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Steel’s health challenged, importance is stressed

Sep 30, 2015 | 07:29 PM | John Ambrosia

Tags  comment, steel, AISI, 2015, recession


Ever since the beginning of and depths of the Great Recession, metals sector executives, employees and investors have been pulling hard to keep business strong, improve productivity and make the right moves to position their companies to become more competitive.

While it is true that on a global level steel production is now outpacing pre-recession levels, domestic production is still far behind where we were in the summer of 2008. And while U.S. capacity utilization rates continue to hover in the low-to-mid-70-percent range, imported steel continues to grab significant market shares within the American economy.

That is because so many factors are beyond the control of the metals sector as a whole, let alone any individual producer within it. For example, issues of global capacity, international production and imported steel and its impact on domestic business remain at the forefront of industry concerns.

Add onto that the more than yearlong slump in oil prices—which has hit the steel tube and pipe sector especially hard—and the 2014–2015 period has been a rough one. Now there is even worry in some quarters that automotive, which has helped bolster steel sales since the recession, could soften domestically.

Steel production remains vital to the overall U.S. economy, so these issues seep out of boardrooms, union halls and Wall Street and into America’s Main Street. Here are some facts about the importance of domestic steel production recently released in the American Iron and Steel Institute’s 2015 Steel Industry Profile that help highlight what is at stake:

• The U.S. steel industry directly or indirectly supports more than one million U.S. jobs. Every one job in the American steel industry supports nearly seven jobs in the U.S. economy, reflecting its ripple effect on employment.

• The products made by the steel industry are essential to the energy sector. Whether it is oil country tubular goods (OCTG) and line pipe for oil and gas production and transportation, key materials for electricity generation and transmission or critical components for wind and solar energy, steel makes all forms of energy possible.

• Steel’s broad range of applications—including renewable energy infrastructure, machinery and equipment, defense, transportation and infrastructure—makes the industry vital to America’s economic and national security.

• Labor productivity has seen a fivefold increase since the early 1980s, going from an average of 10.1 man-hours per ?nished ton to an average of 1.9 man-hours per ?nished ton of steel in 2013. Many North American plants are producing a ton of ?nished steel in less than one man-hour, and productivity of U.S. steel producers has improved 5.7 percent per year on average (exceeding, the 3.9-percent growth in U.S. manufacturing labor productivity over the same period).



 

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