As we move into 2009 with a new administration and a new Congress, the steel industry will be aggressive in its efforts to advance a pro-manufacturing agenda. The domestic steel industry looks forward to working with Barack Obama's administration and members of the 111th Congress in order to advance this agenda, which we believe will strengthen the economy and benefit all Americans.
The steel industry, a fundamental component of the U.S. manufacturing sector, generates 1.2 million jobs and contributes $350 billion a year to the economy. To keep this engine revved, however, the U.S. must support trade, climate, energy and transportation policies that bolster America's competitiveness in the global marketplace as well as policies which strengthen and secure America's infrastructure.
Trade remains an important legislative issue for the domestic steel industry. The U.S. manufacturing sector is still a vital national economic and strategic asset, and one that can thrive only if there is a level playing field that allows American companies the opportunity to compete in the global marketplace. Unfortunately, however, U.S. industry continues to bear the brunt of unfair trade practices that violate World Trade Organization (WTO) rules and U.S. trade laws.
A good example in the global arena is the Chinese government's subsidization of its domestic steel industry ($52 billion over the past 10 years), which has led to excess capacity, an artificial undervaluation of its currency and lax environmental standards, to point out just the top of the list of practices distorting the international steel market. More manufacturing jobs, specifically steel jobs, are going to be shipped overseas unless the new administration takes a strong stand in favor of enforcing current trade laws.
The American Iron and Steel Institute (AISI) and the domestic steel industry urge the new administration and Congress to establish and enforce trade policies that will truly level the international playing field for all manufacturing. This includes a significant revaluation of China's currency and new tools to fight currency misalignment, implementing and enforcing stronger trade laws and fixing WTO tax and trade inequities.
The United States and other countries committed to the operation of free markets in international trade must enforce the rules of trade—rules that some countries have agreed to but are ignoring.
The American steel industry has already made great strides in reducing its energy intensity. In fact, since 1975 the industry has collectively invested more than $60 billion in new technology to improve energy efficiency and since 1990 energy consumption per ton of steel shipped has dropped by 33 percent. We are doing our part to improve the industry's energy efficiency but we are an industry that needs sound energy legislation in order to stay competitive.
Like other significant energy-consuming industries, American steel's competitiveness is largely influenced by the cost of energy. If U.S. energy costs continue upwards unabated, it will increase the likelihood that foreign manufacturers with access to more-affordable energy will capture U.S. jobs and domestic market share.
In order to have a robust and competitive manufacturing base in the United States, it's key to have access to a reliable, affordable and abundant energy supply. The nation has suffered too long without a forward-looking energy policy. We must act expeditiously to promote development of U.S. energy resources to help secure future economic growth. Failure to do so puts our economy, manufacturing and steel industry at risk.
Climate change legislation
When it comes to climate change, the American steel industry is part of the solution in this discussion, not the problem.
The domestic steel industry is the most efficient in the world. In addition to energy-reduction initiatives, steel is in the forefront of recycling. In fact, steel is the most recycled material in the United States—more than all other materials combined. Using more scrap metal in the steelmaking process significantly reduces greenhouse gas emissions and we believe that the recycling issue must be part of any approach to the reduction of such emissions.
Even though we are a leader on the issue of climate change, we are not standing still. Since carbon is still necessary in the current steelmaking processes, we are working on aggressive research programs to develop the next generation of iron and steelmaking technologies that will drastically reduce or eliminate carbon dioxide emissions. In addition, we have, and are developing, new types of steel products that lead the way in reducing the greenhouse gas emissions footprint of our customers. For instance, high-strength steel allows automobiles to be designed with a much lower vehicle weight, thus requiring less fuel, all while maintaining vehicle safety.
We believe that any climate-change legislation must hold foreign manufacturers to comparable standards; if not, we can predict that U.S. manufacturing jobs will migrate to countries with lower environmental standards, thus actually increasing global greenhouse gas emissions. The carbon footprint of major foreign competitors selling in the U.S. market is substantially higher than that of the domestic industry as a whole.
We believe that any competitiveness provisions should apply simultaneously to domestic and foreign companies selling in the U.S. market and use the same baseline periods; they should not invite subsidies by foreign governments and should not enable the administration to waive the requirements for foreign manufacturers.
A globally competitive economy depends on an effective and efficient infrastructure. Last year, the American Society of Civil Engineers rated 15 categories of infrastructure as being in poor condition—indicating room for improvement, which will create significant demand for U.S. manufacturing and steel fabricated products. The passage of the Transportation Equity Act addressed a major portion of the infrastructure expansion and improvement in the United States and provided a high-profile opportunity for steel; however, that act needs to be renewed.
While some highway and transportation infrastructure issues are being addressed through current law, it is becoming apparent that a broader public policy approach needs to be considered to address long-term infrastructure requirements of the country. These go beyond highways and bridges to include water needs, power distribution, flood control, ports and navigation, as well as homeland security and defense (to name a few). The expansion of "Buy American" provisions to other federal programs should be considered as well as the enforcement of existing "Buy American" laws.
Now is the time for our country to re-invest in itself. The AISI will continue to call for a comprehensive, long-term approach to keeping America's infrastructure system safe, sturdy and reliable.
This is a critical time for our nation, especially with the current economic situation. The new administration and Congress have daunting challenges ahead of them, as do we in the manufacturing and steel sectors. It is our commitment to work tirelessly to keep U.S. manufacturing competitive and viable domestically and globally.
In order to do this, we need to work with the new administration and Congress on crafting legislation that will promote U.S. manufacturing and U.S. jobs. We need strong and enforceable trade laws, an approach to climate change that holds foreign manufacturers accountable, an energy policy that brings real energy security to our nation, and investments to strengthen and modernize America's infrastructure. It will be important for all of us in the manufacturing sector, whose health is vital to economic revival, to identify a broad and unifying agenda that we can work on and advance together.
THOMAS J. GIBSON