    [House Hearing, 113 Congress]
    [From the U.S. Government Publishing Office]

                 OUR NATION OF BUILDERS: THE STRENGTH OF STEEL

    =======================================================================

                                    HEARING

                                   BEFORE THE

               SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE

                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 21, 2013

                                   __________

                               Serial No. 113-23

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman
    RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
    JOE BARTON, Texas                      Ranking Member
      Chairman Emeritus                  JOHN D. DINGELL, Michigan
    ED WHITFIELD, Kentucky                 Chairman Emeritus
    JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
    JOSEPH R. PITTS, Pennsylvania        FRANK PALLONE, Jr., New Jersey
    GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
    LEE TERRY, Nebraska                  ANNA G. ESHOO, California
    MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
    TIM MURPHY, Pennsylvania             GENE GREEN, Texas
    MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
    MARSHA BLACKBURN, Tennessee          LOIS CAPPS, California
      Vice Chairman                      MICHAEL F. DOYLE, Pennsylvania
    PHIL GINGREY, Georgia                JANICE D. SCHAKOWSKY, Illinois
    STEVE SCALISE, Louisiana             JIM MATHESON, Utah
    ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
    CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
    GREGG HARPER, Mississippi            DORIS O. MATSUI, California
    LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin
    BILL CASSIDY, Louisiana                  Islands
    BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
    PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
    DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
    CORY GARDNER, Colorado               BRUCE L. BRALEY, Iowa
    MIKE POMPEO, Kansas                  PETER WELCH, Vermont
    ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
    H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
    GUS M. BILIRAKIS, Florida
    BILL JOHNSON, Missouri
    BILLY LONG, Missouri
    RENEE L. ELLMERS, North Carolina
               Subcommittee on Commerce, Manufacturing, and Trade

                              LEE TERRY, Nebraska
                                     Chairman
    LEONARD LANCE, New Jersey            JANICE D. SCHAKOWSKY, Illinois
      Vice Chairman                        Ranking Member
    MARSHA BLACKBURN, Tennessee          G.K. BUTTERFIELD, North Carolina
    GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
    BRETT GUTHRIE, Kentucky              JERRY McNERNEY, California
    PETE OLSON, Texas                    PETER WELCH, Vermont
    DAVE B. McKINLEY, West Virginia      JOHN D. DINGELL, Michigan
    MIKE POMPEO, Kansas                  BOBBY L. RUSH, Illinois
    ADAM KINZINGER, Illinois             JIM MATHESON, Utah
    GUS M. BILIRAKIS, Florida            JOHN BARROW, Georgia
    BILL JOHNSON, Missouri               DONNA M. CHRISTENSEN, Virgin
    BILLY LONG, Missouri                     Islands
    JOE BARTON, Texas                    HENRY A. WAXMAN, California, ex
    FRED UPTON, Michigan, ex officio         officio

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Lee Terry, a Representative in Congress from the State of
      Nebraska, opening statement....................................     1
        Prepared statement...........................................     2
    Hon. Leonard Lance, a Representative in Congress from the State
      of New Jersey, opening statement...............................     3
    Hon. Janice D. Schakowsky, a Representative in Congress from the
      State of Illinois, opening statement...........................     3
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................     4
    Hon. Tim Murphy, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................     6

                                   Witnesses

    Joe Carrabba, President and CEO, Cliffs Natural Resources........     8
        Prepared statement...........................................    11
        Answers to submitted questions...............................   116
    John Ferriola, President and CEO, Nucor Corporation..............    17
        Prepared statement...........................................    19
        Answers to submitted questions...............................   122
    Edward T. Kurasz, Executive Vice President, Allied Tube and
      Conduit........................................................    29
        Prepared statement...........................................    31
        Answers to submitted questions...............................   129
    Richard J. Harshman, Chairman, President and CEO, Allegheny
      Technologies, Inc..............................................    46
        Prepared statement...........................................    49
        Answers to submitted questions...............................   131
    Mike Rehwinkel, President and CEO, EVRAZ North America...........    59
        Prepared statement...........................................    61
        Answers to submitted questions...............................   133
    John Surma, Chairman and CEO, United States Steel Corporation....    65
        Prepared statement...........................................    68
        Answers to submitted questions...............................   136
    Michael G. Rippey, President and CEO, ArcelorMittal USA..........    75
        Prepared statement...........................................    77
        Answers to submitted questions...............................   138
    Yvette Pena Lopes, Deputy Director, Bluegreen Alliance...........    84
        Prepared statement...........................................    86
        Answers to submitted questions...............................   141

                 OUR NATION OF BUILDERS: THE STRENGTH OF STEEL

                                  ----------

                            THURSDAY, MARCH 21, 2013

                      House of Representatives,
    Subcommittee on Commerce, Manufacturing, and Trade,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 9:32 a.m., in
    room 2123, Rayburn House Office Building, Hon. Lee Terry
    (chairman of the subcommittee) presiding.
        Present: Representatives Terry, Lance, Blackburn, Harper,
    McKinley, Bilirakis, Schakowsky, Butterfield, Welch, Barrow,
    Christensen, and Waxman (ex officio).
        Staff Present: Charlotte Baker, Press Secretary; Kirby
    Howard, Legislative Clerk; Nick Magallenes, Policy Coordinator,
    CMT; Gib Mullen, Chief Counsel, CMT; Andrew Powaleny, Deputy
    Press Secretary; Shannon Weinberg Taylor, Counsel, CMT;
    Michelle Ash, Minority Chief Counsel; and Will Wallace,
    Democratic Policy Analyst.

       OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF NEBRASKA

        Mr. Terry. Thank you all for being here. I am going to give
    my opening statement. Thank you, Janice. And I want to thank
    all for coming here to the second in a series of hearings of
    the Commerce, Manufacturing, Trade Subcommittee, Promoting Our
    Nation of Builders.
        The focus of today's hearing is the health of our steel
    industry and how we can work together to overcome the
    challenges that face us. According to the American Iron and
    Steel Institute, steel manufacturing employs 161,900
    individuals over 100 facilities nationwide, and the steel
    industry is indirectly responsible for over 1.1 million jobs in
    industries like transportation, construction, auto and national
    security.
        The productivity of the steel industry is outstanding.
    Since the late 1880s, U.S. steel plants have seen a five-fold
    increase in productivity, producing 1 ton of finished steel in
    10.2 man hours in the early 1980s to an average of just over 2
    man hours in 2011. Today the U.S. is the third largest producer
    of steel, producing over 86 million metric tons. And U.S. steel
    manufacturers do this while maintaining a strong commitment to
    workplace safety. And that is a testament to a very highly
    skilled workforce.
        But today's hearing is about finding pathways to policies
    that will cut down regulatory and other barriers standing in
    the way of our U.S. steel manufacturers. Two things I would
    like to know are, first, what can we do to make sure our U.S.
    steel producers can compete on a level playing field, not
    handicapped by outdated trade laws and not pitted against
    foreign companies that are unfairly subsidized; and, second,
    what can we do to match workers with these good paying jobs. If
    U.S. steel manufacturers cannot find the skilled workers they
    need, that is a double tragedy.
        Surplus steel from countries such as China and South Korea
    is flooding our markets with cheap products. This low cost and
    sometimes low quality steel being imported to the U.S. is being
    heavily subsidized by exporting nations through state
    sponsorship, export rebates, currency manipulation and other
    schemes.
        This subcommittee's jurisdiction covers nontariff trade
    policies, of course, and this is of great interest to us, but
    the main reason we are here today is to identify the obstacles
    facing the industry so we can improve the competitive
    environment of this vital industry.
        At this time I would like to yield to Marsha Blackburn.
        [The prepared statement of Mr. Terry follows:]

                      Prepared statement of Hon. Lee Terry

        Thank you for all for coming to the second in a series of
    hearings of the Commerce, Manufacturing and Trade Subcommittee
    promoting our nation of builders.
        The focus of today's hearing is the health of our steel
    industry and how we can work together to overcome the
    challenges it faces.
        According to the American Iron and Steel Institute, steel
    manufacturing employs 161,900 individuals at over 100
    facilities nationwide. And, the steel industry is indirectly
    responsible for over 1.1 million jobs in industries like
    transportation, construction, auto, and national security.
        The productivity of the steel industry is astounding.
        Since the late 1980s, U.S. steel plants have seen a five-
    fold increase in productivity, producing one ton of finished
    steel in 10.2 man-hours in the early 1980s to an average of
    just over two man-hours in 2011. Today, the U.S. is the third
    largest producer of steel, producing over 86 million metric
    tons.
        And U.S. steel manufacturers do this while maintaining a
    strong commitment to workplace safety. That's a testament to a
    very highly skilled workforce.
        But today's hearing is about finding pathways to policies
    that will cut down regulatory and other barriers standing in
    the way of steel manufacturers. Two things I'd like to know
    are: first, what can we do to make sure our U.S. steel
    producers can compete on a level playing field, not handicapped
    by outdated trade laws and not pitted against foreign companies
    that are unfairly subsidized? And, second, what can we do to
    match workers with these good-paying jobs? If U.S. steel
    manufacturers cannot find the skilled workers they need, that
    is a double tragedy.
        Surplus steel from countries such as China and Korea is
    flooding our markets with cheap products. This low cost and
    sometimes low quality steel being imported into the U.S. is
    being heavily subsidized by exporting nations through state
    sponsorship, export rebates, currency manipulation and other
    schemes.
        This subcommittee's jurisdiction covers non-tariff trade
    polices, of course, and this is of great interest to us. But
    the main reason we are here today is to identify the obstacles
    facing the industry so we can improve the competitive
    environment for this vital industry. We want to make sure our
    steel manufacturers have the opportunity to compete on equal
    terms. If we can help facilitate that and make sure the U.S.
    government is not thwarting progress, then I am confident they
    will flourish in a competitive market.

                                    #  #  #

        Mrs. Blackburn. I thank the gentleman for yielding. And I
    thank our chairman for calling this hearing today. We all know
    the vital nature of the steel industry to our economy. Here in
    the country, we have got 161,000 workers who are working in the
    steel economy. Some of those we find in Tennessee. Mr.
    Ferriola, who is the CEO of Nucor Steel has two plants in
    Tennessee, one down in Memphis, where I have visited and had
    the opportunity to see firsthand the work they are doing; the
    other is up in Portland. So we welcome you and we thank you for
    the work you are doing.
        I will add that in the 11 steel industry facilities that
    are located in Tennessee, in the past couple of years, we have
    seen 2,813 new jobs created, so we are pleased with that and
    that type growth in this sector. So welcome. We appreciate
    that. I yield back my time.
        Mr. Terry. And at this time, I will recognize the vice
    chairman of the committee, Mr. Lance.

     OPENING STATEMENT OF HON. LEONARD LANCE, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Lance. Thank you, Mr. Chairman. And my thanks to both
    panels and to Congressman Murphy as well as our distinguished
    guests from the steel industry.
        New Jersey has approximately 7,000 steel-supported jobs,
    and many of these are value added, and one plant is affiliated
    with Nucor Corporation, which is testifying today. Even though
    the State is not a primary producer of steel, it is obviously a
    critical industry for every corner of the country.
        As we examine the vitality of manufacturing in the United
    States, we are looking in part at the way government at the
    Federal level can help or hurt the industry. In past
    subcommittee hearings, we have been told that the current Tax
    Code is a driver of inefficiency and frequently uncertainty.
    Extending the R&D tax credit, simplifying the Tax Code and
    lowering the Federal tax rates are suggestions that come to
    mind. A high tax rate makes it all the more difficult for our
    domestic steel industry to compete in an already difficult
    playing field where competitors are frequently subsidized in
    various ways by their home countries.
        Beside the tax issue, I welcome your testimony on a range
    of issues faced by our domestic steel industry, and I hope that
    you will find our subcommittee a willing partner in ways to
    encourage and support the manufacturing community and the steel
    industry. Thank you very much, Mr. Chairman.
        Mr. Terry. Well done, Mr. Vice-Chairman. At this time
    recognize the ranking member of the subcommittee, Ms.
    Schakowsky.

           OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
         REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

        Ms. Schakowsky. Thank you, Mr. Chairman. As you said, this
    is the second hearing of the year and the second in a series on
    our series of manufacturing, a critical sector of our economy.
    At the last hearing a small steel company from my district,
    Black Steel, Joe Black was here to talk about the industry and
    some of the challenges.
        I want to welcome those from the Chicago area, Ed Kurasz
    from Allied Tube and Conduit Corporation, Mike Rehwinkel from
    air--I probably am destroying these names; I am sorry if I am--
    EVRAZ, Inc., North America, and Mike Rippey, president and CEO
    of Arcelor Mittal USA.
        And so I grew up in Chicago and, of course, I know a lot
    about old steel on the southeast side of Chicago and
    northwestern Indiana. I am sorry that Pete Visclosky wasn't
    able. He is managing a bill on the floor today, but I am
    anxious to hear about new steel and what is going on right now.
        I am focused very much on having an educated workforce that
    can well serve your industry. Our universities and community
    colleges and high schools are beginning to really have
    collaborations with businesses to prepare students for long
    success in manufacturing and a commitment to the national
    infrastructure. Without that, the American steel industry will
    suffer.
        The American Society of Civil Engineers reported this week
    that our national infrastructure is rated as a D plus. I know
    that sounds bad. It is up from a D 4 years ago. While
    investments in our Nation's infrastructure, including the
    American Recovery and Reinvestment Act and a 27-month
    transportation bill have improved our transportation
    infrastructure, but a lot of work remains.
        And as times have changed, steel production has been able
    to become more energy efficient while simultaneously meeting
    the shifting demands of our consumers. Today the effort to
    develop cleaner energy sources is heavily reliant on steel.
    Wind turbines are composed of almost 90 percent steel. Wind is
    one of the fastest growing energy sources in America,
    representing 35 percent of all newly installed capacity over
    the past 5 months.
        I know my colleagues have talked about the need for an
    equal playing field, so our steel can compete competitively in
    the world, and I hope we will talk about that as well.
        And in the interest of time, because I know we are going to
    have a vote before too very long and getting to our witnesses
    is a top priority, let me yield back my time.
        Mr. Terry. The chair recognizes Mr. Waxman.

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman. Thank you very much, Mr. Chairman. I appreciate
    your holding this hearing on steel manufacturing. And I want to
    thank all the witnesses, including our colleague, Mr. Murphy,
    for being here today.
        The steel industry's important. In 2012, steelmakers in the
    U.S. Produced 96 million tons of steel, the third most in the
    world. The steel industry employs 160,000 workers directly, and
    it supports many more jobs in related industries, like
    construction, automotive assembly and the production of
    machinery and equipment.
        The success of the domestic steel industry is closely tied
    to the health of the broad economy. When the country's economy
    is growing, we need steel to build new structures, new cars and
    new machines, but when the economy contracts, as it did after
    the collapse of Wall Street in 2008, demand for steel plunges
    and the U.S. steel industry suffers significant turmoil.
        Today the steel industry's total output and capacity
    utilization are approaching levels historically consistent with
    stable industry-wide growth. After an unsteady 2012, some
    industry observers believe that gains in residential
    construction and the auto industry will make 2013 a good year
    for steel.
        To maximize growth in the long-term, however, we must take
    several steps to support the U.S. steel industry and ensure it
    remains globally competitive. First, we must seize the
    opportunity to improve our Nation's infrastructure. Targeted
    investments in transportation, water supply, public facilities
    and our electric grid are needed, and in some cases, long
    overdue.
        According to the American Society of Civil Engineers, 12
    percent of the bridges in my home State of California are
    considered structurally deficient. These must be repaired, and
    now is the perfect time, given how low interest rates are.
    Improved road, rail and port infrastructure would lead to
    efficiencies throughout the steel supply chain and demand for
    steel would surge as projects got underway.
        Second, we must prepare for an innovative future. This
    means providing incentives for research and development so that
    the U.S. steel industry can outcompete other nations. It also
    means ensuring that workers have the education and technical
    training they need to work in the highly automated steel mills
    of the future.
        Third, we must remain vigilant in the area of trade
    enforcement. Countries whose steel producers seek to access the
    U.S. market must keep their commitments under international
    trade law not to distort the market in their favor. And we must
    impose anti-dumping sanctions and countervailing duties when
    warranted.
        I understand that steel production is an energy intensive
    process, and that some witnesses today may speak against
    energy-related regulations, but we must remember that
    innovations that make our factories less polluting and our air
    and water cleaner are good for the environment, our communities
    and the steel manufacturers.
        Through the hard work of improving energy efficiency and
    using cleaner energy, the U.S. steel industry has become more
    competitive, allowing it to continue to grow and thrive. We
    could have both: a clean environment and a vibrant steel
    industry.
        I look forward to the testimony today to learn more about
    how we can accomplish these goals. And I thank you Mr.
    Chairman. Yield back.
        Mr. Terry. Thank you, Mr. Waxman. At this time it is my
    pleasure to introduce our first panel, the chairs, chair and
    co-chair of the steel caucus in the House. Before introducing
    Mr. Murphy, I will also--his co-chair is on the floor. Mr.
    Visclosky is running time on the CR, so he is not able to make
    it today, but I am sure, Mr. Murphy, you can share his views.
    And you will not get his 5 minutes, though.
        We recognize the gentleman from Pennsylvania, a passionate
    supporter of the steel industry, Mr. Murphy. You are recognized
    for your 5 minutes.

       OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
             CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

        Mr. Murphy. Thank you, Mr. Chairman. And I want to thank
    also my good friend Pete Visclosky for his hard work and
    dedication for this.
        Together we lead the steel caucus, which is over 100
    lawmakers from 30 States who work to keep steel strong. Usually
    we do the steel caucus hearings with just our members alone,
    but I appreciate the opportunity to speak to your subcommittee.
        American steel supports 1.2 million jobs and adds $350
    billion to our Nation's economy and serves as a backbone, both
    literally and figuratively, of America's built environment, our
    national defense and our economic strength. American
    steelmaking stands ready for resurgence powered by plentiful
    fuel resources, new technologies and the most efficient plants
    in the world.
        American steelmakers have tremendous advantages over their
    foreign competitors, but they need clarity and certainty here
    at home. New restrictions in the mining of coal and iron ore
    will make it costly for integrated steelmakers to operate the
    blast furnaces that produce coke and iron.
        Now, if someone has not paid attention during high school
    science, they may have missed this point: you cannot make steel
    without coal and other raw materials, and you cannot make steel
    in the United States without competitively-priced coal,
    electricity and shipping and rail, trucks, barges, and a
    competitive and well-trained workforce. And most importantly,
    we cannot keep our mills open while other countries undermine
    fair trade.
        Meanwhile, our Nation's crumbling infrastructure makes it
    increasingly difficult for steelmakers to transport goods
    across the United States. But there is a solution. I have
    introduced the Infrastructure, Jobs and Energy Independence
    Act, H.R. 787, to put us on the path to energy independence
    while creating jobs and fixing our aging roads, bridges, locks
    and dams without raising taxes, importing OPEC oil or borrowing
    from China.
        This legislation expedites development of our offshore
    resources, bringing an estimated $2.2 to $3.7 trillion in new
    Federal revenue dedicated--and dedicating some of those new
    funds to slashing our deficit and rebuilding America's
    transportation infrastructure. It will launch a massive
    building boom that will mean big things for the steel industry.
        In its 2013 report card for America's infrastructure, the
    American Society of Civil Engineers estimated that 25 percent
    of the Nation's bridges are deficient. That is more than
    151,000 structures in need of new steel.
        Now, steelmakers also face challenges beyond our shores
    from nations that consistently violate their obligations under
    international trade agreements. Our steelmakers can win this
    fight, but only if there are clear standards in place giving
    them and the working men and women of this country a fair shot
    at competing and succeeding.
        In the March 12th issue of The Wall Street Journal, it
    reported that Chinese officials are increasingly worried that
    state-owned steelmakers are expanding capacity while losing
    money. Faced with these contradictory conditions and sluggish
    economy, Chinese steelmakers are dumping their excess product
    into our markets in clear violation of our international trade
    agreements.
        In the last year, imports from China have grown 34 percent.
    Across the industry, imports now account for a quarter of steel
    consumption. And the brightest segment of the steel market, oil
    country tubular goods, we are finding significant quantities of
    Chinese-made steel that has been purposefully mislabeled in
    order to avoid duties and detection by Customs officials.
        American manufacturers like U.S. Steel's National Tube
    plant in McKeesport, Pennsylvania, has been expanding to
    provide drill and transmission pipe for gas and oil deposits
    found in places like the Marcellus shale in my congressional
    district, but now these facilities are scaling back because of
    the massive influx of cheap government-subsidized foreign
    steel.
        Furthermore, steel from China, Japan, Korea, and several
    other countries is coming in at a significant price discount
    because their governments are engaged in illegal currency
    manipulation.
        Yesterday I introduced the Currency Reform for Fair Trade
    Act, H.R. 1276, along with a group of bipartisan lawmakers, to
    stop this practice. Foreign governments are illegally
    controlling currency markets in order to prop up their steel
    exporters, while our manufacturers suffer slowly and painfully.
        And now that China knows they can get away with
    manipulating currency, other nations like Japan and Korea are
    doing the same. It is a growing list, and it will continue to
    grow as long as other countries see a loophole big enough to
    sail a cargo ship through.
        This legislation will give the Department of Commerce and
    Treasury the necessary tools to build honest and fair trade
    regulations. America wouldn't tolerate this kind of behavior by
    domestic companies, so why do we tolerate it by foreign powers?
    Free trade doesn't have to be free for all where only the naive
    abide by the rules. We want China and other countries to be
    honest trading partners and we want them to know we are a
    welcome source, but not a welcome mat.
        Moving forward, our caucus will continue to pursue these
    issues to ensure American steel remains strong and vibrant for
    decades to come. And I thank you for this opportunity to appear
    before you today. And I will welcome any questions.
        Mr. Terry. Your testimony is appreciated.
        We don't have time to ask you questions, though, because we
    want to talk to the people behind you.
        Mr. Murphy. I thank the------
        Mr. Terry. I will just catch you on the floor.
        Mr. Murphy. Thank you very much, Mr. Chairman.
        Ms. Schakowsky. Yes. I------
        Mr. Terry. Ms. Schakowsky.
        Ms. Schakowsky. Thank you, Mr. Chairman. I have a unanimous
    consent request to put the testimony of Congressman Pete
    Visclosky into the record. \*\
    ---------------------------------------------------------------------------
        \*\ This document was unavailable at the time of printing.
    ---------------------------------------------------------------------------
        Mr. Terry. Absolutely. So without objection, so ordered. So
    thank you, Mr. Murphy. Well done.
        Mr. Murphy. Thank you all.
        Mr. Terry. Your timing was great.
        Mr. Murphy. Thank you.
        Mr. Terry. At this time I would like to invite our panel
    up. And, boy, I will tell you, this is probably one of the most
    distinguished panels we can have, so this is impressive.
        So I am just going to invite all of you up now. Joseph
    Carrabba, chairman, president and CEO of the Cliffs Natural
    Resources, currently chair of the American Iron and Steel
    Institute; John Ferriola, CEO and president, Nucor Corporation,
    currently chair of the Steel Manufacturers Association, and had
    the extremely positive, once-in-a-lifetime experience of
    spending 4 years in Norfolk, Nebraska, running the Nucor
    facility there; Richard Harshman, chairman, president and CEO
    of Allegheny Technologies, Inc., also represents the specialty
    steel industry of North America; Edward Kurasz--Kurasz, I am
    sorry--executive vice president, Allied Tube and Conduit,
    currently chair of the Committee on Pipe and Tube Imports; Mr.
    Mike Rehwinkel, president and CEO of EVRAZ North America; Mike
    Rippey, president and CEO of Arcelor--I probably have that
    wrong--ArcelorMittal USA; and John Surma, president and CEO of
    United States Steel; and then Ms. Yvette Pena Lopes, deputy
    director of the BlueGreen Alliance.
        As you know, the rules, 5 minutes. There is a little
    machine someplace that will let you know your time. Just
    because we are going to have votes early in the day here, I
    would appreciate it if you could stick to the 5 minutes as much
    as you can. And Mr. Carrabba, I would appreciate it if you
    would start us.

