[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.
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    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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