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
"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
"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.