Trade Policies Destroyed Steel Industry

By John P Barclay JR. | St. Joseph News-Press, September 22, 2012 | Go to article overview

Trade Policies Destroyed Steel Industry


John P Barclay JR., St. Joseph News-Press


Here is a different perspective on GST Steel, the closure of the Kansas City plant and Bain Capital. First, I'll share a brief history and the sequence of events that led to the closure of the Kansas City steel mill.

What was once a blacksmith shop in the pioneer years of Kansas City grew to become Kansas City Bolt and Nut Co. in 1888 and later Sheffield Steel Corp. in 1925. The company was billed as "the Department Store of the Steel Industry with a more diversified line of products than any mill in the country.'

The Sheffield complex was located near the confluence of the Missouri River and the Blue River in the Northeast Industrial District of Kansas City. During this same period, about 1918, Black Steel and Wire Co. was reorganized as Union Wire Rope Corp. and located on Manchester Road bordering the Blue River close to the Sheffield rod mill. Their close business relationship was further enhanced when Armco Steel purchased Sheffield Steel in 1930 at the beginning of the Great Depression.

Both Armco and Union Wire Rope survived the depression, expanding and growing during World War II and prospering during the early post-war years. Union purchased its rod requirements from Armco and produced wire and wire rope. It sold rope wire to Wire Rope Corp. in St. Joseph (since, in 1950, Wire Rope had moved to St. Joseph from New Haven, Conn., in order to be close to its primary wire supplier).

The steel industry emerged from World War II with overcapacity and with outdated and exhausted equipment in need of replacement and modernization. All the mills were scrambling for tonnage volume to survive. The post-war, pent-up demand carried most industries, including steel, well into the late 1960s and early 1970s. There were numerous mergers, acquisitions and consolidations " a general rationalization of the domestic steel industry.

In this highly competitive domestic manufacturing environment, the United States government entered into several significant general agreements on tariffs and trade, or GATT Agreements, with our so-called "trading partners.' In the subsequent years a domino effect took place in the steel industry.

The first to fall to imports were the West Coast manufacturers. Then low-carbon products like barbed wire, fencing and rebar. The new rebuilt, technically advanced mills in Europe and Japan came on line with the complete package of steel products. The Marshall Plan for recovery abroad after WWII was a brilliant political and economic success financed with our money. The enforcement of fair trade laws was a complete failure and a cruel joke for manufacturers.

Steel products were "dumped' in the U.S. market, sold below the price they would be sold in their home market, in order to get these products established in the U.S. market. Often foreign governments either directly or indirectly subsidized their steel manufacturers. Once established in the U.S. market, the volume of imports grew, enabling the maintenance of a ruinous competitive price advantage over American producers. The price levels often were at or below U.S. manufacturing cost. This unfair competition forced the further realignment of the U.S. domestic steel industry.

Over two decades the Armco Sheffield plant became a ghost of its former self. …

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