Manufacturing Corporation Sales Down 3 of Last 4 Months
Steelmakers are suffering their worst downturn in at least 15 years, partly because oil producers have drastically cut drilling activity and so have less need for steel pipes. This week’s drop in oil prices below $40 a barrel could intensify the pain for steel manufacturers by delaying a rebound in energy investment, saysBarclays analyst Matthew Korn.
Yet the oil slump only partly explains the steel industry’s woes. Steel producers have been hit by a global nose-dive in commodity prices exacerbated by a massive glut of Chinese steel that the industry says is being illegally unloaded below cost around the world, including in the U.S.
Industry officials have asked the Commerce Department’s International Trade Administration to impose hefty tariffs on Chinese and other countries’ steel in the hope of avoiding a wave of bankruptcies and consolidation that would rival the sector’s punishing shake-up in the late 1990s and early 2000s.
“If we can’t stop this dumping into the country, that could be fatal for the industry,” U.S. Steel CEO Mario Longhi said in an interview. “The situation is now worse than what it was in the early 2000s.”
U.S. steel shipments were down about 11% through the first nine months of 2015 compared with the year-ago period, according to the American Iron and Steel Institute (AISI). The industry, which employs about 150,000, has announced 12,000 layoffs the past year, the group says. About 67% of plant capacity is being used, down from a historical average of 85%.
FLASHBACK November: Manufacturing Recession?
“Manufacturing is more than just putting parts together. It’s coming up with ideas, testing principles and perfecting the engineering, as well as final assembly.” – James Dyson
“The rumours of the demise of the U.S. manufacturing industry are greatly exaggerated.” – Elon Musk
“3D printing has digitized the entire manufacturing process.” – Peter Diamandis
“I, for one, struggle a little bit with a $250,000 education for a philosophy degree. They are a wonderful people, but we can’t employ philosophers in manufacturing in the United States. We need a one- or two-year technical add-on for a high school.” – Douglas R. Oberhelman
“I think a lot of people will be liberated from a lot of oppressive manufacturing jobs, or a lot of service jobs, because they’ll be done by computers. There’ll be the world’s best education available online and free.” – Tyler Cowen