At a sprawling steel mill on the outskirts of Philadelphia, the workers have one number in mind; and it’s not how many tons of steel produced every day, or how many hours they work. It’s where each of them falls on the plant’s seniority list.
ArcelorMittal, which owns the mill, announced in the fall that it would lay off 150 of the plant’s 207 workers in 2018. While the cuts will start with the most junior employees, they will go so deep that even workers with twenty years of experience will be unemployed and without health insurance unless they can afford COBRA or Obamacare.
Chinese products are driving down the global price of metal to a price where American steel producers simply cannot compete unless they install robots instead of workers. The layoffs have demoralized these same steelworkers who cheered President Trump’s election as a saving grace for their industry. Trump swore to build roads and bridges, strengthen “Buy America” requirements, and protect factories from unfair imports—especially steel.
A year later, Trump has not even mentioned these policies. Trump and his daughter Ivanka still make their own products overseas. And when it comes to steel, his failure to follow through on his promise has actually done more harm than good.
Foreign steel makers actually raced to fill the void, hoping to beat Trump’s promised tariffs were to start. According to the American Iron and Steel Institute, which tracks shipments, steel imports were actually 19.4 percent higher in the first 10 months of Trump’s presidency than in the same period in 2016.
The part of the plant, whose specialty is ultra-strong, military-grade steel has been abandoned. The recent surge of multi-national imports has further crippled American steel makers on top of their struggling against a glut of cheap Chinese steel. When ArcelorMittal announced the layoffs, it specifically attributed those imports, as well as low demand for steel for bridges and military equipment.
James Rockas, a spokesman for the Commerce Department, said the administration was “aware of the plight of American steel workers and will continue working to halt unfair trade practices that harm our economy and kill American jobs.” In 2007, before the financial crisis struck, this same plant ran around the clock. Now, the mill struggles to run five days a week.
Uncertainty about whether the President will do anything to reshape trade rules is now creating a drag on many industries. Companies are waiting to invest, or finding alternative suppliers outside the United States, say executives in agriculture, automobiles, solar energy and information technology.
Adding insult to injury, in June, Mr. Trump told a crowd in Cincinnati, “Wait till you see what I’m going to do for steel and your steel companies,” vowing that he would “stop the dumping” of products at super-low prices by other countries.
“We’ll be seeing that very soon. The steel folks are going to be very happy,” he said.
The announcement never came.
The tariffs had plenty of opponents. Automakers, food processors and companies in other industries that use steel and aluminum in their products complained correctly that tariffs would drive up costs and make them less competitive, ultimately sacrificing more American jobs than they would save. Steel exporters, like the European Union, threatened retaliation. Prominent economists highlighted the risk of a trade war.
The administration will also face a series of deadlines on the steel measure in 2018. The Commerce Department must present the results of its study to the president by Jan. 15. The president will then have 90 days to decide what to do.
Still, the delay has threatened to fracture the brittle alliance the president has forged with some labor unions, who liked Mr. Trump’s populist approach to trade. Senator Bob Casey Jr., a Democrat from Pennsylvania, said the administration’s failure to act would probably be an issue in the 2018 midterm elections. “They’ve sat on this for far too long,” he said.
The United Steelworkers has historically aligned with Democrats. But many workers opposed trade agreements forged by Presidents Bill Clinton and Barack Obama and viewed Hillary Clinton’s stance on trade as insincere.
In an odd shift in the politics of trade, the union has defended the Trump administration’s trade agenda against the criticisms of traditionally Republican business groups, like the Chamber of Commerce.
But Scott Paul, the president of the Alliance for American Manufacturing, a trade group that represents steelworkers, said he had “a profound sense of frustration that the president has been using steelworkers as political props.”
“The president’s own words and lack of action have actually put the industry in a worse position than if he had done nothing at all,” he said.
President Donald Trump spent much of his campaign promising to bring back coal, an industry that he said then-President Barack Obama had “demoralized” with too many regulations. So in July when Trump declared at a rally that he had created 45,000 coal jobs since the start of his presidency, many coal miners rejoiced.