     STATEMENTS OF JOE CARRABBA, PRESIDENT AND CEO, CLIFFS NATURAL
    RESOURCES; JOHN FERRIOLA, PRESIDENT AND CEO, NUCOR CORPORATION;
      RICHARD J. HARSHMAN, CHAIRMAN, PRESIDENT AND CEO, ALLEGHENY
    TECHNOLOGIES, INC.; EDWARD T. KURASZ, EXECUTIVE VICE PRESIDENT,
      ALLIED TUBE AND CONDUIT; MIKE REHWINKEL, PRESIDENT AND CEO,
         EVRAZ NORTH AMERICA; MIKE RIPPEY, PRESIDENT AND CEO,
    ARCELORMITTAL USA; JOHN SURMA, CHAIRMAN AND CEO, UNITED STATES
      STEEL CORPORATION; AND YVETTE PENA LOPES, DEPUTY DIRECTOR,
                           BLUEGREEN ALLIANCE

                       STATEMENT OF JOE CARRABBA

        Mr. Carrabba. Thank you, sir. Chairman------
        Mr. Terry. And just turn on your mike and pull it up to
    you.
        Mr. Carrabba. There we go. Chairman Terry and Ranking
    Member Schakowsky and distinguished members of the
    subcommittee, good morning, and thank you for the opportunity
    to testify today. My name is Joe Carrabba and I am the
    chairman, president and CEO of Cliffs Natural Resources.
        As the current chairman of the American Iron and Steel
    Institute, I wish to express sincere appreciation of your
    interest in the state of our domestic steel industry.
        In many respects, our industry is at a crossroads. We are
    an extremely efficient sector with a talented workforce, state-
    of-the-art technologies, and the ability to furnish products
    critical to the broader U.S. manufacturing economy; however, we
    also face significant challenges arising from a persistently
    sluggish economic recovery, the surge of unfairly traded steel
    imports, and an investment climate plagued by overly
    restrictive regulatory requirements and constant uncertainty in
    the areas of U.S. tax and fiscal policy.
        In a moment, I will speak further to specific policy
    challenges and opportunities, but first I would like to briefly
    highlight the economic contributions of this industry.
        The company that I lead, Cliffs Natural Resources, is the
    largest producer of iron ore in North America, and a
    significant producer of metallurgical coal for steelmaking. As
    a supplier to the domestic steel industry, Cliffs is a prime
    example of how steel production in the United States provides
    economic benefits well beyond those generated by steel
    manufacturing alone.
        In a study commissioned by the American Iron and Steel
    Institute last year, Professor Timothy Considine of the
    University of Wyoming found that each job in America's steel
    industry supports seven jobs in the U.S. Economy. The aggregate
    national impacts of steelmaking, however, does not come close
    to capturing the importance of our industry to specific
    communities and regions across the United States.
        A study recently released by the University of Minnesota
    Duluth found that iron ore mining contributes to more than $1.9
    billion to Minnesota's economy and mining represents 30 percent
    of the gross regional product of northeastern Minnesota.
        Many of you have communities in your districts that share
    such a profound reliance on the steel industry, its suppliers
    and the family-sustaining jobs supported by these businesses.
    Given the acute demand for more of these quality jobs, we are
    grateful for your focus on our industry and we appreciate the
    opportunity to share our perspective on public policy matters
    that will help define the future of steelmaking in the United
    States.
        I would first like to address the importance of sensible
    energy and environmental regulatory policy. While the CEOs
    before you today represent different elements of a most diverse
    industry, we all share reliance on cost-effective sources of
    energy. Many believe that newly discovered shale gas
    developments are the most remarkable source of economic growth
    and prosperity that any of us are likely to encounter in our
    lifetimes.
        However, despite the tremendous promise of this new
    domestic energy source, persistent permitting delays and an
    arcane environmental regulatory environment threaten to further
    degrade the status of the U.S. as the location of choice for
    all large capital and energy-intensive industries.
        Our permitting process is far too protracted, and we
    increasingly find that Federal agencies are usurping the role
    of States that States should play in working with industry to
    innovate science-based solutions, working efficiently to reduce
    environmental impacts.
        In order for our industry to thrive, we need to responsibly
    develop our American resources while ensuring that U.S.
    regulatory requirements are as predictable and workable as they
    are protective and stringent.
        In addition to energy, our industry is also concerned with
    the need for adequate Federal Government investment in
    infrastructure. Just as iron ore mines and steel mills rely on
    efficient rail, road and port infrastructure in our supply
    chains, so too is prosperity of the U.S. economy linked to the
    adequacy of our national infrastructure. Developing nations,
    such as China, are recognizing the importance of
    infrastructure, with massive investments in their
    transportation networks. The United States can ill afford to
    fall further behind in this space.
        In 2013, Congress should begin developing options to ensure
    a long-term funding mechanism for the Highway Trust Fund as
    well as pursue reauthorization of the Water Resource
    Development Act in order to rehabilitate or replace crumbling
    infrastructure and enhance global competitiveness in
    manufacturing.
        Lastly, I would like to speak about the stake we all have
    in our outcome of corporate tax reform. As a capital-intensive
    industry facing intense competition in global markets, the
    American steel industry supports tax policies that will make
    U.S. firms more competitive globally.
        In order for tax reform to produce real economic growth and
    job creation, the Tax Code should not simply be changed to
    favor less capital intensive sectors of the economy. Rather,
    the framework for rate reduction must be determined based on
    what it requires to ensure that all U.S. industries are more
    globally competitive.
        In short, achieving the lower overall statutory tax rate
    should not come at the expense of a higher effective tax rate
    for businesses and industries that most support capital
    investment, job growth and value-added manufacturing.
        As industry leaders, we stand ready and willing to work
    with you on these and other priorities. Today's hearing is an
    important and encouraging step forward in the realization of
    the public policy environment that can allow our industry and
    the economy as a whole to thrive. Once again, I thank you for
    your time and the invitation to appear before you today.
        Mr. Terry. Thank you very much.
        [The prepared statement of Mr. Carrabba follows:]

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        Mr. Terry. Mr. Ferriola.

                       STATEMENT OF JOHN FERRIOLA

        Mr. Ferriola. Good morning. On behalf of our 22,000
    teammates, I would like to thank you for this opportunity to
    appear before you today. My name is John Ferriola. I am
    president and CEO of Nucor Corporation. I am also chairman of
    the Steel Manufacturing Association, and I serve on the board
    of the American Iron and Steel Institute. Nucor is the largest
    steel producer in the United States and also the largest
    recycler.
        Chairman Terry and members of the committee, I commend you
    for convening these hearings on America's manufacturing sector.
    Like you, we at Nucor believe a strong manufacturing base is
    essential to sustainable economic growth. For years, our
    company has emphasized the need for America to once again be a
    Nation that makes, builds and innovates.
        Despite the difficult economic conditions of the past 4
    years, Nucor has continued to invest in our U.S.-based
    facilities. Our capital investments since the industry's last
    peak in 2008, through the end of 2012, totaled almost $7
    billion. We are doing this in a down cycle to position
    ourselves to be stronger and more profitable when the economy
    recovers. This investment philosophy has driven tremendous
    returns for our investments and contributes to our position of
    strength.
        Our largest project currently is the construction of a $750
    million direct-reduced iron plant in Louisiana. Direct-reduced
    iron is a key ore material we use in the steelmaking process,
    along with scrap steel. The project is employing over 600
    construction workers, and will create 150 full-time permanent
    manufacturing jobs with the average annual wage of $70,000.
        Bringing this technology back to the United States would
    not have been possible without an abundant and affordable
    supply of natural gas. That is why we at Nucor are urging
    decision-makers to proceed with caution on the issue of LNG
    exports. We feel strongly that we should not export away a
    significant domestic competitive advantage.
        We have also made investments that will allow us to make
    products for higher end markets, including automotive, heavy
    equipment and energy. For example, we are investing $290
    million to expand our capacity to make special bar quality
    steel at our mills in Norfolk, Nebraska; Darlington, South
    Carolina, and Memphis, Tennessee.
        We are investing another $115 million to expand production
    of hot rolled sheet piling at our Nucor-Yamato mill in
    Arkansas, and we recently completed a $110 million heat
    treating facility at our Hertford, North Carolina, plate mill
    that enables us to produce armored plate for military
    applications and high end plate steel for the heavy machinery
    sector.
        I am particularly proud that we did not lay off a single
    teammate during the great recession. Nucor has a long tradition
    of growing stronger during downturns by investing in our
    teammates and mills and collaborating with our customers;
    however, a surge of steel imports that defies market
    fundamentals puts our ability to reap the benefits of these
    investments at risk.
        Last year steel imports increased 17 percent from 2011 and
    a whopping 38 percent from 2010, a 38 percent increase in
    imports in 24 months, meanwhile, U.S. steel capacity
    utilization was only 72 percent. Imports were up in every major
    product area and for most major steel-producing nations.
        These import levels make no sense whatsoever when you
    consider the sluggish domestic economic recovery and the fact
    that American producers are among the lowest cost steel
    producers in the world. The U.S. enjoys marked advantages in
    practically every aspect of steelmaking, including access to
    capital, technology and raw materials, relatively low energy
    costs, high labor productivity--we will put the American worker
    up against any worker in the world--and proximity to the U.S.
    market.
        The reason we are seeing this import surge is that, while
    America is a free market, many major steel-producing countries
    are not. Foreign governments interfere in the market through
    state-owned enterprises, import barriers, currency
    manipulation, raw material export restrictions, and subsidies
    that are in direct violation of international rules.
        India recently imposed new tariffs on hot rolled coil and
    steel plate. Egypt has import restrictions on rebar. Brazil not
    only doubled its steel tariff, but is proposing export tax
    increases on scrap metal in order to discourage its export. And
    China, by far, is the worst offender. Its highly subsidized
    steel industry is government-owned and government-controlled,
    and its market remains heavily distorted and closed to outside
    competition.
        As a result of these trade barriers, the open U.S. market
    becomes a dumping ground for steel products from all over the
    world. This is where public policy becomes important. Global
    trade is governed by a set of rules. If our system of trade is
    going to work and be fair for all participants, we must use
    every tool at our disposal to enforce these rules.
        Mr. Terry. Mr. Ferriola, if you can just go to the
    conclusion at this point.
        Mr. Ferriola. We have a tremendous opportunity to
    revitalize the American manufacturing sector and strengthen our
    economy. If we have strong trade enforcement coupled with other
    policy areas discussed here today, infrastructure investment,
    regulatory certainty, domestic energy development, America can
    once again become a Nation that makes, builds and innovates.
    Thank you for your time this morning.
        Mr. Terry. Thank you very much.
        [The prepared statement of Mr. Ferriola follows:]
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        Mr. Terry. Mr. Kurasz.
        Before you start, we just got notice that the floor was
    moving faster than we thought, and we probably are not going to
    get all through, but we will come back, but we are going to
    keep going until we absolutely have to go to the floor. Mr.
    Kurasz.

