EDITORIAL

The iron and steel industry in this country is on the verge of extinction. What would this mean ??? We would have to purchase all the steel used in the production of cars, refrigerators, ranges, ships, pots and pans, knives and forks and the castings used in automobiles, wind generators, machining lathes and countless other applications, from overseas suppliers. This would of course result in the loss of thousands of jobs and make us dependent upon foreign countries for all basic metallic products - even bombs and shells for the military.

Why is this happening? There seems to be two major factors. The price of electricity has increased dramatically which is blamed on higher natural gas prices. Not sure why the natural gas prices have increased ??? Electricity is used to melt scrap iron and steel for the production of new ingots of steel or iron castings.

What else is causing the problem? Raw materials have tripled in cost between 2001 and 2004. WHY, because CHINA is buying as much as it can find. What raw materials are we talking about ??? SCRAP for one, scrap iron and steel. Iron and steel scrap is used by both iron foundries and steel mills to produce iron and steel for new products. Scrap dealers all over the United States are shipping scrap to China. COKE is another. Coke is made from coal and is used as fuel in blast furnaces to melt iron ore and produce pig iron. Pig iron is then used in steel mills for the production of steel and in iron foundries for the production of iron castings. Coke is also used as fuel in furnaces called Cupolas to melt scrap iron and steel in the production of gray, ductile and malleable iron castings. We, the United States, have a good supply of coal in West Virginia and Pennsylvania which is used in the production of coke. Apparently, China does not have coal available for this purpose. Coke that is available in this country now is very high in cost and very low in quality.

The two primary sources of energy to melt iron ore or scrap iron and steel, electricity and coke, are both very expensive compared to 3 or 4 years ago.

Pig iron has tripled in cost also. Much pig iron used in this country is purchased from Brazil and other countries. China is buying all of this it can also. A steel mill in South America recently built a blast furnace to supply their pig iron and China has purchased an interest in this so it can get half of the production.

You might say that if scrap iron and steel are in short supply, why not use iron ore like the Taconite in the Great Lakes region. In the past it wasn't economical but now with scrap iron and steel costing three times as much it should be a good way to go. Not so, the Chinese have purchased some of the plants producing Taconite Iron Ore so it too is in short supply.

All of these things have also resulted in higher prices for the alloys used in the production of iron and steel such as ferrosilicon, ferromanganese, ferrochromium and others.

What can be done to help the situation? Higher tariffs on exports of coke, iron and steel scrap etc. would help. There isn't much that can be done to improve the pig iron situation since producers of pig iron in this country are almost non existent and we can't control what China buys from other countries. The same is true of ferroalloys, most of the domestic producers of ferroalloys have already disappeared. Also, not sure what the answer to the high cost of electricity is .... this in itself has already put a number of heavy manufacturing plants out of business.

I am not blaming this situation on the past or present administration. Heavy manufacturing, steel mills, foundries, ferroalloy producers have been going out of business at an increasing rate for the last 30 years or more, through many administrations. I think everyone needs to be aware and perhaps the government can do something. I'm not suggesting that the government subsidize these industries, as is the case in China. Nor should we eliminate our pollution controls which increase the cost of production to compete with China who isn't overly concerned with smoke.

What will be the long term result of this situation? We have already lost almost all of the pig iron production in this country, as well as ferroalloys - companies such as Ohio Ferroalloy, Foote Mineral, Union Carbide, Pickand Mather and others used to produce ferroalloys, now some of them import alloys from other countries and sell them here. Almost all of the pig iron used in this country is imported. More and more steel mills and foundries are closing. When we have to buy all of our steel sheet and strip, rods and bars, etc. from China or some other country don't expect the price to be cheap. Cars, appliances and everything else made of iron or steel will be more expensive and harder to get.

Also, can't you just see our government ordering thousands of bomb and shell casings from Russia or China. Say China attacks Taiwan and we want to help Taiwan, do you think China would supply our military ????

One more thought, heavy industry such as steel mills and foundries use very large quantities of electricity. When they are gone who is going to pay for the production of electricity?

As mentioned earlier, all of this will result in the loss of thousands of jobs as well. What is the answer ?? Maybe if some of our senators and congressman become aware, someone will come up with a solution.

Couple of comments about me. I worked in a steel mill in PA and NY for 12 years, a foundry in Michigan for 16 years and a foundry in Texas for 17 years, now retired. The steel mill cut back because of competition from Japan, I believe it is still in production. When I started working in St. Joseph/Benton Harbor Michigan there were several foundries in production, Auto Specialties, Benton Harbor Malleable, Superior Steel Castings and Bendix Lake Shore. The only one remaining is Bendix Lake Shore but under a different name. In Lufkin Texas there are two foundries, Lufkin Industries and Texas Foundries. Texas Foundries is part of Citation Corporation which just in the past week has announced going into bankruptcy.

It might be said that we are at war with China, they are winning without firing a shot. When I was a kid when we thought of China, it was in relation to the Japanese over running their country or later it was very cheap toys. Now they are going to deal a devastating blow to this country and most people won't even know why the price of everything has gone up and will blame whoever is in power for the loss of jobs. This situation has been getting worse for the last 40 or more years!

UPDATE: Things are getting worse rapidly. The cost of scrap, pig iron and coke among others are sky rocketing. Pig iron has increased in price by $400-$500 in the last two months to about $900 a ton in May 2008. Coke has increased because the Japanese have bought some coal mines in West Virginia for their own use. The Chinese bought a Taconite mine in Minnesota and are shipping the Taconite to China. China also bought a large fabrication plant in the Carolinas. They found out they could ship trailer vans into this country and call them container boxes and save a lot of money. This put Lufkin Trailers out of business. Where will it all stop --- when China has BOUGHT the United States! Not funny.