The only problem is that it was just another Trump lie. In fact, since the beginning of Trump’s presidency, just 1,200 coal-mining jobs have been created, according to monthly reports by the Bureau of Labor Statistics, and the 1,200 coal jobs during Trump’s presidency thus far are only a handful more than were created between August and December 2016 under President Obama.
A union official at a prominent West Virginia mine said this month that it was simply no longer economically viable and that 260 workers had lost their jobs but that they were all confident that the jobs would soon return with raises to boot. [Sounds suspiciously like the Trump braggadocio that AT&T was first to hand out $1,000 bonuses to employees because of the GOP tax bill whereas they had actually laid off thousands of workers prior to paying those bonuses.
Even more illustrative is that Reuters reported in November that coal miners who were rejecting free training courses in other fields [provided by funds set aside during the Obama administration] cited Trump’s promise that he would bring back coal jobs. So they collect welfare rather than take advantage of the free opportunity to acquire new skills and gainful employment based on a Trump promise that cannot and will not happen.
“The regulatory changes promulgated by Trump are entirely outweighed by these technological changes, not to mention the price of natural gas or renewables. Even if you brought back demand for coal, you wouldn’t bring back anything resembling the same number of workers, much less for higher wages” Mark Muro, a senior fellow at the Brookings Institution’s Metropolitan Policy Program, told The New York Times this past March.
But that won’t stop Trump voters from believing, as he promises them jobs that will never materialize.
Sub-Prime Auto Loans
Consumers have made it worthwhile for automakers and banks to create ways for Americans to purchase larger, heavier, less efficient, more expensive vehicles on comparable terms to those once promoted to own smaller, lighter, more fuel efficient, less expensive vehicles. The circumstances aren’t the same, though, and consumers are stretching themselves ominously thin to meet them.
Macro Economists are currently determining if the supercharged loaning and supercharged defaulting should be considered a bubble, and if so, whether that bubble could do the same damage as the mortgage bubble. As long ago as November 2016 I was emphasizing the length and breadth of the dangers in the subprime auto market.
Even ignoring the worst predictions, these should be alarming numbers.
- Earlier this year, the length of the average auto loan sky-rocketed to an all-time high of 69.3 months.
- The average price of a new vehicle before incentives climbed to $35,309, another record.
- The average buyer finances $30,945 of a car purchase, also a record.
- Monthly payments average $517, another record.
If you spend a now-common seven years paying down that $30,945 average loan on a $35,309 average price, it’ll cost you about $4,000 in interest. With taxes and fees, the real total cost of the vehicle is over $40K. Meanwhile, median household income stood at $59,039 in 2016, and the personal savings rate is an anemic 3.2 percent, a level not seen since just before the Bush market crash in late 2007. And we should all remember what happened by 2008.
An AutoNews story from March reported, “Through February 2017, 33.8 percent of loans were 73 to 84 months.” As of June 2017, out of those six- to seven-year terms, “28.7 percent of new-vehicle loans were 84 months.” More records.
Ten percent of used-car loans on 2010-model-year vehicles run 73 to 84 months. Seven-year car loans on seven-year-old cars? That’s how you get this sentence: “According to Edmunds.com, an estimated 32 percent of all trade-ins toward the purchase of a new car through the end of 2016 were underwater [worth less than the outstanding loan balance].”
Despite the self-congratulatory proclamations of Benito Cheeto and his cowardly minions in the GOP Congress who point to an unrealistically high stock market [less a reflection of the strength of the overall economy and all about the coming billions in government financed dividends to shareholders], mark my words—the dark clouds on the American economic horizon mean the same GOP robber barons will be coming after Medicare and Social Security to pay for CEOs, shareholders, and investment firms New Year’s celebrations.
Meanwhile, the eviction notices that steel and coal workers will be facing will be met with dejected disbelief as they realize that they’ve been played like an Appalachian banjo.