                     STATEMENT OF EDWARD T. KURASZ

        Mr. Kurasz. Good morning, Chairman Terry, Ranking Member
    Schakowsky and------
        Mr. Terry. Could you pull that a little closer?
        Mr. Kurasz [continuing]. And distinguished members of the
    Energy and Commerce Subcommittee on Commerce, Manufacture and
    Trade. My name is Ed Kurasz. I am the executive vice president
    of sales at Allied Tube and Conduit and the chairman on the
    committee on pipe tube imports.
        Allied Tube as five production facilities in the United
    States and we employ nearly 1,000 workers at our headquarter
    facility in Harvey, Illinois. We permanently closed a facility
    in Morrisville, Pennsylvania, early last year, which I will
    discuss shortly. The CPTI that I represent has 42 member
    companies located in 30 States, with approximately 35,000
    workers.
        Like other segments of the industry, but probably worse,
    the U.S. pipe and tube industry has a major import problem. In
    2012, we had a record 8.75 million tons of imports. In fact,
    imports increased by 1.7 million tons over 2011 and captures
    virtually the entire increase in U.S. consumption of pipe and
    tube in 2012. OCTG imports took more than half the market and
    line pipe imports took more than two-thirds of the U.S. market.
    Korea alone shipped 2 million tons, and numerous other
    countries, including Vietnam, Turkey, India, Taiwan and many
    middle eastern countries accounted for massive surges of
    imports into the U.S. markets.
        While seven successful sets of trade cases caused direct
    imports of pipe and tube from China to fall from a record 3
    million tons in 2008 to less than 200,000 tons last year, there
    has been significant evasion of these orders through
    transshipment and misclassification. For these reasons, we
    support the efforts of Congressman Billy Long and others in the
    House and Senate to pass the ENFORCE Act, which would provide
    U.S. Customs and Border Protection with necessary tools to end
    Customs fraud and duty evasion.
        While direct imports from China have been curtailed, we
    believe that as much as half of pipe tube imports entering the
    United States are made with Chinese steel. According to the
    OECD, China had approximately 970 million tons of steel
    capacity and approximately 717 million tons of steel production
    in 2012. China exported 60 million tons, to make it far and
    away the world leader in steel exports.
        The Chinese government subsidizes its steel industry for
    policy reasons and makes Chinese steel available to our foreign
    pipe and tube competitors at ridiculously low dumped and
    subsidized prices.
        We urge this committee to engage the administration in
    discussions to use World Trade Organization rules to address
    Chinese government subsidization of its steel industry.
        In 2012, both the galvanized steel wire industry and our
    circular welded pipe industry lost cases at the ITC, which
    found that despite significant market share losses, modest
    improvements in the industry as a result of increases in demand
    after the depth of the recession was cause for negative injury
    determinations.
        We believe the Commission failed to take in account the
    prescribed statutory obligation to analyze injury in the
    context of the business cycle. In particular, despite the fact
    that dumped and subsidized imports from India, Oman, UAE and
    Vietnam doubled from 100,000 tons to 200,000 tons between 2009
    and 2011, grabbing five additional points of market share in
    the U.S. market, the ITC found operating profit margins of 2
    percent with net losses of 2 percent to be a sign of a healthy
    U.S. pipe industry.
        I was quite mystified that commissioners at the hearing and
    in their written decision did not understand the need for a
    manufacturing industry to earn its cost of capital. In
    addition, I was extremely troubled by the Commission's finding
    that our permanent closure of a mill in Morrisville,
    Pennsylvania, was not a sign of injury due to imports because
    our mill equipment was purchased for spare parts.
        There is something fundamentally wrong with our trade law
    system when ITC commissioners do not understand the need for an
    industry to earn a decent profit margin and don't understand
    the devastating impact of mill closures on industries, their
    workers and the surrounding communities.
        As the two charts displayed demonstrate, the massive pipe
    and tube import surge of 2012, which has continued in 2013, has
    caused devastating reductions in U.S. production in 2013. We,
    therefore, urge Congress to persuade President Obama to appoint
    ITC commissioners that will vigorously enforce trade laws in
    accordance with U.S. statutes. We also urge you to hold
    oversight committee hearings to determine why the Commission is
    not properly enforcing the injury laws, and to explore
    legislative changes that will make the intent of these laws
    even more explicit.
        There is no doubt in my mind that without action against
    massive subsidized Chinese overcapacity and without strong
    trade law enforcement that our extremely competitive U.S. pipe
    and tube industry will largely disappear within the next
    decade. Since we are the second largest consumer of steel in
    the United States, that will also have a major negative impact
    on the American steel industry.
        Thank you for the opportunity to appear here today. We urge
    the committee to take all the necessary steps to ensure that
    our industry can compete in a fair and free trade environment.
    Thank you.
        Mr. Terry. Thank you, Mr. Kurasz.
        [The prepared statement of Mr. Kurasz follows:]
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        Mr. Terry. Mr. Harshman.

                    STATEMENT OF RICHARD J. HARSHMAN

        Mr. Harshman. Good morning. I am the chairman, president
    and------
        Mr. Terry. Is your mic on?
        Mr. Harshman [continuing]. Chairman, president and chief
    executive officer of Allegheny Technologies, Incorporated.
    Thank you for inviting me to participate in this hearing. I am
    appearing on behalf of the specialty steel industry of North
    America, or SSINA, and my company. SSINA's member companies
    produce stainless steels, super alloys, high-nickel materials,
    electrical steel, tool steels, and other high technology
    materials for critical application.
        ATI is one of the largest and most diversified specialty
    metals producers in the world, with 2012 sales of over $5
    billion. We have over 11,000 full-time employees, 85 percent of
    whom are located in the United States.
        At ATI, we use innovative technologies to offer growing
    global markets a wide range of specialty metal solutions. Our
    products include titanium and titanium alloys, nickel-based
    alloys and superalloys, zirconium, hafnium and niobium, advance
    powder alloys, stainless steel and specialty alloys, grain-
    oriented electrical steel, and highly engineered forgings and
    castings.
        Sales to many of our domestic customers allow them to
    produce critical products, such as commercial and military
    airplanes and jet engines, gas turbines, power transformers,
    oil and gas drilling and completions equipment, products used
    by global chemical processing industry, and advanced medical
    equipment. We are one of the few companies in the world which
    can produce a full lineup of specialty metals in such a wide
    variety of critical applications.
        We understand and believe that the ability to manufacture
    critical specialty metals for our key growth markets must
    remain a core competency of the United States both from a
    national security and a sustainable economic growth
    perspective.
        First I would like to comment on the current state of the
    specialty metals industry. As the U.S. economy slowly improved,
    so did demand for our products. The outlook for 2013 is for
    modest improvement; however, low priced imports continue to
    take a substantial share of stainless steel market, and were up
    12 percent in 2012, with China and Mexico leading the way.
        I would also like to mention this is a significant year for
    our industry, which is celebrating the 100th anniversary of the
    creation of stainless steel. And we hope you can attend a
    reception on April 15th, with an exhibit showing the history of
    stainless steel.
        The U.S. specialty metals industry is technologically
    advanced and competitive in the global economy. ATI, for
    example, exports about 26 percent of its U.S. production and
    sells U.S.-made products all over the world. In recent years,
    ATI has invested more than $3.7 billion in capital expenditures
    and strategic acquisitions, nearly all in our facilities
    located in the United States.
        Our most recent strategic investment is the construction of
    a state-of-the-art $1.2 billion ATI-funded hot rolling and
    processing facility in Brackenridge, Pennsylvania, which is
    currently scheduled for completion by the end of 2013.
        Why has ATI chosen to make these investments in the United
    States rather than in a foreign country? First, we are a proud
    U.S. company; second, we believe that to ensure that we remain
    a technology leader in specialty metals, we need to co-locate
    our technology development resources with our core
    manufacturing capabilities.
        We believe the best way to achieve the vision is to have
    the majority of our manufacturing capabilities in the U.S. so
    that we can be an innovative, high quality, reliable and cost-
    competitive supplier to our customers. However, as a primarily
    U.S.-based manufacturer, we must be able to compete on a level
    playing field with our foreign competitors, several of which
    are state-owned enterprises.
        A level playing field combined with our industry-leading
    innovation and advanced technology capabilities, our
    unsurpassed manufacturing capabilities, and the productivity
    and knowledge of our employees will ensure ATI remains a key
    contributor to the national security and the economic growth of
    the United States.
        We are optimistic about our ability to continue to grow and
    invest here in the U.S., however, I would like to raise several
    policy concerns which may affect our long-term competitiveness.
    ATI remains supportive of the Department of Energy's
    preliminary ruling regarding more stringent efficiency
    standards for distribution transformers. The proposed standards
    issued after a lengthy negotiated rule-making process
    established a well-balanced update to the existing standards.
    The proposal will result in a significant and additional energy
    savings, it is environmentally responsible and it maintains the
    domestic manufacturing base for core materials. We urge the
    Department of Energy to finalize the preliminary ruling
    expeditiously and without further change.
        It is critical that the U.S. retain strong trade laws to
    allow us to fight pervasive unfair trade practices of our
    foreign competitors: dumping, government subsidies, protected
    markets, state-owned enterprises. U.S. companies struggle to
    compete with government-owned and supported foreign companies,
    which have easy or low access to capital or may not be required
    to make the same returns on investment required of the
    publicly-traded U.S. company.
        Of particular concern, the government of China continues to
    subsidize its specialty metals producers by keeping currency
    valuations low.
        Here at home, we are concerned about a new targeted dumping
    methodology proposed by Commerce and USTR, which will severely
    weaken our anti-dumping laws. Additionally, we are concerned
    about the potential use of foreign trade zones to subvert
    existing tariffs.
        ATI is proud to produce materials critical to the national
    defense. No weapon, naval or aerospace program could function
    without specialty metals. Congress recognized this more than 40
    years ago with the specialty metals amendment, and we encourage
    Congress to continue to support that. Thank you again for the
    opportunity to testify, and I would be happy to answer any
    questions.
        Mr. Terry. Thank you.
        [The prepared statement of Mr. Harshman follows:]
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        Mr. Terry. We have 6 minutes before we have to go to the
    floor and make our votes, so we are going to have one last
    witness. Mr. Surma, Mr. Rippey and Ms. Pena Lopes, we will wait
    till we get back. We will probably gavel and go. You are
    invited to our anteroom, which actually has coffee.
        Mr. Rehwinkel.

                      STATEMENT OF MIKE REHWINKEL

        Mr. Rehwinkel. Mr. Chairman and members of the committee, I
    am Mike Rehwinkel, president and CEO of EVRAZ North America. My
    company makes flat, long and tubular steel for a variety of
    industries, including the energy sector, infrastructure like
    rail, bridges and roads, building construction, and we are very
    proud of the armor plate we developed for the U.S. military. We
    employ 4,500 people in the United States and Canada. Roughly
    half of the employees work in our Pueblo, Colorado, Portland,
    Oregon, and Claymont, Delaware, operations. In the last 56
    years, we have made more than 20,000 miles of pipe.
        Thank you for the opportunity to discuss the future of
    steel manufacturing in this country. Today I want to join my
    colleagues in painting a picture of what our industry needs to
    support the nearly 154,000 well-paying jobs we currently
    provide for American steel workers and to create new jobs for
    the future.
        Modern steel mills are highly technical operations, they
    require bills of dollars in capital investments, demand a
    highly skilled labor force. After touring the EVRAZ Colorado
    mill, U.S. Senator Michael Bennett said, ``I have got it. These
    are the middle class jobs we are talking about in Washington
    and this is a place that creates them.''
        Steel companies in America are very responsible corporate
    citizens, strong stewards of the environment. In fact, EVRAZ is
    a largest recycler in Colorado and Delaware. We make new steel
    products from scrap metal.
        Mr. Chairman, to be competitive in today's market, we need
    a reasonable and streamlined regulatory approval process for
    the construction and permitting of new facilities or
    modernization of existing ones. If we are going to create and
    maintain the jobs this country needs right now, the process
    should meet the letter and spirit of the law. The process
    should be timely and provide a high degree of certainty that
    once the requirements are met, the project will be able to
    proceed. It should be a proceeding that recognizes the scope of
    the project being considered.
        Currently, navigating the bureaucratic permitting process
    is extremely frustrating in terms of the time, scope and
    uncertainty. It has become controlled by special interests that
    raise issues outside the purview of the process simply to delay
    an approval.
        To continue to have a healthy industry, regulations should
    be well defined and we need to have a good working relationship
    with regulators to obtain the most efficient results. A case in
    point: the proposed Keystone XL Pipeline. This project includes
    550 miles of my pipe. It will provide a competitively priced,
    reliable North American supply option for Gulf Coast refinery.
    Its completion is important for several compelling public
    policy reasons. Pipelines are safe, efficient form of
    transportation for liquids and gases. The required regulations
    regarding Keystone construction, operation and safety have been
    met, yet ongoing delays, reviews and questions, alternative
    routing have delayed this particular project. These delays are
    undermining the goal of secure, stable energy supplies in our
    country.
        Permitting reviews should continue to be fact-based and
    focused on individual projects. Additional studies with
    secondary implication of production activities like refineries
    or supplementary pipeline should be evaluated independently of
    the appropriate government agencies.
        Approval time frames must be reasonable. Keystone was
    approved by the Department of State and 11 cooperating
    agencies. It has been exceptionally comprehensive. There was
    rigorous environmental review and ample opportunity for public
    input and participation.
        In summary, the needs of the Nation and special interests
    were both considered, the Keystone Pipeline met all regulatory
    hurdles, and it should be allowed to proceed without further
    delay.
        Finally, I would like to point out that it is North
    American products that meet the high quality standards for
    steel products in general and this pipeline in particular. The
    economic boost the energy renaissance will provide in terms of
    the increased production and jobs should be benefits enjoyed by
    north Americans, not foreign countries flooding us with
    subsidized and unfairly traded imports that may be of inferior
    quality.
        We in the steel industry will gladly meet or exceed all
    regulatory requirements, but we need our government's support
    to ensure that once these requirements are met, we can get our
    U.S. steelworkers back to making the products we need to
    rebuild and repair our Nation's infrastructure and get our
    natural resources to market. Thank you for your time.
        Mr. Terry. Perfectly done. I appreciate that.
        [The prepared statement of Mr. Rehwinkel follows:]
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        Mr. Terry. Members, we have a minute three, but 288 of us
    have yet to vote. We will see you in a little bit.
        [Recess.]
        Mr. Terry. We have gotten word that Jan is on her way, but
    we can go ahead and start.
        So, Mr. Surma, you are up.

