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‘You want us to buy American, then sell American’

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For a concept whose roots date back to the early 1930s and the last time this country found itself in as deep an economic funk as it is today, the "Buy America" provision in President Obama's stimulus package has roared back onto the American industrial/manufacturing scene with lightning-rod quickness and controversy

Red, white and blue through-and-through, the provision has stirred a hornet's nest of high emotion, self-righteous rhetoric (both pro and con), a Congressional Steel Caucus hearing and electronic mailboxes full of letters to the editors of publications across this country and the world. "Buy America" has pitted industry analysts against academics and international trade association heads and labor union leaders against some of their peers.

More disturbing and down-to-earth than the legal/philosophical arguments over free trade vs. protectionism, the provision has put American steel mills at odds with some consumers, who have expressed concerns that the stipulation could actually cost fabricators jobs by forcing the purchase of more-expensive, home-grown steel.

The phenomena is not a new one. The fact is, with or without the latest reprisal of "Buy America," there is not a lot of love among steel distribution and consumer circles these days for the mills they source steel from. Many are still smarting—and struggling, or worse—from the steep run-up in steel prices that saw hot-rolled sheet tags in the U.S. jump from about $560 per ton at the end of 2007 to around $1,100 per ton by last August, when the bottom began to fall out. Of course, there are ample explanations (other than the profit motive and raw opportunism) for last year's breathtaking escalation in steel prices—the emergence of China and the closely linked commodities boom, to name two.

Then there was another breed of unofficial, ad hoc "Buy America" that the world's scrap consumers took to heart and, in the process, sent U.S. ferrous scrap prices through the roof. It didn't take long for those increases to translate into surcharges, which were handily passed along to steel consumers.

"Who was thinking about American jobs then?" asks one veteran purchasing manager for a large manufacturer of material handling products, who also sees a direct connection between escalating steel prices at home and the decision by many top-tier U.S. mills at the time to push deeper into the export market. "Their choice to export product at a much higher selling price forced American manufacturers to purchase at that elevated price or close their doors," the procurement professional said. "It was done so fast that many very good companies did not have the reserves or credit lines to keep up."

"My message to the U.S. mills is simple," she said. "You want us to buy American, then sell American."

Strong words, and not without merit. It's tough to argue against the essential logic and rightness of using American taxpayers' money to create American jobs. It's almost as tough to justify waving the American flag only when profits are at stake.

JO ISENBERG-O'LOUGHLIN

Editor


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