Something's rotten in Farrell

I wrote a few weeks ago about the struggle a steel mill in my county is going through due to the AFL-CIO and its role in supporting the Buy American provision of the latest stimulus legislation. One of the AFL-CIO's member unions, the United Steelworkers Union (USW), has joined the battle against the mill and its 600 USW employees. I'll tell you the story, but I think it will be helpful to keep a few questions in mind as you read:

Duferco Farrell, located in little Farrell, Pa., is part of an international steel producing conglomerate that buys its raw material---steel slab---from one of its affiliates in Russia and from other global suppliers and then rolls it into steel sheet coils. Duferco sells the coils to other companies that fabricate the steel into things like pipe and tube, automobile bumpers, and washing machines. Its biggest customer, Wheatland Tube, owned by a private global investment firm, is located a short distance down the street. Due largely to the AFL-CIO's influence, Wheatland Tube cannot buy steel coil from its neighbors at Duferco for projects funded by stimulus monies because Duferco does not melt the steel slab they use---they buy it from foreign sources. The result is that the health of Duferco, already struggling due to the ailing economy, is further jeopardized, leading to the laying off of workers. In other words, the Buy American steel slab clause supported by the AFL-CIO and the USW is hurting American union workers represented by USW Local 1016.

Duferco Farrell is seeking an exemption to the clause and, incredibly, the USW is now fighting the exemption that would keep their brethren working in Farrell. Last week, USW International Vice President Tom Conway wrote a letter (subscription required) to the trade publication American Metal Market complaining about Duferco Farrell.

Why? The USW doesn't like that Duferco is telling the federal government that the Buy American provision is cause for additional layoffs.

But that's the truth.

"This unnecessary and unwarranted threat [of layoffs] is despicable," Conway wrote. He then told the Farrell-area newspaper The Herald, "I really think this is a form of blackmail." He may think Duferco's concern about layoffs is unnecessary and unwarranted because, as he told The Herald, he's identified "American steelmakers willing to sell them [Duferco] steel at market prices" that are "probably below the cost of production because people just want to generate volume right now. . . . But that doesn't fit their model of rolling, which is based on cheap Russian slabs."

Do you think it's possible that Duferco will lose money if they buy and roll cheap American slabs rather than buying and rolling cheap Russian slabs? Keep in mind that Duferco has to transport the Russian slabs from halfway across the globe.

Conway contends that this strategy "doesn't pass the smell test." I've seen the numbers from a source at Duferco. The company will lose money rolling American slabs, which have been offered to Duferco at prices higher than the global market for steel slabs. One of the companies that Conway suggested as a reliable slab supplier offered slab to Duferco at a price higher than their finished coils could be sold at. Translation: Duferco loses money rolling American slabs even if they're sold to the company below market prices. Today's most efficient steel making operations happen to reside outside of the United States, so buying Russian slab at world market prices would allow Duferco to earn a profit . . . and keep USW union employees working.

Duferco's concerns do pass the smell test. The AFL-CIO and USW are the source of this odor. Due to their efforts and congressional complicity, Duferco's freedom to make a profit and keep its USW employees in the factory is rotting.

Remember those questions I asked earlier? Is freedom a good thing? Are freedom and Buy American legislation compatible? Is Buy American un-American?

Americans hold a few truths to be self-evident, including that our Creator endowed us with the unalienable rights of life, liberty, and the pursuit of happiness. I think you know the answers to the questions.