                        STATEMENT OF JOHN SURMA

        Mr. Surma. Thank you very much, Chairman Terry and members
    of the subcommittee.
        I would like to start by thanking you for devoting an
    entire hearing to the state of our steel industry. We have long
    recognized that our industry has a true champion in your
    distinguished colleague, Steel Caucus Chairman Murphy, who was
    just with us, and we appreciate the efforts he puts forth on
    the policy and political front to advance our steel industry's
    interests. Your willingness to hold today's hearing speaks
    volumes about Mr. Murphy's enthusiasm and persistence in
    promoting an industry that is important to the country,
    especially to his district, where I live, and his State, where
    we are headquartered, and we employ nearly 6,000 people.
        Steel is a globalized industry that competes fiercely on
    costs and quality to win and keep markets. Too often some of
    our biggest challenges come from counterproductive and costly
    government policy and regulation. The Energy and Commerce
    Committee knows these problems well, and we appreciate your
    efforts to conduct vigorous oversight of U.S. EPA regulations
    and guidance, and to attempt to achieve a better cost-benefit
    analysis of individual rulemakings, as well as a cumulative
    cost of regulatory compliance.
        I will spend my brief time this morning talking about
    America's natural gas success story and how it is affecting the
    steel industry and our company.
        Just a few short years ago, few could grasp the economic,
    social, and environmental potential that would be unleashed by
    the discovery and technological mastery of bringing America's
    shale resources to market in the form of oil and natural gas.
    Today, however, we read U.S. Government reports projecting that
    the United States will be the largest energy producer in the
    world by 2020.
        As a result of this new supply source and our ability to
    extract it safely and economically, there is a renaissance
    under way in the manufacturing sector. It is propelled by the
    availability and competitive pricing of natural gas. Electric
    utilities; industrial users, including refiners, chemicals,
    steel, and the transportation sector; and households are all
    turning to natural gas as a clean and cost-effective energy
    source.
        United States Steel Corporation has been manufacturing
    high-quality steel products for more than 100 years. Since
    1901, our products have included pipes and tubes for energy
    industry customers, and today we are the largest supplier of
    these products in North America.
        As the energy industry has increased its domestic
    exploration and production efforts, new markets have emerged
    for steel tubular products and services. The energy sector has
    been a rare bright spot for us during a challenging period of
    economic recession and painfully slow growth in the rest of the
    economy.
        We built and invested in a new joint venture in northern
    California to produce large-diameter spiral-welded pipe to
    serve pipeline and distribution customers. We are designing new
    grades of steel and new products, such as our PATRIOT and USS
    LIBERTY premium connections to serve the exacting requirements
    of shale drilling and production. We are adding new
    capabilities at our operating facilities to serve our
    customers' growing and changing needs, including a new $100
    million finishing facility in Lorain, Ohio, began operations in
    late 2011, created 100 new full-time jobs, and the
    refurbishment and reopening of McKeesport Tubular operations
    just south of Pittsburgh.
        U.S. Steel is also one of the country's largest natural gas
    consumers. In fact, we consume all forms of energy, including
    natural gas, coal, coke, electricity, and biomass. To give you
    an idea of our natural gas use, in 2012, U.S. Steel used more
    than 130 million MMBTUs of natural gas across our North
    American facilities. So ever $1 change on the NYMEX is over
    $100 million impact on our bottom line on an annual basis.
        The current competitive price situation has been very
    positive for our steel-producing activities, where we use 6
    MMBTUs per ton of steel shipped. Here in the U.S. Those 6
    MMBTUs cost us around $25. In Europe, where we also operate,
    those same 6 MMBTUs cost us close to $75. Twenty-five dollars
    here, 75 in Europe. That is called being competitive, and that
    is reality.
        We are as concerned as anybody about prices and volatility,
    but we also have great confidence in the ability of our
    domestic share reserves and the energy industry to meet
    America's natural gas requirements if they are permitted to do
    so.
        Competitively priced natural gas has enabled us to enhance
    our industrial processes and technologies, while improving our
    environmental performance along the way. As you know, natural
    gas emissions contain about half the greenhouse gases present
    in coal emissions. So every ton of coal we can replace with
    natural gas helps us to reduce our total emissions.
        One example is increased injection of natural gas to our
    blast furnaces in order to reduce our usage rates for coke,
    which we derive from coal, an important material in our iron-
    making process. We now have the ability to the optimize the
    blend of fuels to attain the lowest carbon cost for each
    particular furnace as well as to make adjustments to maintain
    that cost based on the changing relationship between coke,
    injection coal, and natural gas.
        Let me close my remarks with a couple of comments
    concerning the recent surge in imported steel products
    generally, which my distinguished colleagues have discussed,
    but specifically on pipe and tube imports.
        In 2010, the U.S. Imported almost 2.3 million tons of oil
    country casing and tubular goods used in exploration in
    developments of oil and natural gas. Last year the U.S.
    Imported over 3.4 million net tons of these high-tech, high-
    value-added products, an increase of more than 51 percent over
    a 2-year period.
        Some foreign production have been even more aggressive.
    Since 2010, casing and tubing imports from South Korea are up
    more than 58 percent, imports from Taiwan are up more than 88
    percent, and imports from Saudi Arabia are up more than 420
    percent. Same story is true for many other pipe products.
        Even though the last year featured a relatively strong
    market for OCTG, public pricing sources estimate that U.S.
    Prices of casing and tubing fell by as much as $200 per net
    ton. Very disconcerting following large capital investments to
    serve the sector by our company and others.
        Let me just conclude by saying that the shale gas
    revolution holds great promise for American industry and
    workers. We believe the import surge problem calls for strong
    responses from all who believe that true market-based
    competition is the best pathway to prosperity. The time has
    come for a strong global consensus that winners and losers in
    the steel business should be determined by hard work,
    innovation, costs and competition, not by market-distorting
    government programs.
        Mr. Terry. Thank you very much.
        [The prepared statement of Mr. Surma follows:]
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        Mr. Terry. Mr. Murphy wanted you to have more time to say
    nice things about him, but he wasn't here to hear your
    beginning, so I am going to have to deny that request.
        Mr. Rippey.

                     STATEMENT OF MICHAEL G. RIPPEY

        Mr. Rippey. Mr. Chairman and members of the subcommittee, I
    am Mike Rippey, president and CEO of ArcelorMittal USA. On
    behalf of my company and its 20,000 U.S. Employees, I want to
    thank you for holding these hearings on the future of American
    manufacturing.
        If I can leave you with only one thought today, it is this:
    The American steel industry represented by those at this table
    is simply not your grandfather's or even your father's steel
    industry. The industry represented here operates at the cutting
    edge of material science. It produces high-technology solutions
    for its customers. It does so with increasingly advanced and, I
    might add, expensive equipment operated by a highly skilled and
    tech-savvy workforce. Its employees are better paid than almost
    any industrial workers in the world. In short, it provides
    great jobs for American workers and for our country.
        You have my full testimony, so I won't address all the
    issues raised in it, but there are two that I would like to
    highlight now, and I am happy to answer questions on the
    others.
        First, let me address how we are supporting our auto
    customers. ArcelorMittal is the number one worldwide supplier
    of automotive steels. One out of every five cars in the world
    is made of ArcelorMittal steel. So you can understand that we
    work hard every day to meet the ever-changing needs of our auto
    customers.
        Since the early 1900s, steel has been the standard material
    for car body construction. It is strong, moldable, and low
    cost. But customer expectations and government regulations such
    as CAFE have challenged automakers to increase safety, improve
    fuel economy, and reduce CO2 emissions all at the
    same time. A huge challenge. I am here today to tell you that
    the steel is meeting the challenge.
        When the Transportation Department and EPA first announced
    the goal of bringing the fleet to a Corporate Average Fuel
    Economy of 54 \1/2\ miles per gallon by 2025, there were those
    who proclaimed that this was simply game over for steel. We
    knew otherwise. So to demonstrate this, we obtained from EPA
    and NHTSA the very computer models used to assess fuel
    technology and set standards. These models show that weight
    reduction we can achieve with advanced steels combined with
    power train improvements can indeed get 54 \1/2\ miles per
    gallon. The models also show that steel gets the fleet 54 \1/2\
    miles per gallon at a lower cost than other materials.
        We understand that part of the objective of this standard
    is to reduce greenhouse gas emissions. We urge the subcommittee
    to make sure that CAFE regulations measure the full impact of
    materials on the environment, from cradle to grave, or over the
    life cycle. Models show that steel gets the fleet 54 \1/2\
    miles per gallon with a lower total life cycle carbon footprint
    than other materials that are significantly more energy and
    emissions intensive.
        We can achieve these incredible technological advances in
    automotive and many of our other product applications because
    of the innovation of our workforce, the hard-fought relative
    prosperity of the domestic steel industry, and our R&D
    initiatives. But that prosperity is threatened every day. That
    is why we need your help to transform America's vital
    manufacturing base and to ensure a secure job future for our
    workers.
        One of our highest priorities must be to identify,
    encourage, and train manufacturing workers in the future. In
    the next few years, because of retirements, we face having
    hundreds of job openings left unfilled either because of
    today's young people have forgotten about manufacturing, or
    because they lack the skills and work values we need.
        To address this shortage ArcelorMittal initiated
    Steelworker for the Future in 2008, an associate degree program
    in partnership with great community colleges located near our
    plants. We work with local high schools to attract science- and
    math-savvy students to this program, where they get classroom
    training at a reasonable cost. Then we offer them paid
    internships at our plants. Qualified graduates are offered
    full-time jobs when they finish this program. If they don't
    want to work for us, they still end up with a set of skills for
    a lifetime, these skills that will allow them to be valued by
    other manufacturing companies.
        I would urge the committee to look closely at private
    programs like Steelworker for the Future as a possible template
    for a national campaign to educate young people about the
    incredible possibilities that today's manufacturing industries
    offer. With thousands of great jobs going begging every year in
    manufacturing, it is time we made a national priority to value
    and train people who make things.
        Mr. Chairman, once again, thank you for the opportunity to
    testify, and I look forward to your questions.
        Mr. Terry. Thank you.
        [The prepared statement of Mr. Rippey follows:]
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        Mr. Terry. Now Ms. Pena Lopes. Appreciate your being here.

