Steel Mills

US Steel Mario Longhi Talks Industry and Trade
Written by Sandy Williams
February 2, 2017
US Steel CEO Mario Longhi has been in the limelight recently due to his meeting with President Donald Trump at the White House. During US Steel’s earnings call, he was asked to shed light on some of the trade and manufacturing issues that were discussed.
Longhi was asked what kind of insight the President is looking for from the steel industry and manufacturing.
Replied Longhi, “Well from what we have seen the President is remaining true to his promises during the campaign and one of them is buy America and hire America.”
Longhi noted the President is curious and open to recommendations. “I think he is paying attention to the different nuances that exists between different business segments. “
“The potential for good quality jobs to be created and maintained is truly real when it comes to manufacturing,” said Longhi. “Probably for every job that we can create inside of our industry seven more quality jobs will be created as a consequence of that. And I think if you add on top of that the dimension of security that is required economic security is a fundamental one. So if we can make this country grow at least 3.5% per year you can see all the good that will come out of it.”
He added, “I imagine that when the full cabinet is in place, the conversations will continue and my expectations is it will all lead to action that can be very positive for manufacturing and, certainly, for the steel industry.”
Longhi was complimentary toward U.S. Trade Representative Robert Lighthizer. “I think you can qualify Bob as one of the top specialist on that object matter. He has been at it for a long time. He has seen so many different cycles, so many different ways in which trade has been impacted. I think he would be an incredible contributor to establishing the rule of law and make all trade a balance effort for this economy.”
A question was asked about whether a border tax would apply to steel slabs. It was too early to speculate, said Longhi. “The essential thing is free and fair trade should be balanced for everybody, that is the core.”
CAFE standards were another topic that came up at the White House meeting in a discussion about regulations.
“If you look at all of the players in that environment, everybody has regularly been doing pretty good work when it comes to making, for example, cars, more efficient,” said Longhi. “What is important is that, every new piece of improvement in legislation gets properly assessed against the economic impact and the overall impact into the environment in the world.”
“It’s proven that, we can pretty much stop consuming carbon in this country here, if some other countries don’t follow suit, the environment will not change.” One of the items brought up was that improvements in the U.S. have been negatively offset by activity that has taken place in other countries.
“As a matter of fact, when it comes to steel in particular, every pound of steel that’s not made here, that is made in some of the more natural places out there, especially where overcapacity exists, is most likely being generating – is generating significantly worse conditions from an emission standpoint.”
A topic that has received a lot of attention by the industry lately is a proposed infrastructure bill.
The steel market is going to improve, said Longhi. “We look forward to a better environment where there is going to be more activity, infrastructure will go one way or another. It’s a common theme that everybody understands that it’s more than just roads and bridges, it’s airports, it’s water treatment stations, it’s all of the infrastructure related to energy in general.
“So, everybody understands the importance of that. And that is why, for example, if you can figure out a way in which the conditions for the economy to grow at a higher rate are put in place, all of these projects and infrastructure are going to drive significant improvement to all the manufacturing companies. The other thing that this will do, I think, it will improve labor, it will improve salaries, it will improve the confidence of consumers which all bode well for the economy as a whole.
Trade law enforcement continues to be a concern and the Trump administration appears in favor of strong trade remedies.
“I think it’s one of the areas where the opportunity still remains real,” said Longhi. “Because many of the elements we were able to improve in the trade laws require that enforcement is performed at a higher level. That’s some area where we continue to remain engaged or is good work that is being done both from an amount of the folks that keep checking everything. The utilization and better artificial intelligence analytics. The commerce department is now issuing more regularly information on what materials supposed to become imported from where.
“So, the ability to do better analytics will help with all of the enforcement that we’re seeing. So, I mean, would the current administration has very openly declared that they’re going to do everything they can to make these rules to be properly enforced. One of the areas that still remains a concern is about circumvention. That’s still delicate area that requires a lot more work to be done. But I feel optimistic that this administration they’re saying all the right things and they are asking for how can they better prepare themselves to make sure that our laws are respected.
When asked if the current protectionism environment is having a positive impact on the industry, Longhi commented:
“Absolutely. I don’t like to use the word, protectionism, because you know that some people interpret it as if we’re asking a favor of somebody, which is the opposite. All that we want is that the rule of law prevails, so that we can really go and compete in the way that world market should compete, where market forces play the role, not subsidies and all types of – that is protectionism.
“So the reductions that you’ve seen are a direct consequence of all the hard work that we’ve been putting in that arena, and we’re not done and we’ll never let up, it’s something that is important, it’s something if the globalized environment is to really provide betterment for a society, the rule of law has to prevail everywhere. And it’s proven that if we don’t remain vigilant, these things can deteriorate pretty quickly. So we will always be watching out of it over this.
“And when it comes to China, you see that we do have a 337 case against them. It’s in process and the dimensions of aggression to our markets are so abnormal that they are beyond just dumping. You have all the circumvention and transshipments, and you have the hacking of intellectual property incorporated into the level of aggressiveness that takes place. So we will remain vigilant in this regard.”

Sandy Williams
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