October 28, 2005    Volume 12, No. 19

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Nucor Deploys Grass-Roots Approach To Changing Washington Trade Policies; Company Is Fed Up With Feds

BY RICHARD McCORMACK richard@manufacturingnews.com

Nucor Corp. the largest steel producer in the United States and perhaps the most respected (and efficient) steel company in the world, has found that the federal government has no interest in preserving the U.S. industrial base. The company says essential changes in trade and economic policies are not forthcoming from the Bush administration or Congress.

As a result, Nucor has initiated a series of town hall meetings throughout the country to educate voters on the need to elect a new breed of politician who has the best interest of the country at stake. "Manufacturing is pissed off and we're starting to do something about it," says Bob Johns, Nucor's director of marketing.

"We were beating our head against the wall" trying to get the Bush administration and Congress to address unfair trade issues with China, says Johns. "It wasn't working, so we had to get the message up from the grass roots through the states so that our federal legislators know that we understand that we mean it and we mean it with votes. The only way we're going to get a change in public policy is if the voters speak."

Nucor held a town-hall meeting recently at its steel plant in Nebraska that attracted 3,500 people. Nucor was expecting less than half that number. It has a similar meeting planned for November 1 at the Darlington Speedway in South Carolina, a venue that can hold considerably more people. It will be the last town hall type meeting until next year, when Nucor will start them again in preparation for the congressional mid-term elections.

"We have got to elevate these issues to legislators so they understand what is at stake," Johns told Manufacturing & Technology News. "Free trade as it is done around the globe today is science fiction because in our industry you have government involvement to the point that it is absurd and it is creeping down into every form of manufacturing to where you end up with China's mercantile approach to trade this is killing business in the United States. The only testimony to the current trade policy is the size of the deficit. When that is north of 5 percent of your GDP, you are in deep caca."

Legislators have been bought off by big multinationals that like the status quo of the U.S. government acquiescing to China, due to the investments they have made there. "If China was brought to task for manipulating its currency, how smart was their [the multinationals'] investment in China if China had to play by the rules?" Johns asks rhetorically. "Multinationals can give a lot of money to political parties but they don't vote. Voters put people in office and...an educated electorate is a politician's worst nightmare."

Nucor is committed to changing the dynamics of policymaking in Washington. "If you are familiar with Nucor, you know that we are a no-nonsense group and we stay focused. When we get on an issue, we get on it."

The company has a big stake in advocating policies to reverse the decline of U.S. manufacturing. Its customers are leaving. "We're doing this for a very selfish reason," says Johns. "We are a large company. We're well heeled. We can migrate offshore with everyone else, but we don't think that's a good answer for the United States."

Indirect steel imports into the United States are surging, as steel-consuming industries like metal benders and appliance makers leave. The metalworking component of the trade deficit was $175 billion last year, says Johns. The steel content of finished goods imported into the country reached 18 million tons.

There has been growth in the economy and in the U.S. population (to the tune of 3 million new residents per year). Per capita consumption of steel has held steady. Yet there has been no growth in the U.S. steel industry. "What is wrong with this picture?" Johns asks. "You find it is coming into the country in finished goods about as fast or faster than companies are moving out of the country."

Johns says it is unbelievable that the U.S. government has not stood up to the Chinese. On currency manipulation the Bush administration is addressing China "in precisely the wrong way," Johns argues. Congress is also punting on the issue, refusing to take up the Ryan/Hunter bill (HR-1498) that would make currency manipulation a form of trade subsidy that could be ruled illegal by the World Trade Organization. That bill has more than 150 co-sponsors, including more Republicans than Democrats and addresses an issue that is causing direct harm to U.S. industry and workers.

Yet congressional inaction "is absolutely absurd when you look at some of the bills and resolutions that hit the floor with 10 cosponsors," says Johns. House leaders blocking its consideration, particularly Rep. Bill Thomas (R-Calif.), chairman of the House Ways and Means Committee, are going to face the wrath of voters next year, Johns predicts. Thomas "is going to have problems in his own district," he says, due to agricultural interests that "are getting their ox gored by trade agreements."

Nucor also wants energy policies to change so that electric utilities are not encouraged to burn natural gas, thereby reducing supply and increasing its cost to the industrial community. A decatherm of gas in the U.S. costs between $14 and $15; in Trinidad, where Nucor runs a mill, the price is $1.50. Utilities should be encouraged to build clean-coal fired power plants and nuclear reactors.

It wants the Commerce Department to change its rules that exempt non-market economies like China from countervailing duties. "If a U.S. business guy wants to keep his family fortune, this Commerce Department decision made years ago means that he rents a plant in China," says Johns. "These convoluted policies are killing industry in this country."

Nucor's grass-roots meetings are also aimed at educating state legislators and officials about how broken federal policies are adversely impacting local communities. The meetings are even spurring a debate about the efficacy of the 17th Amendment, which was adopted in 1913 and is viewed as having removed the ability of the states to influence the federal legislative process.

"It basically took any input on trade policy out of the hands of states," Johns says. "So now a number of states are talking about whether the 17th Amendment is appropriate today or whether it simply serves special interest groups. It gets that deep. The deeper you get into this thing, the more you find broken."

All of these issues and more are being discussed at the Nucor town meetings. "We're connecting the dots in our town hall for our employees, the communities that our plants are in in 16 states and the state legislators," he concludes. "We say we have some things that are broken in DC and we need to send people there who get it and will do something about it. Activism is going on and people aren't happy."

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