                     STATEMENT OF YVETTE PENA LOPES

        Ms. Pena Lopes. Thank you. Good morning.
        Chairman Terry, Ranking Member Schakowsky, and members of
    the subcommittee, I am Yvette Pena Lopes, deputy director of
    the BlueGreen Alliance. On behalf of my organization, our 14
    national labor and environmental partners, and the estimated 15
    million members and supporters they represent, I want to thank
    you for holding this hearing today. We appreciate the
    invitation to testify and are honored to join the other
    panelists from the Congressional Steel Caucus and the steel
    industry; in particular, the CEOs of ArcelorMittal, Allegheny
    Technologies, and EVRAZ, who are each valued members of the
    BlueGreen Alliance's Corporate Advisory Council.
        United Steelworkers and the Sierra Club founded the
    BlueGreen Alliance in 2006 and have since grown to incorporate
    12 other labor and environmental organizations to create an
    alliance built with a wide variety of priorities and
    backgrounds. Our partners have come together to move America
    towards a 21st century clean economy, and manufacturing has
    consistently been a major focus of the alliance.
        The economic downturn and years of shifting manufacturing
    production took a significant toll on U.S. Manufacturing and
    their workers. America has begun to change this, but much more
    needs to be done to bring these jobs back and ensure that
    American manufacturing, and the steel industry in particular,
    are drivers of America's 21st century clean economy.
        To achieve this rebirth, we must implement the following
    five drivers of American manufacturing. First, we must rebuild
    our Nation's infrastructure. Investment in our infrastructure
    can yield tremendous benefits, including jobs and expanded
    demand in our domestic steel sector. One out of every four of
    the Nation's bridges are structurally deficient or functionally
    obsolete. Nearly a quarter of the Nation's bus and rail
    infrastructure is in marginal or poor condition. Across the
    country 700,000 tons of steel plate is used annually in bridge
    and building construction projects. If a properly structured
    infrastructure program is implemented, job creation for the
    manufacturing sector could clear more than 250,000 new jobs.
        Second, we must deploy more industrial energy efficiency.
    Energy efficiency leverages productivity and power from
    resources that in many cases would otherwise literally vanish
    into thin air. When combined with smart policies aimed at
    minimizing the economic impact to power providers, efficiency
    gains can be a win for manufacturers, utilities, workers,
    consumers, and the environment.
        Third, you must integrate more advanced transportation and
    clean energy into our economy. Whether it is more efficient
    technology in advanced materials for automobiles, commercial
    scale wind turbines, or rail lines, steel is a necessary
    component for these industries that will drive the 21st
    century.
        Last year the Obama administration set forth the strongest
    clean car standards in a generation, making conventional
    technology significantly more efficient and using advanced
    materials to make our cars stronger yet lighter, which will
    make the biggest contributions towards getting the American
    vehicle fleet to 54.5 miles per gallon over the next 12 years.
        Over the next decade, an estimated $2.3 trillion will be
    invested in clean technologies; however, according to Ernst &
    Young, the U.S. Renewable energy investment climate is losing
    attractiveness, while countries like China and Germany are
    gaining ground. Existing policy support for clean energy does
    not provide adequate long-term certainty for the industry to
    succeed. We must implement long-term policy certainty.
        Fourth, we must ensure products and components are made in
    America. Buy America policies reflect where the jobs are, not
    where the manufacturing companies are headquartered or
    incorporated. This approach ensures that taxpayer dollars are
    reinvested in jobs in communities here at home.
        Fifth, we must continue to support research and
    development. Manufacturing is responsible for 70 percent of all
    private-sector research and development spending and 90 percent
    of all American patents.
        The Department of Energy's Advanced Manufacturing Office
    recently launched the Innovative Manufacturing Initiative. One
    of the projects selected was a partnership between DOE,
    ArcelorMittal, U.S. Steel, and others to produce flash
    ironmaking technology, which is a cleaner, coke-free way to
    produce iron from abundant domestic iron ore concentrates and
    natural gas with a 30 to 50 percent improved energy
    productivity. We must continue to support R&D such as this as
    well as the work being done at the Department of Commerce.
        Mr. Chairman, Ranking Member Schakowsky, and fellow members
    of the subcommittee, we truly believe that these five measures
    will go a long way toward helping America and its workers
    reinvigorate the steel sector, U.S. Manufacturing, and the
    middle class, and move America to a clean economy while
    ensuring that we continue to address climate change.
        Once again, thank you for the opportunity to testify today.
        Mr. Terry. Thank you very much.
        [The prepared statement of Ms. Pena Lopes follows:]
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        Mr. Terry. And thank you to all of our folks here on the
    panel. Very well done.
        This now starts our question period. We get to ask you
    questions, and you get to answer. And it is not under oath, but
    we still expect you to be honest and truthful with us. That is
    right. You had to agree to that and sign that. That is right.
        So most of the discussions really boil down to a few areas
    that there seems to be consensus among you, and that is the
    trade policies, energy policies. And then amongst the energy
    policy is being cleaner, more efficient. And then I should add
    workforce. So I am going to focus my first round of questions
    on energy, and probably to Mr. Surma and Mr. Ferriola. I'll
    start with you, Mr. Ferriola.
        What is your current worry about energy--what is the one
    thing in that general field that worries you the most or
    concerns you the most?
        Mr. Ferriola. Well, we believe that the best way to get
    sustainable growth in the economy is through job creation. We
    need to create more jobs here at home. To do that, we need a
    reasonably low-priced, affordable, and available energy source.
    Natural gas is a great answer to that need.
        Our concern is that we will export that competitive
    advantage away. We are not saying that you cannot export
    natural gas. We believe that you need to show concern about
    both the producer and the user of that natural gas, focus on
    restoring our manufacturing base here in America first, and at
    that time, if we have excess gas, then we should export it.
        Mr. Terry. Mr. Surma.
        Mr. Surma. As I mentioned in my remarks, Mr. Chairman, our
    company is very large user of natural gas, and we are also the
    largest pipe producer and providing pipe and other services to
    natural gas producers. So inside our company we have the same
    tension that may be felt across your committee. We believe that
    a middle-of-the-road approach, cautious approach, to natural
    gas, LNG exports would be appropriate, as my distinguished
    colleague just mentioned.
        We have to keep a close eye on the supply side. I think it
    would be important, and we would very much be in favor of a
    policy, administration Federal policy, that encourages
    continued development of domestic energy sources, natural gas
    liquids, and oil, and with pipeline transportation, because it
    is safer and better, as my colleague said, but also uses a lot
    of steel. A policy which says no exports we think is really
    outside of what WTO would want anyway. A policy which says
    unbridled exports are fine I think causes us supply worries. So
    we think a process that is cautious, that allows the market to
    give us some information as these large projects would come on
    stream, and balances the supply/demand so that large users like
    us aren't at risk.
        The supply side needs to be encouraged by Federal policy
    that should encourage very high environmental standards. We
    should make no compromise on that. But I think it can be done
    safely in an environmentally sustainable way while still
    providing enormous economic benefits, employment, balance of
    trade among other things, to domestic industry. So a favorable
    energy policy that encourages domestic development and a
    cautious approach to exports.
        Mr. Terry. Anyone want to add to that testimony? Anyone?
        All right. In regard to natural gas sustainability,
    availability, reliability, affordability, do any of you worry
    about EPA regulations or potential regulations?
        Mr. Surma.
        Mr. Surma. I maybe was not as explicit as I should be. We
    think regulations that would be designed to impede the
    continued safe and economically sustainable development of
    domestic natural gas would be a terrible idea. We think the
    domestic natural gas production process has been demonstrated
    to be safe. They should be held to very high standards.
        But if one wonders why domestic natural gas is such a
    success story in the U.S., this is the only place that there
    are rocks with gas in them. OK? Argentina, Poland, Wales,
    China, everywhere. The reason it is successful here is because
    we have an entrepreneurial culture, capital markets that allow
    capital to flow to a good use like that, open access pipelines,
    and a market. And we think that that process of entrepreneurial
    spirit should be allowed to continue with very high standards.
    No problem with that, and I think the good companies know how
    to do that.
        But we think that the supply side of this is extremely
    critical if, in fact, the other benefits are intended to flow.
    We use 130 million MMBTUs of gas per year, and I don't want to
    have to worry about where it is going to come from, and I would
    rather not see it at $10 an M, which is what it was not too
    long ago.
        Mr. Terry. Yes. I remember that time.
        Anyone else want to add on to that?
        Mr. Ferriola.
        Mr. Ferriola. I think my colleague said it very well.
        Mr. Terry. All right. Then I will recognize the gentlelady
    from Chicago, the ranking chairman, Ms. Schakowsky.
        Ms. Schakowsky. Thank you, Mr. Chairman.
        I wanted to ask Ms. Pena Lopes, I wanted to begin with
    this. I feel that the greatest challenge facing humankind on
    Earth today is if we--is climate change, and that it can
    disrupt nations and their stability and create massive
    disruptions. Obviously your coalition has brought together what
    some see as disparate partners, and I am just wondering how
    those--how you have resolved those kinds of issues in your
    coalition.
        Ms. Pena Lopes. Thank you for your question, Ranking Member
    Schakowsky.
        So all of our partners are committed to addressing the
    issue of climate change. Everybody cares and wants a cleaner,
    more safer Earth, I guess you can call it. And also everybody
    embraces the potential opportunities that come from addressing
    climate change as well.
        From our perspective, whether in the past when we supported
    comprehensive climate change, or even now as we are working
    through the issues of the various EPA regulations on greenhouse
    gases that are potentially before us, we really just--we see
    this as, again, not just an opportunity to combat climate
    change, but a real opportunity to create jobs and make our
    industries and companies more efficient.
        On the issues that we don't--I am sorry. On the issues that
    we--there are differences, and there are quite a few, we really
    provide a safe table to understand each other's perspectives,
    but then do not take a position on them in the end if that is
    where we land.
        Mr. Schakowsky. Your written testimony cited a 2009
    McKinsey & Company study that stated that the U.S. Can reduce
    primary energy consumption by 21 percent by 2020, saving the
    U.S. $47 billion a year, just by unlocking potential for energy
    efficiency in the industrial sector. So I am wondering if you
    could elaborate a bit.
        Ms. Pena Lopes. Sure.
        Mr. Schakowsky. And then any of the others that would want
    to contribute to that.
        Ms. Pena Lopes. Great. Thank you for your question.
        We see a lot of opportunity in industrial efficiency. As
    you know, the Obama administration several months ago put
    forward an Executive Order with respect to industrial
    efficiency and to work towards that. There is also legislation
    that is about to be introduced.
        But we have seen great examples like with ArcelorMittal.
    There was a Department of Energy ARRA grant of--actually, it
    was a matching grant for $31 million that really led to great,
    great savings where they were actually able to generate and
    regenerate their energy. This, of course, means, again,
    cleaner, more efficient industry and also------
        Mr. Schakowsky. If I could just--I wonder if Mr. Rippey
    would want to comment on that.
        Ms. Pena Lopes. Yes.
        Mr. Rippey. The project that Ms. Lopes refers to is our
    number 7 blast furnace in East Chicago, Indiana. It is the
    largest blast furnace in North America. Prior to receiving
    applying for and receiving that grant, the total amount of the
    project was $63 million, we were simply flaring the waste gas
    from that furnace. We were able, in the presence of the grant
    and installing this equipment, to capture 100 percent of that
    waste gas and convert it to electricity, which, of course, can
    be used to supply homes and every industrial application for
    electricity that we can imagine. So it is a wonderful example
    of how industry can continue and should improve its use of
    energy resource in this country.
        I might add that since 1990, the domestic steel industry
    has reduced its use of CO2 by nearly 30 percent and
    its greenhouse gas emissions by 33 percent. So I think we have
    a track record in this area of success, and we should continue
