March 20, 2001
Mr. Brad Botwin
Director, Strategic Analysis Division
Bureau of Export Administration
U.S. Department of Commerce
Washington, DC 20230
Dear Mr. Botwin:
We wish to submit the following in response to the request for public comments on Initiation of National Security Investigation
of Imports of Iron Ore and Semi-Finished Steel.
The Great Lakes Maritime Task Force (GLMTF) was founded in 1992 to promote domestic and international waterborne
commerce on the Great Lakes. As you can see by our letter, our coalition is a unique and broad blend of labor and
management that have united to achieve this common goal.
GLMTF can offer a unique perspective on the issue of imports of iron ore and semi-finished steel. That's because the
livelihood of our members drawn from U.S.-Flag vessel operators and shipboard unions depends on hauling iron ore to make
steel in the region's blast furnaces. Simultaneously, the livelihood of longshore unions and terminal operators in our coalition
depends on steel imports. GLMTF has never had a problem balancing these two needs, even thought they are potentially
conflicting. That's because we believe in free but fair trade.
The early and mid 1990s are a prefect example of domestic production and imports complementing each other. A booming
economy had America's steel mills and iron ore mines operating at essentially full capacity. As a result, the U.S.-Flag Great
Lakes fleet was similarly fully employed hauling taconite pellets (iron ore), fluxstone and coking coal to feed those voracious
blast furnaces.
Yet even when America's steel mills are being pushed to the limit, the country is not self-sufficient in this raw material. America
must import steel, especially those specialty steels for which demand doesn't justify domestic producers investing in facilities
with limited payback. Additionally, when American mills shut down for a furnace reline or other major maintenance project,
imported steel slabs actually keep American workers gainfully employed. That's the situation that existed in the early and mid
1990s, so the many steel cargos Great Lakes longshoremen unloaded were to the benefit of all.
Then came the Asian Flu and more economic problems in the former Soviet Union. These developments left overseas
steelmakers scrambling to fill the void when Asian steel consumption plummeted. Cash-strapped Russian steelmakers elected
to sell their product at any price. And what's the world's largest steel market? The United States. Steel Imports soared to a
new record level in 1998 - 42 million tons. Steel imports dipped only slightly in 1999 and 2000.
As a consequence of this unfair trade in steel, America's steel industry and those enterprises that serve it have been severely
weakened. Consider this:
· Some 16 American steel companies have filed for protection under the bankruptcy laws in the past three years. Just last
December, LTV Steel, the nation's third largest steelmaker, had to seek such protection.
· 15,000 steelworkers have lost their jobs and their pensions and health care benefits are threatened.
· 1,500 iron ore workers have been permanently let go; another 2,000 face lengthy lay-offs this summer.
· U.S.-Flag cargo movement on the Great Lakes has swiftly declined, from 122.7 million net tons in 1997, to 113.3 million net
tons in 2000.
· At least one large U.S.-Flag laker is not scheduled to sail in 2001 because of the continued dumping of foreign steel. A
number of other vessels will delay their sailing this spring.
The national security implications of this situation are ominous indeed. Without a healthy iron ore mining and steel industry, the
United States cannot build the tanks and warships it needs to defend its interest around the world. Without a healthy iron and
steel industry, the United States can't even provide its troops the munitions they need to defend themselves.
We trust you realize that iron ore is the primary ingredient in steel, so if America's steel mills are silent, then so too are our iron
ore mines in Minnesota and Michigan. However, the impacts go beyond that. The production of one ton of steel also requires
roughly ½ ton of fluxstone, much of which is mined in Michigan. Also needed is a quantity of metallurgical coal from the giant
Pittsburgh coal seam that lies beneath Pennsylvania, Ohio, West Virginia and eastern Kentucky. Tens of thousands of mining
jobs are depend on a healthy steel industry.
Steel and the raw materials that product it are lifeblood of U.S.-Flag shipping on the Great Lakes. Approximately 80 percent
of the cargos moving in U.S. bottoms are directly related to steel production. Shutter America's steel mills and the Lakes fleet
quickly dwindles to a few small hulls moving cement, salt, sand and various petroleum products. There are about 2,500
American mariners working on U.S.-Flag lakers. Most of them would find themselves "on the beach (sailors' way of saying
'unemployed')."
Iron ore and steel are the first direct tie-in to national defense; skilled merchant mariners are the second. When American
troops head overseas, 95 percent of their supplies must move in ships. The United States government maintains a fleet of
deep-sea cargo vessels for activation in times of crisis (the Ready Reserve Force fleet). These vessels are crewed with civilian
mariners. During the Persian Gulf War, a number of Great Lakes mariners sailed on RRF ships.
A strong America also needs a shipbuilding industry to build and maintain Navy and Coast Guard vessels. There are a number
of shipyards on the Great Lakes and their primary business is building, modernizing and maintaining the U.S.-Flag Great
Lakes fleet. These yards also craft auxiliary vessels for the Navy and Coast Guard, but with the Navy downsizing, they could
not survive on military orders.
Your investigation is also analyzing the impacts of semi-finished steel. As we stressed at the beginning of our letter, slabs
imported to supplement domestic product are beneficial to all. However, dumped slabs reduce demand for
domestically-mined raw materials and U.S.-Flag carriage on the Great Lakes.
In summation, the Great Lakes Maritime Task Force believes that unfair trade hurts America and when that trade is in
commodities as crucial as iron ore and steel, the nation's very security is put at risk. The government must recognize the vital
national defense role of domestic iron ore and steel production and protect those industries from unfair trade.
Sincerely,
Daniel L. Smith, President
George J. Ryan,1st Vice President
John D. Baker,2nd Vice President
James J. Driscoll,3rd Vice President
GN:mbl