Dan DiMicco’s Nucor Has Killed Off More Of The American Steel Industry Than China Ever Has
I’ve been guilty of more than my fair share of brazen chutzpah over the years but this sally into the form from Dan DiMicco still has the ability to take even my breath away. For DiMicco was the CEO of Nucor and he’s calling for trade protection for the American steel industry. That American steel industry which has suffered so grievously from the competition from Nucor. That Nucor which Dan DiMicco used to be the CEO of. That American steel industry which has suffered more from the competition of Dan DiMicco’s Nucor than it has from anything the Chinese have done.
The background here is this from Kristopher Harrison:
Notwithstanding President Trump’s executive order aimed at weeding his administration of lobbyists, big steel has staked quite a claim to U.S. trade policy.
If personnel is policy, there is nothing subtle about the administration’s pro-steel bent. Dan DiMicco, the former CEO of Nucor Steel, served as Trump’s head trade adviser and transition head. In the administration are well-known big steel attorneys Robert Lighthizer, the newly minted U.S. Trade Representative (USTR), and Steve Vaughn USTR’s General Counsel. Rumored to be in the hopper are Jeff Garish for deputy USTR and Gil Kaplan for Under Secretary for International Trade at the Department of Commerce.
As I’ve said before the most worrying part about the Trump Administration is their hopeless misunderstanding of what trade policy should be. That roster there not being a great comfort to me either.
In the comments though DiMicco pops up:
Your commentary couldn’t be more misleading and dead wrong. Rather than the picture you paint, the Steel Industry is the “canary in the coal mine”. It is the case study for the Massive trade Mercantilism and cheating that China is perpetrating on the USA’s entire Manufacturing sector. Your propaganda doesn’t pass the smell test!
Don Boudreaux tackles that here:
What doesn’t pass the smell test are your apologies for trade restrictions.
Knowledgeable people are aware of the parade of excuses that you and other trade-restrictionists offer for why American consumers should allow Uncle Sam to force them to pay higher prices so that steel-industry operatives reap more revenues. None stand up to economic or ethical scrutiny.
And now that little extra piece of industry knowledge. There are, in effect, two basic steel making technologies. One is to take iron ore, coal and limestone and run it thought a blast furnace. This produces steel, no doubt about it. The other way is to take scrap iron and steel and run it through an arc furnace. This also produces steel, no doubt about that either. And what has been happening to the American steel industry this past half century is that the blast furnace method, the older one, has been in large part replaced by the newer one, the arc furnace one.
The arc furnace method requires less capital, fewer workers, the finished product is cheaper too, it uses less energy and…..well, it’s just better really. You can’t quite make every type of steel this way but those that you can has been an ever expanding list over the past 5 or 6 decades. So, the smaller, cheaper, more nimble, arc furnace minimills have been replacing the larger blast furnace ones. And that’s really the pencil sketch of what has been happening to the industry. Have a look at any particular steel mill you want to think about, one that has closed, gone bust, whatever, and you’ll almost always find that it was a blast furnace site.
That’s just what has been happening. Technological change, not trade change nor China. And here’s the kicker. Nucor isn’t the only minimill operator but it’s one of the largest in the world. And it pioneered both the basic idea and many of the refinements to the technology over these past decades. It’s a useful shorthand to say that, even if it’s not accurate it’s shorthand, Nucor killed off those blast furnace parts of the American steel industry. And now we’ve got the ex-CEO of Nucor arguing that the American steel industry needs trade protection?
That’s industrial grade brazen chutzpah right there. The people that cut a swathe through an American industry demand trade protection for that industry they cut a swathe through? Almost admirable in its effrontery really.