    to challenge ourselves in this area.
        Mr. Schakowsky. And is it true that it saves your company
    nearly $20 million?
        Mr. Rippey. Yes, it did.
        Ms. Schakowsky. A year?
        Mr. Rippey. Per year, yes, that is correct.
        Ms. Schakowsky. Pretty impressive.
        Mr. Rippey. Win-win project all the way around, as people
    define win-win.
        Ms. Schakowsky. Excellent.
        Did you want to say something, Mr. Surma? I didn't know if
    you wanted to add anything.
        Mr. Surma. Just briefly. In our company's case, as I
    mentioned, we are using natural gas now to inject into our
    blast furnaces, thereby reducing the amount of coal-based coke
    that we have to use by significant amounts that financially
    probably save us on the order of $100 million a year. But the
    emissions reductions on that are also significant, and we are
    doing that because it is in our best business interests to do
    so, and it is entirely consistent with the kind of emissions
    reductions you would like to see.
        One of the reasons that our industry has the lowest per-
    unit carbon emissions per ton in the world is because we are
    also the most recycled material of all time.
        Ms. Schakowsky. Do you mean the U.S. Steel industry?
        Mr. Surma. Yes.
        Ms. Schakowsky. You are comparing------
        Mr. Surma. Versus the rest of the world.
        In the U.S., if we have roughly 100 million tons of
    production, two-thirds of that is from recycled material, scrap
    metal. It is the highest recycling rate of all time, more than
    aluminum, glass, plastic times four. The best recycling system
    of all time because economics drives it. And that is one of the
    reasons we are reusing the energy and the labor and the
    materials over and over again.
        Almost all the steel that has ever been produced since the
    1890s is still in use today. It doesn't go to a landfill, it
    goes back in the system. So it is a wonderful system that
    allows us to enjoy economics and emissions levels which are far
    superior to most of the rest world.
        Ms. Schakowsky. Thank you so much. I am going to have to
    yield back.
        Mr. Terry. Thank you.
        Mr. McKinley, you are--I am sorry, Mr. Lance is recognized
    for 5 minutes.
        Mr. Lance. Thank you, Mr. Chairman. I will be brief.
        To Mr. Harshman, in your testimony you state that your
    industry continues to see substantial evidence of unfair trade
    practices, such as dumping and foreign governmental subsidies
    to the specialty steel sector. Might you be able to describe
    with some specificity what these practices are, and who are the
    worst offenders, and what trade enforcement options do you
    believe are at your disposal?
        Mr. Harshman. Sure. Thank you.
        First of all, across all of our alloy systems, we are very
    diversified starting with stainless steel and getting into the
    much higher, more technological, higher barrier to entry of
    titanium and nickel alloys. But that competition is coming, and
    it is coming from the same places. We see the more commoditized
    products------
        Mr. Lance. Coming from Asia?
        Mr. Harshman. Coming from China, it is coming from Korea,
    it comes from Russia in terms of titanium. Eventually, longer
    term, 10, 15 years down the road, it will come from places like
    India.
        Mr. Lance. And the titanium is found where?
        Mr. Harshman. Titanium as an element is the seventh most
    common element in the Earth's crust. And it starts either with
    ore or rutile, and from that is produced titanium sponge, which
    is a raw material that we then melt and alloy and produce into
    the kind of products that make rotating components in a jet
    engine.
        On the dumping side, really where we see it in our business
    today is more on the more commoditized business of stainless
    steel. And we can go back and where the U.S., in 2012--where
    the U.S. Economy began to weaken after a reasonable recovery in
    the first quarter from a very challenging 2011, we saw--at the
    same time as our demand started to decrease, we saw significant
    or some weakening in the Chinese market from a production
    standpoint.
        And we can track when the imports from China began in March
    and April, really the surge of imports into the U.S. Market in
    that same time period where the Chinese economy started to
    weaken, significant dumping of product in the U.S. at very low
    prices, so that today there isn't--looking at just stainless
    steel, there isn't a stainless company in the world that is
    profitable. And that has to do with capacity, a large part of
    the capacity------
        Mr. Lance. What should we do about that?
        Mr. Harshman. Well, part of what--we are not going to
    control what happens in the Chinese market, but we can, as a
    Nation, make them live up to their commitments that they made
    when they were admitted to the WTO, and, in addition, look at
    the manipulation of currency, which has to be viewed as a
    significant market distorter.
        Mr. Lance. We certainly urged the administration to do
    that. Is there anything we can do in our responsibilities as
    the legislative branch?
        Mr. Harshman. Keep pushing it. I know there was a bill
    introduced yesterday that continues to focus on the Chinese as
    a currency manipulator; not just China, but other nations of
    the world as well. And we are at a trade war. We are in a trade
    war today. And it is represented by all of the companies
    sitting at this table, and longer term, as you get into the
    more advanced alloys and alloy systems, the capabilities and
    the technologies that this country has today the Chinese aspire
    to, the Indians aspire to, and longer term the Vietnamese
    aspire to.
        Mr. Lance. Thank you.
        Do the other members of the panel agree with what Mr.
    Harshman has said?
        Unanimity, let the record show. So rare here in Congress.
        Thank you, Mr. Chairman. I yield back the balance of my
    time.
        Mr. Terry. Thank you.
        At this time we recognize the kind gentleman from North
    Carolina Mr. Butterfield for his questions.
        Mr. Butterfield. Thank you very much, Mr. Chairman. I
    apologize for being late to you, but you know the routine that
    we keep around here. I left the floor a few minutes ago after
    we passed that continuing resolution. It is going to keep the
    government open now until September 30th. At least we have that
    behind us. Now I am preparing to get in my automobile and drive
    4 hours to my district. So I apologize for being late.
        But, Mr. Chairman, I thank you for holding today's hearing
    on the American steel industry. And I just want to say publicly
    that plate steel is a very important part of my congressional
    district, and Nucor has a very robust facility there in my
    district. And while they are providing good steel for the
    world, they are also providing good jobs for the people that I
    represent. And so steel is so very important to me.
        It is clear from today's testimony that we can do more to
    support domestic steel production. The U.S. Is the third
    largest producer of steel in the entire world, but we rank
    number 12 in exports. We must develop and support policies that
    disincentivize foreign steel producers from circumventing
    existing antidumping and countervailing duty orders.
        And so the gentleman from Nucor Mr. Ferriola, I appreciate
    you and all of our other witnesses for being here today. You
    are the president and CEO of Nucor. And, as I said in my
    opening statement, Nucor is a very large steel producer in my
    district. Nucor has a tremendous presence in the district and
    is a great success story for eastern North Carolina in domestic
    steel production. At their Hertford County facility alone,
    Nucor's 458 employees produce an astounding 1.6 million tons of
    steel plates every year. And I have been there, and I have seen
    it on many occasions, and it is really something to behold.
        Nucor recently completed a $110 million heat-treating
    facility that now enables them to manufacture steel armor
    plates for the military, having a direct impact on the safety
    and security of our forces.
        As you may know, I have toured the facility and have gotten
    to know your team very well. They are hard working and
    dedicated. And on behalf of Hertford County and all of us in
    the district, we are happy to have them.
        And so, to the witnesses, I will direct this question to, I
    guess, Mr. Ferriola. I highlighted the $110 million capital
    development project in one of my counties. When so many
    businesses are downsizing, layingoff employees, or, even worse,
    closing entirely, what motivated you and your company to make
    such a large capital investment in a rural community?
        And I might also tell my friends that my district is the
    fourth poorest district in the United States of American.
    People don't realize that, but we are right at the bottom. And
    what motivated you to make this investment?
        Mr. Ferriola. Fate and confidence in our team, our workers,
    and, frankly, in the American worker. We believe that if we are
    allowed to have a level playing field, American industry, the
    American worker, the Nucor teammate will compete very
    successfully on the world market.
        So we are not afraid to make these type of investments. We
    do ask for your help in making sure we get that level playing
    field so that we have the opportunity to earn the types of
    return on those investments that we need to continue to provide
    long-term, sustainable, high-paying jobs for Americans.
        Mr. Butterfield. And it makes you competitive with anyone
    in the world; is that right?
        Mr. Ferriola. We believe that we are more than competitive
    with anyone in the world.
        Mr. Butterfield. Thank you. Thank you so very much.
        I yield back, Mr. Chairman.
        Mr. Terry. Thank you, Mr. Butterfield.
        At this time, Mr. McKinley.
        Mr. McKinley. Thank you, Mr. Chairman. I have got probably
    20 minutes of questions to try to get in to 5, so I don't think
    we are going to be able to get through all.
        But I come from an area that has been markedly affected by
    the demise of the steel industry, the northern panhandle of
    West Virginia. We used to have 30,000 steelworkers in those
    communities. So you look at that as 90,000, maybe 90,000
    citizens, that were affected, that have lost their jobs. So I
    am very frustrated with it.
        We are not Philadelphia or New York or Chicago or St.
    Louis. This is America, these little towns that are being
    affected with it. And we were told over the years--I am going
    back just in the 1980s that we had 30,000. We were told that it
    was the dumping and currency manipulation was much of the fault
    of the demise of the steel in our valley.
        I applaud ArcelorMittal for holding on to the tin mill in
    Weirton, but you drive through that town, see the rest of it
    all boarded up, it just takes your breath away to think of all
    the hundreds of thousands of people that are hurting as a
    result of this loss.
        So my question in part is why--what are you hearing why
    they--the administration won't cite China as a currency
    manipulator? Does anyone know why they won't do that? If
    everyone keeps saying it is currency manipulation, but yet the
    administration won't cite them.
        Mr. Harshman. Yes, I--quite frankly, this has been going on
    for a long time.
        Mr. McKinley. Could you speak up just a little bit, please?
        Mr. Harshman. This has been going on for a long time. This
    is not just within the last 4 or 5 years. So from--this is a
    national problem, right? This isn't a political issue. But I do
    think that------
        Mr. McKinley. What------
        Mr. Harshman. Well, the best answer, the only answer I keep
    hearing, is, well, they're--we can't get into a trade war with
    the Chinese. That will start a trade war. And in actuality----
    --
        Mr. McKinley. So we can just expect to have more Weirtons,
    Martins Ferry, Bel Air just dry up?
        Mr. Harshman. Well, sir, I can't answer that from the
    standpoint of the administration or the Congress, but I can
    tell you from the standpoint of a CEO of a large manufacturing
    company that operates in 18 States in the United States, many
    of whom are represented on this panel, that this is a war. This
    is a trade war. And we can't stand behind the view that we
    can't--that we don't want to upset------
        Mr. McKinley. Would we be adding to this trade war if we
    tried to level the playing field------
        Mr. Harshman. I don't believe so.
        Mr. McKinley. Let me finish. If we were to level the
    playing field by requiring as part of the determination for
    fair trade or fairness to have our competing nations have the
    same air and water qualities that we have here in America?
        Mr. Harshman. I think that is part of the level of the
    playing field.
        Mr. McKinley. What would happen to American production if
    we caused that to happen, that nations would have to meet our
    standards so that it is a level playing field?
        I am a fellow of the American Society of Civil Engineers,
    so I am well aware of all the bridges and repairs that have to
    be done. I am very concerned that we are going to continue to
    lose our position. So I--what happens then?
        Mr. Harshman. I think what happens is that you have a
    stronger U.S. Economy that is growing and providing jobs. That
    is what happens.
        Mr. McKinley. How about, I assume the rest of you would
    agree with that, that that really would have a dramatic impact?
    I don't know how realistic it is, but I sure think it ought to
    be a shot fired across someone's bow.
        Yes, U.S. Steel?
        Mr. Surma. If I could add, Mr. McKinley, last week--the
    American Iron and Steel Institute always releases our industry
    utilization statistics.Last week our industry ran at about 73
    or -4 percent. Last week China set an all-time record
    production. So in our country, if we need 120 million tons of
    steel, we are only producing about 90-some million tons of
    that. The rest is coming from places that don't live here.
        As a young auditor, Mr. McKinley, my first client was
    Wheeling-Pittsburgh Steel. I have been to Benwood, Beach
