How The U.S. Steel Industry Is Reacting To Trump's Aspiration For A Steel Border Wall

Jan 8, 2019
Originally published on January 8, 2019 7:21 pm
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AUDIE CORNISH, HOST:

The U.S. steel industry was already enjoying a boost in profits after the Trump administration slapped a 25 percent tariff on their foreign competitors. Now the steel industry is back in the spotlight. The president says he'd like an artistically designed steel slat barrier rather than a concrete border wall between the U.S. and Mexico.

With negotiations over the wall at a stalemate, it's not clear whether it will come to fruition. But if it did, it would require an enormous amount of steel. For some reaction to this, we turn to Tom Gibson. He's president and CEO of the American Iron and Steel Institute, represents the steel industry. Welcome to the program.

TOM GIBSON: Good afternoon, Audie.

CORNISH: So first, were you actually surprised by the president's suggestion that he wanted this American-made steel barrier rather than concrete?

GIBSON: No, we were not surprised. The topic of a barrier has been under discussion since the early days of the administration. Prototypes have been constructed, and there are versions of this that were made out of steel. So we fully expected steel to be in the discussion as a solution for a barrier.

CORNISH: Given what you know about the idea of this project, how much steel would be required? Would the industry be able to meet that demand?

GIBSON: The industry's ready to meet that demand. We estimate a barrier of about a thousand miles would require about 3 million tons of steel. And the industry is ready to meet that demand, to produce the steel that's required for the project.

CORNISH: In layman's terms, is that a drop in the bucket, or is that something that could have substantial impact on the steel market and prices?

GIBSON: I'm going to refrain from talking about prices, but let's talk about steel production. Last year, in the United States, we produced about 90 million tons of steel. We're talking about 3 million tons here. We are operating at 81 percent capacity utilization. But that means we still have a lot of unused capacity that can be dedicated to this and other projects.

CORNISH: The border wall is an extremely controversial political issue at this point. How would that affect the thinking of steel companies about whether or not to get involved with a project like this?

GIBSON: Well, I think steel companies will be ready to respond to a project like this if the government puts it out for bid. Obviously, there's a political discussion going on right now between the Congress and the president. But if a barrier is built, it should be built out of steel. And the industry's ready to respond with the steel that's needed.

CORNISH: The Trump administration has very much been supportive of this of the steel industry, right? This is why you see a tariff as high as 25 percent on foreign competitors. And he has very much touted the state of the industry at this point. Are the president's claims about how the industry is doing overblown?

GIBSON: I think that there is definitely momentum in the industry. We're seeing announcements on new investment in the industry. Just yesterday, Nucor announced a $1.35 billion expected investment in the Midwest. We've seen restarts at U.S. Steel, at idled facilities.

But we still have not reached levels of production, levels of capacity utilization that we saw as recently as just prior to the Great Recession. This industry has never fully recovered from the Great Recession. We're now at 81 percent capacity utilization, but it's not where we were before the Great Recession. It's not at typical levels we see when we have an economy that's healthy.

CORNISH: Tom Gibson is president and CEO of the American Iron and Steel Institute, represents the steel industry. Thank you for speaking with us.

GIBSON: Thank you. Transcript provided by NPR, Copyright NPR.