakers can compete and win against our counterparts anywhere in the world.
Give us that opportunity, and the U.S. rebar industry won't have to lay off hardworking Americans in Arkansas or anywhere else.
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Tracy L. Porter is senior vice president of the Commercial Metals Company and president of the CMC Americas Division. He was executive vice president and general manager of CMC Steel Arkansas and served on the Arkansas State Chamber of Commerce.
Editorial on 08/30/2014