Steel legacy in crisis

MYRNA BROWN, HOST: Today is Thursday, January 9th..

Thank you for turning to WORLD Radio to help start your day.

Good morning. I’m Myrna Brown.

MARY REICHARD, HOST: And I’m Mary Reichard.

Coming next on The World and Everything in It: A steel deal gone wrong.

The Biden administration recently blocked the sale of Pittsburgh-based U.S. Steel to Japanese-owned Nippon Steel. Economists and steelworkers are wondering what this will mean for the future of the industry.

BROWN: The “steel city” is losing its identity as its steel mills go out of business. But some steelworkers in Pittsburgh saw the Nippon Steel acquisition as a new hope.

WORLD’s Benjamin Eicher brings us that story:

SOUND: [Welding torch turning on]

KASUNICK: That’s not on enough. Turn that up.

BENJAMIN EICHER: Ken Kasunick has worked with machines since the 60s. He started with repairing equipment on the family farm. Then got into welding when he was 19.

KASUNICK: I have a degree in metallurgy and welding technology from Ohio State University, and I used to teach welding for almost 10 years. I was head of the welding department at Dean Institute of Technology in Pittsburgh.

Now, he owns Kasunick Manufacturing, a steel manufacturing plant in Pittsburgh.

KASUNICK: I started this business in 1972.

For years his company specialized in manufacturing steel equipment for the Heinz food company headquartered in Pittsburgh. And in its heyday the company employed more than 50 people. Today, it only employs 3, Kasunick, his son, and one other employee who’s still learning the tricks of the trade.

AMBI: Welding and talking about welding

Kasunick has seen, first hand, the ups and downs of Pittsburgh’s steel industry. He’s had to diversify his business. 30 years ago, he started working for the aviation industry.

KASUNICK: During the 90s, early 90s, I can tell you that the steel industry was starting to change…

So called “mini mills” sprung up around America and started producing more specialized steel products for less than the big mills were charging. And then on December 8th, 1993 …

BILL CLINTON: Thank you, thank you very much.

Bill Clinton signed the North American Free Trade Agreement or NAFTA with the intended goal of eliminating trade barriers between Canada and Latin America.

KASUNICK: NAFTA was probably one of the worst, and it, I still, to this day, still it's the worst trade deal that the United States ever entered into … we weren't competitive anymore in manufacturing anything. And it was a globalist deal where most of our manufacturing was slowly being outsourced globally.

Kasunick is not a globalist. He wants to protect American workers and the steel industry from what he calls unfair trade agreements like NAFTA.

KASUNICK: It was cheaper to buy foreign steel than it was to buy domestic steel. It kept the United, the steel manufacturers in the United States, from spending money improving their steel mills. They just couldn't afford it. That was really the downfall of American manufacturing…

Pittsburgh is known around the world as the “steel city” even their football team, the Steelers, get their name from steel production. But in the early 2000s the city started shutting their steel mills down. Mills like Homestead Steel:

KASUNICK: They shut that mill down. American Bridge, which was a big steel fabricator, they built bridges. They closed their factory down. The writing was on the wall.

The last few presidential administrations have enacted policies to protect American jobs like President Donald Trump’s 2018 tariffs on foreign steel. Less than a week ago, the Biden administration blocked a proposed deal: A 14 billion dollar deal between Pittsburgh-based U.S. Steel and Japanese steelmaker Nippon Steel.

Biden claimed that part of his reason for blocking the sale was that Nippon Steel posed a threat to U.S. national security and our domestic economy.

PACKARD: I'm rather dubious that any kind of Japanese investment in the United States poses any kind of national security risk…

Clark Packard is a research fellow at the Cato Institute. He focuses on U.S. international trade and investment policy–specifically in Asia.

PACKARD: This might be a different calculus if this were a Chinese based steel company that wanted to invest in the US. But that's not the case. Japan is clearly one of the U.S. strongest allies.

Much of Biden’s efforts to protect American steelmaking has been aimed at China. And legitimate national security concerns that justify Biden’s caution.

PACKARD: I come at this from a pretty pro-trade bent, international trade, pro-international investment. But I do think that there are very serious challenges posed by Chinese investment and Chinese trade worth addressing.

But there’s a major difference between American investment with Japan versus China. Packard warns against the effect this political meddling may have on future business deals.

PACKARD: It potentially chills foreign investment, particularly from Japan, right, like if Japanese investors are going to see how poorly they've been treated on this particular case, you know, they might not be willing to continue to invest. And to be clear, Japanese companies are the largest investors, foreign investors in the United States.

And Packard argues that not only is this not a security risk, it’s counterproductive to Biden’s other intended goal of being more competitive with China.

PACKARD: Something like 50-60 percent of all imports into the United States are actually intermediate inputs, like products that a company in the U.S. is gonna buy from abroad to make their products in U.S. more competitive. … And now by raising my costs of production costs, I’m not nearly as competitive to reach global markets.

The deal may still go through, as both steel companies filed lawsuits against the U.S. government. Steel manufacturer Kasunick shares Packard’s views.

KASUNICK: Probably not a bad deal, in my opinion. It's going to keep people working here in the Pittsburgh area, if you renovate the steel mill to the state of the art mill, whether most of the companies right now are huge international conglomerates, so it’s not like they’re domestic companies anyway …

Kasunick is still watching the downward trajectory of the American steel industry. He’s retired but has “unretired” three times to keep his business afloat. And to train his son, who’ll soon take over. Kasunick says it’s hard to find workers who can keep the fires going:

KASUNICK: I just, I can't find any welders. I can't find any machinists that know this type of business. We've been machine builders all our lives. Build machinery for people, and I'm not complaining. It's been very good to me, you know …

Reporting for WORLD, I’m Benjamin Eicher in Pittsburgh, Pennsylvania

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