    Bottom, Follansbee, Martins Ferry. I have been there. It is
    tragic. And if we were running at 85 or 90 percent, those folks
    would be at work today.
        Mr. McKinley. Let me just close in the time frame I have. I
    don't know whether any of you are aware that there is a
    potential trade barrier or conflict we are having with Canada
    right now that steel pipe--there is a--in the province of
    Ontario, the regional council appeal has banned the use of
    steel pipe in a $500 million water project. Are any of you
    aware of that, that they are banning steel pipe? They are
    replacing it with concrete.
        And what I want to make sure is that we stop this trade
    problem early before it becomes contagious and other people
    pick up on that issue. So any of you could look into that, I
    would love to hear back from you.
        Mr. Terry. Thank you, Mr. McKinley.
        Now Mr. Guthrie from Kentucky.
        Mr. Guthrie. Thank you, Mr. Chairman. Appreciate you having
    this hearing because this is important.
        My family is in manufacturing. My dad worked for Ford in an
    aluminum-casting facility, and now have one that we run--after
    that plant closed, we had one of those--well, it is no longer
    there, but a place you drive and say, wow, there were a lot of
    good, hard-working people who made their living there. And it
    was just a tough, tough decision Ford had to make. And they had
    to make it to stay in business back in the early 1980s.
        My question really, well, first of all, gets to--we are
    talking about the environment on the green initiatives. We are
    supplier to the automotive business before I came here, so I
    have been in countless manufacturing facilities. And I am sure
    everybody up here, because I know the quality of your
    organizations, have your environmental policy, your--how you
    deal with your community, how you deal with your neighbors. And
    maybe it is different than it was before I was going around,
    but everybody--you--even if you wanted to, which you don't, you
    couldn't get away with not being a good neighbor anymore.
        So the industries you are talking about--I think Al Gore
    said one time, ``Pollution is really inefficiency.'' But you
    can't run everything 100 percent efficient, but everything you
    get down to that is reasonable is just benefiting your
    business. Isn't that what you guys are figuring out to do to be
    more profitable? And being good stewards of the environment.
        And to the point, you may see me sometime around here, if I
    see an aluminum can in a trash can, I will usually reach in and
    get it out, because if it goes into a landfill, it does nothing
    for us; if it goes back in the stream of commerce, it makes my
    product cheaper because we buy scrap to form into--so corporate
    America and manufacturing America are concerned about the
    environment and have done great strides.
        And I went to school on the Hudson River, so I know there
    are issues there that you can't ignore that things have
    happened in the past, but we are moving forward and working
    together, and I appreciate that.
        But there is a concern, I think it was in Mr. Harshman's
    testimony, written testimony, about the EPA mercury source
    control requirements. And I think you said that would
    effectively preclude the construction of any new facilities in
    the U.S. Could you clarify that? Because we are struggling with
    that in our area as well.
        Mr. Harshman. Yes, well, from some of the regulations that
    are being discussed, as it pertains particularly to the
    specialty metals industry, and more specifically to nickel
    alloys, the EPA is discussing the--significantly lowering the
    standards for the measurement of mercury, which would be at a
    level that technology doesn't even enable you to measure. And
    when you look at the amount of mercury that is a part of the
    process from a specialty metals industry standpoint, it is
    negligible. It is at levels that is not contributing to any
    environmental concern from a scientific fact data standpoint.
        And the introduction of levels of--that are below the
    ability of companies to measure is not, in our view and in the
    industry's view, the responsible approach to how can we produce
    and have a viable economy with a safe and responsible
    environmental compliance.
        And I think that the businesses in this country--and you
    are right, we have learned the lesson over the past 40 and 50
    years, and the amount of investments that have gone on in the
    metals and steel-related industries over the past 30 and 40
    years, all of which have to be funded by profits and profitable
    growth, every investment in the $1.1 billion investment we are
    making today in our new hot rolling and processing facility in
    Brackenridge, Pennsylvania, is state-of-the-art control systems
    with state-of-the-art environmental systems, and advances the
    state beyond our 60-year-old mill.
        Mr. Guthrie. We have that in our area. We have a coal-fired
    plant that supports aluminum smelter. The aluminum smelter uses
    as much electricity as the city of Louisville. And these
    maximal achievement standards--it is not measurable. This
    electric company has got to decide are we going to invest this
    kind of money to serve one client, and if--and so there is--
    these are United Steelworker jobs that pay the kind of wages
    you are talking about, and this is real. I mean, these are real
    jobs you can point to that are as risk.
        I am going to yield the rest of my time to Mr. McKinley.
        Mr. McKinley. Thank you.
        I have one last question with that, and that has to do with
    the International Trade Commission. When they--when they make a
    determination that someone is guilty of dumping, it is my
    understanding that that money then, the duties collected, are
    transferred to the Treasury.
        Why don't they go to the companies that are affected and
    convert--and by virtue of that extension to the men and women
    that have worked in the steel mills that have lost their jobs
    as a result of it? Do any of you--can any of you respond to
    that in 11 seconds that we have left?
        Mr. Ferriola. I can do it in just a few seconds. We agree.
    At least I agree.
        Mr. Terry. Do everybody agree with Mr. Ferriola's comment?
        All right. Mr. Murphy from Pennsylvania, you are recognized
    for your 5 minutes.
        Mr. Murphy. Thank you.
        Ms. Lopes, quick question. Isn't it true that the BlueGreen
    Alliance and your members have opposed the Keystone pipeline?
    Yes or no?
        Ms. Pena Lopes. We have some members------
        Mr. Murphy. Yes or no. I believe it is yes.
        And isn't it a true------
        Ms. Pena Lopes. We have a position.
        Mr. Murphy. Is it true or not?
        Ms. Pena Lopes. We have no position on Keystone pipeline.
    We have some members who are in support of Keystone and others
    who are against it.
        Mr. Murphy. And isn't it true that some of your members
    have been opposed to coal use, coal mining, coal exports, and
    coal-fired power plants?
        Ms. Pena Lopes. Some of our environmental partners, yes.
        Mr. Murphy. I will take that as a yes.
        Do you have a buy American policy for BlueGreen Alliance?
        Ms. Pena Lopes. Yes.
        Mr. Murphy. OK. Are you going to be in support of our
    Currency Reform and Fair Trade Act, 1276, that is going to deal
    with Chinese and other countries' currency manipulation?
        Ms. Pena Lopes. I will be happy to look at it.
        Mr. Murphy. OK. Thank you.
        Mr. Surma, sorry I wasn't here to hear your positive
    comments, but thank you.
        You have made a lot of investments in domestic tubular
    production in recent years. How did those investments relate to
    the import situation?
        Mr. Surma. As I mentioned in my comments, Congressman
    Murphy, we invested, among other things, $100 million in a new
    plant in Lorain, Ohio, just west of Cleveland, because our
    customers said they were concerned about the availability of
    certain types of casing for down-hole applications and some of
    the higher-end alloys and finishing that we could provide; $100
    million, 100 new people. And we are working there today.
        That will stay invested for another 25 or 30 years, and
    that was on the assumption in good faith that there would be a
    level playing field for all of us. Since then, as I mentioned
    in my testimony, Korean exports up a huge percentage; Vietnam
    from zero to 240 percent; Saudi Arabia, 400 percent. That is
    taking away our markets, and we have had to lay a few crews
    off. Most of them are back now, fortunately.
        But when we make investments, we expect to get a return, we
    expect a level playing field. What we don't expect is to have
    to have those 100 people compete with governments. And we think
    that is totally unfair, and we encourage you and you
    colleagues, and I know you do this, to be vigilant in
    maintaining our trade laws and strident in ensuring their
    strong enforcement.
        Mr. Murphy. Thank you.
        Now, the Steel Caucus has also led efforts to convince the
    International Trade Commission of antidumping and
    countervailing duties and positions, et cetera. I wonder if you
    could say, are you convinced that the ITC is slow to respond or
    unconvinced there has been an injury to domestic steelmakers?
        Mr. Surma. From our company's standpoint, yes, we think the
    system is terribly organized and terribly slow to respond. We
    operate in other regions. Almost every other region in the
    world--EU, Brazil, Russia, Canada, anywhere else--they are
    mostly administrative actions that are taken realtime when
    injury takes place. In our case, we have to prove either injury
    or threat of injury, which the ITC has, to their convenience,
    largely defined as a near-death condition.
        And so several years ago when we had a trade case against
    Chinese OCTG imports, we had 10,000 people on layoff, and
    almost every plant in North America negligent was closed. They
    found that to be injury, and even that was a close call. My
    distinguished colleague here reports about a plant that was
    closed and was found not to be injury. That kind of logic
    escapes us.
        And we think the system is such that the injury has to be
    so severe and so prolonged that it almost makes it too late
    when relief is actually provided. We would like to see a more
    accelerated process where injury can be determined earlier so
    we don't have to go to a near-death experience in order to
    receive relief.
        Mr. Murphy. Or death.
        Mr. Harshman, I thank you also for being here. I want to
    ask a question about titanium, which is a critical element for
    jet planes, steel armor plate, et cetera, and that is why it is
    considered a specialty metal.
        My understanding is the Commerce Department is considering
    a change in the foreign trade zones which would undermine
    domestic titanium manufacturing. And one of the conditions of a
    trade zone is you can't unfairly import foreign goods to resell
    in America if there is an existing industry or provider here.
        Can you comment about what would happen if the Foreign
    Trade Zone Board reversed precedent and allowed foreign-made
    titanium to be sold into the American commerce?
        Mr. Harshman. Well, currently the big non-U.S. Producers of
    titanium alloys, which are critical for not only commercial
    aerospace, but also for military applications, are VSMPO, which
    is a large Russian and essentially a state-owned enterprise in
    Russia; the Japanese; and emerging--an emerging competitive
    threat is in China.
        And if the--the nature of the titanium industry in the U.S.
    Is really dependent upon the diversification of the markets. It
    is not only--the military spending could not support and
    sustain a titanium industry in the U.S., even though it is
    critical to the defense of the United States. So you need a
    viable commercial base, commercial aerospace, an industrial
    market. Titanium is used extensively in desal plants throughout
    the world, for example, in chemical processing plants. And all
    of that works together to make a viable U.S. industry of which
    there is really only three producers today in the U.S.
        And what the--the change in some of the foreign trade zone
    laws that would permit the circumvention of the existing
    dumping duties that are on titanium being imported from those
    foreign locations into the U.S., if that were allowed to
    happen, we believe it would significantly weaken and dampen the
    profitability and the ability for the U.S. Titanium industry to
    grow.
        Mr. Murphy. And, Mr. Chairman, thank you again for holding
    this hearing, and to the ranking member as well, on behalf of
    the million-plus people in this country who are affected by
    steel manufacturing jobs. It is critically important, and it is
    a wise choice on your part to hold this hearing, for you and
    Ms. Schakowsky. Thank you.
        Mr. Terry. Thank you. Would you say that again?
        That does conclude our question part. And, boy, I will tell
    you just what an honor to have the high level of steel industry
    here in this room today and participating in this. You have
    been very helpful. And we understand that steel is a
    foundational piece to our manufacturing in the United States,
    and we want to be helpful.
        So with that, let us see. I have unanimous--well, I guess I
    will do the unanimous next.
        Thank you. Oh, yes. Also, we all have additional questions
    that we will not be able to give today, but we will submit
    those to you in writing. We will ask you to respond as promptly
    as you can. And remember the Members that are still left here,
    that they have 10 working days to submit their questions.
        And I ask unanimous consent to include in the record a
    statement of C. Davis Nelson on behalf of the Cold Finished
    Steel Bar Institute. It has been reviewed by the minority staff
    as well. So I ask unanimous consent. Not hearing any objection,
    so ordered. It will be submitted and accepted. \*\
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        Mr. Terry. And at this point we are finished. So thank you
    very much.
        [Whereupon, at 11:54 a.m., the subcommittee was adjourned.]
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