Saturday, June 22, 2013

Is USA produced steel worth it? By using Chinese steel the USA is inviting trade imbalances.

This is production by tonnes, not necessarily quality. We all know capitalism solves problems by minimizing costs. The problem with steel is that quality is a much a component to it's value as cost. The most likely cheapest steel has poorer quality.

I want to take a look. This list is from 2012 (click here).

ArcelorMittal is the largest steel producer in the world. It was ranked 70th in the Fortune 500 of 2012. It is headquartered in Luxembourg with 260,000 persons employed, of which 53% of those employees in Europe, 14% in North America and 16% in Asia.

I am sure I don't know as much as I should about the ArcelorMittal definition of sustainability, but, I sincerely believe they worry about the planet and the emissions of their company. They define themselves as a sustainable company. A very interesting word to describe a steel and mining company.

That said, besides poorer quality of Chinese steel due to unsophisticated processes and Third World manufacturing values, China has a lot of problems with pollution. Air pollution. Besides extremely high levels of NOX and SOX there are also problems with volatiles and radioactive air pollution. The CO2 component to Chinese steel is extremely high.

So, I am quite surprised USA Governors and Mayors are actually using Chinese steel, especially on the basis of CO2 emissions and employee health standards.

I am very surprised. In an era where the people of Bangladesh are dying for the production of USA clothing, our government is contracting for Chinese Steel? I am very surprised.

This article about ArcelorMittal makes a lot of sense when it comes to obtaining steel for production purposes. This steel was manufactured and used in production within France. It's transportation costs, especially that of fuel costs, was very low. The production plant used far less fuel to move the steel to the ship building plant and reduced it's global carbon footprint by enormous amounts.

Not only that, but, steel for a ship floating in the ocean is vital. A good paint job alone won't prevent deterioration of that steel. Strong steel to specification of it's use is vital.

One of the ten largest ships (click here) in the world recently made its maiden voyage, with the vessel’s 17 decks all made of ArcelorMittal steel supplied by the company’s site in Saint Nazaire. 

The MSC Preziosa, built by French company STX (les Chantiers de l’Atlantique) and owned by MSC – the world’s biggest ship-owners – weighs 141,303 tonnes.

ArcelorMittal’s Distribution Solutions business division supplied 1,000 tonnes of steel for the decks. One truck a day delivered the steel between our Saint Nazaire plant and the nearby STX premises. The plant produced the naval specification steel sheets, which have long been popular with maritime builders and suppliers worldwide.

The light, thin grades A and H36 in lengths 16,000mm and 20,000mm and thicknesses as low as 5, 6, 7 and 8mm were supplied for the MSC Preziosa....

The strength of any steel is based in it's CARBON content. The higher the carbon content the stronger the steel becomes when heated. Steel is GRADED according to that content. Different grades mean different uses and cost. There are basically four categories of steel; carbon steel, alloy steel, stainless and tool. Within each one of those categories are many grades of steel. Each grade is defined to specific characteristic and the steel has to match those characteristics.

The production of steel has a lot of technical information that would require a lot to explain it. But, bridge steels, especially suspension bridge steels have to exceed any doubt about their strength.

Before major infrastructure is reinforced and/or built any Governor or Mayor needs to pay attention to details. This is not simply passing on money. The 'VALUE' of the project lies in it's service to the taxpayer over time. So, if construction or repair of any major public works project is going to be repeated within five years due to poor quality materials and/or engineering and/or construction, then why bother doing it in the first place. Simply shut it down. 

Planned obsolescence for the 'idea' of increasing jobs year after year is not a viable economy. That sort of public works project will run treasuries into the negative range and taxpayers into the poor house. The quality of all the aspects of public works projects have to be scrutinized and valued for safety of the public and longevity of the structure.

If governors and mayors are allowing poor quality construction (substandard) to hold down immediate costs they are not then seeking high value within the project which is measured differently than a balance sheet.The balance sheet for any public works project is measured in 'taxpayer dollars' for the service of the project over time; it's lifetime. 

In other words if a project is immediately costing $100 million but will stand for 20 years the cost to taxpayer dollars is $5 million per year. If the longevity of the project can be extended to 25 years or 30 years due to higher quality materials and work the value to taxpayer dollars is now reduced depending on the increase in cost if any.

If higher quality materials means less maintenance, the value to taxpayer dollar is also reduced. The more maintenance public works structures require the larger the work force to keep up with the maintenance demands creating higher demands on state or local budgets. So, it needs to be done right.

USA manufactured steel is the most safe form of production with the best trained workers under tight standards.

The American Iron and Steel Institute’s Mission (click here) is to influence public policy, educate and shape public opinion in support of a strong, sustainable U.S. and North American steel industry committed to manufacturing products that meet society’s needs....

When states and cities have infrastructure projects and want the best for their citizens they need to seek USA manufactured steel before any other. In doing so they increase USA jobs in the USA, increase the manufacturing sector for Wall Street and reduce carbon emissions while protecting the lives of employees involved in this very dangerous form of manufacturing.

One thing never measured on a balance sheet at any level of government spending is the number of jobs it adds to USA's citizens, the quality of those jobs, the ability of the job to be sustainable and the return of income from those jobs to the USA Treasury.

See, if jobs are important enough to the treasuries of local, state and federal governments, then the return on investment by the government monies spent should be as important to any project.

Either Washington needs to get their heads screwed on straight about supporting the USA economy before it supports the Chinese economy, including the Chinese military or we desperately need to change those making the spending rules of these infrastructure projects. 

Chinese steel should be allowed in use of government infrastructure projects. Shame on everyone.