EVRAZ North America Verbal Testimony Conrad Winkler President & CEO April

Transcription

1 EVRAZ North America Verbal Testimony Conrad Winkler President & CEO April Distinguished panel members Thank you for inviting me to testify today. My name is Conrad Winkler. I am the President and CEO of EVRAZ North America. We produce steel critical to our nation s infrastructure: we are the largest producer of Rail Steel and Large Diameter line pipe in North America. We make steel plate for our United States Military, for construction, for barges, for railcars, for wind towers, and for many other uses across the United States. EVRAZ currently employs about 15 hundred people at our production facilities in Pueblo, Colorado, Portland, Oregon, and our Chicago Headquarters. I am here today to share the dire situation of today s steel market. I believe that the U.S. steel industry can compete with any in the world on a level playing field. But today, the outlook is bleak for the U.S. industry because of unfairly traded products subsidized by governments that are being dumped into our market. Difficult conditions are best illustrated through job losses, which heavily impact our communities. I have 4 specific examples from our 2 U.S. mills that have greatly affected our employees and their families. In each case, Import penetration has been swift, severe, and with dire consequences. Finished product imports into the United States were at record 29 percent penetration in the fourth quarter of 2015, versus 22% from 2010 to If the economics of our industry do not improve, our job EVRAZ North America 200 East Randolph Drive Suite 7800 Chicago, IL

2 losses will only increase. Here is how those imports have impacted our communities: In Portland, Oregon, two job reductions have led to a 53 percent reduction in employment from the start of 2013 to March In February we made the difficult decision to idle our Large Diameter pipe mill, costing 230 jobs. Why did that happen? A major reason is that Large Diameter pipe imports into the U.S. and Canada have increased by 94% from 2013 to 2015, and import values have fallen by 17 percent, or $204 per ton. These import values are often below our production costs, and certainly below the importers costs in our opinion. We simply cannot compete with products heavily subsidized by foreign governments. Also at our Portland mill due to increased imports of Flat products from Korea, Turkey, and several other countries, we have reduced crewing levels, costing another 100 jobs. Cut-to-Length Plate imports into the U.S. have increased 65 percent from 2013 to 2015, and import values have fallen by 15 percent, or $135 per ton. In Pueblo, reductions in our seamless pipe mill, steelmaking, and rail mills have led to a 30% decline in employment from the start of 2013 to March A deluge of unfairly trade Oil Country Tubular Goods imports have necessitated 200 layoffs. Even with duties of up to 15 percent, Korean imports are still creating massive inventory stockpiles, grinding U.S. production to a halt. Turkish OCTG subsidy rates were recently reduced from 16% to 2% upon appeal, and Korean appeals to

3 lower their rates are underway. Imports have a 66 percent market share in 2015, compared to 53 percent in Our Pueblo Rail mill and its steelmaking have also been impacted. Our rail is vital to commerce in the west and transportation across the country. Import volumes and pricing of rail continue to be a major problem. From 2013 to 2015, imports of rail into North America have increased 26 percent, while import values have declined 18 percent, (or $175 per ton). We ve recently idled our mill for several weeks, temporarily impacting approximately 400 jobs. We have brought some of those workers back, and we hope to bring back more. These jobs are well-paid, highly-skilled Steelworker jobs. Imports have been the most significant contributor in both states. Combined with recent salaried employee reductions, our U.S. employment is down 45%, or over 1,100 people, in from 2013 to March It is vital that the Administration hear our concerns, and build the conditions that allow for success. Investment and technology are the lifeblood of our industry. Steel is capital-intensive and requires significant investments in equipment and technologies that take years to pay back. The four products I mentioned earlier where we have lost sales and jobs due to imports are engineered products that require significant research and development. We see foreign government loans that lower the cost of capital

4 and eliminate market risk for their steelmakers: the only real requirement appears to be that jobs are maintained, and it is at our expense. My company has a considerable number of high-value investments that we would love to execute. These are not necessarily capacity-expansions, but technological innovations and product quality enhancements to put as at the cutting edge of the industry over the next 5 years. Today, as a market-based company, we cannot make sufficient returns within a reasonable timeframe. Unfortunately, producers in countries with loan protections, guarantees and other government subsidies are afforded this luxury. We need the Administration to seek commitments by other steelmaking countries to stop illegal subsidies and other distorting trade practices. Regarding global competitors, the problem is not just China. China is flooding the world and U.S. markets with its excess steel at below-market prices. In turn, Exports from Japan, Turkey, and Korea have also entered the U.S. market aggressively. From 2013 to 2015 exports to the United States from Turkey have grown 135 percent, from Korea 27 percent, from India 18 percent, and from Japan 6 percent. Specifically for India and Turkey, we have seen export growth fueled by low-interest loans, loan guarantees, tax breaks, and several other government interventions. We are facing more threats than ever before.

5 Other countries have taken strong measures amidst the threats to their domestic industry. India has implemented safeguards of up to 20% on steel products to deter undercutting from China and other countries. And last week Mexico renewed for six more months their 15% duties on several steel products from non-free Trade Agreement countries. And Mexico has hit U.S. large diameter pipe producers like EVRAZ with duties of over 50%, even when we have not had a single U.S.-made pipe sale to Mexico in many years! The more actions other countries take to level the playing field for their domestic industry, the larger the target the United States becomes for dumping. In conclusion, we ask two things of you today: First, vigorous utilization and enforcement of U.S. trade laws to ensure the right resources are in place and decisions are made to protect our industry from unfairly traded products. Second, strong commitments by the Administration to force commitments from China, Korea, Turkey and Japan to reduce their significant overcapacity. We need binding commitments. At EVRAZ, we are passionate about job creation. We are playing to win. However, we need a supportive, strong Administration to act now to allow the industry to cultivate the recipe for success. Thank you very much.