May 26, 2012 Strength for our Future

Volume 15 | Issue 2

The American Steel Industry remains a national cornerstone. Steel is a fundamental component of job creation, economic health and, in turn,

A manufacturing backbone, the steel industry is a strategic, essential element of America’s economic growth, stability and national security. The nation’s energy supply, transportation system, urban centers, clean water and safe food supply all depend on steel. Innovation and technology transformed America’s 21st century steel industry into a world leader in quality, performance and sustainability.

America faced challenges in recovering from the global recession. The steel industry played a significant role in leading U.S. manufacturing’s post-recession resurgence, primarily because it is highly interrelated with many other economic sectors. Timothy J. Considine, professor of energy economics at the University of Wyoming, described the ripple effect on employment. In his analysis (“Economic Impacts of the American Steel Industry”), he found that every one job in the U.S. steel industry supports seven jobs in the U.S. economy. For 2011, his report states, the American steel industry directly employed 150,700 and – given the multiplier effect – supported more than 1,022,009 jobs elsewhere. In addition, the industry contributed more than $101 billion in value added and $246 billion in gross output. Based on tax multipliers utilized in the analysis, during 2011 the steel sector generated nearly $23 billion in local, state and federal taxes.

The industry’s significant economic impact is based on the fact that steel is the most prevalent material in the economy, and the industry purchases a wide variety of inputs from other industries, creating the favorable ripple effect. This is one reason why so many countries welcome investments that establish steel mills. Mills stimulate industrial supply chains.

Considine writes that indirect impacts support jobs in industries supplying the steel industry with inputs of energy, materials and services. Economic impacts also arises from the stimulus that additional labor and capital income provides for households to spend on goods and services, he adds.

BUILDING A SUSTAINABLE FUTURE
The American steel industry has a longstanding commitment to sustainability in both its products and its practices. This commitment is backed by significant investment in state-of-the-art facilities that improve energy efficiency, reduce carbon emissions and heighten productivity. By deploying new steelmaking technologies – and through the innovations of the workers on the plant floor – the industry has reduced energy intensity per ton of steel produced by 27 percent and CO2 emissions by 30 percent since 1990. Indeed, the industry is the only significant U.S. industry that reduced total energy consumption while increasing production from 1990 to 2008.

Further, steel’s infinite recyclability sets it apart from other materials; it can be constantly reused without quality loss. Its recycling rate also far surpasses that of other materials. Overall recycling rate of steel reached an all-time high of 88 percent though 2010, based on recent data compiled by the Steel Recycling Institute. Almost 76 million tons of domestic steel scrap was charged into furnaces. All steel is 100-percent recyclable and more steel is recycled each year than aluminum, copper, paper, glass and plastic combined.

Committed to sustainability, the industry aggressively seeks ways to reduce its environmental footprint while producing the advanced and highly recyclable steel that the U.S. economy needs. The American steel sector has the steepest decline of total air emissions among nine manufacturing sectors studied in the U.S. Environmental Protection Agency’s 2008 Sector Performance Report.

A helpful tool the industry is using as part of this process is the Life Cycle Analysis (LCA) approach, which measures a material’s true environmental impact. (LCA considers the total environmental impacts generated by the production, and use and end-of-life [recycling or disposal] phases of a product, among other elements). Steel has lifecycle advantages because of its relatively low energy use, high recyclability, the conservation of natural resources (such as water) and the extensive re-use of by-products.

GLOBAL LEADER IN LABOR PRODUCTIVITY
Industry labor productivity has more than tripled since the early 1980s, going from an average of 10.1 man-hours per finished ton to an average of two man-hours per finished ton of steel in 2010. Many North American plants are producing a ton of finished steel in less than one man-hour. These achievements are only possible through a highly-skilled workforce. In that regard, American Iron and Steel Institute (AISI) member companies are committed to continuous improvement in safety and health and to achieving an injury-free workplace.

American manufacturers, including U.S. steelmakers, can compete with anyone in the world, but we cannot compete with governments. That is why AISI urges U.S. government leaders to embrace a national manufacturing strategy. This approach can restore the manufacturing sector, creating millions of new jobs through a comprehensive program to rebuild our infrastructure, achieve energy independence – which will also significantly reduce our trade deficit – and enforce trade laws. The government must also remove artificial barriers built by trading partners and ensure that domestic policies are pro-manufacturing.

STRONG US PRESENCE
Steel is an essential material for downstream manufacturers in the automotive, energy, machinery and equipment, container, appliance and rail industries. Steel is a critical building material for the nation’s energy, transportation and water infrastructure, and to commercial and residential construction. In addition, steel products are a critical component in virtually every military platform and are essential to national defense.

Before the global recession, the industry enjoyed five consecutive years of robust demand and strong performance. In 2012, the steel sector expects to see gradual progress in comparison to 2011, with the market experiencing improvement in steel demand.

DEPLOYMENT VERSATILITY
The automotive industry is one sector where steel is invaluable. Indeed, the North American steel industry’s continual investment in advanced technologies has led to the introduction of a wide variety of new automotive steels. These new steel grades are growing faster in new automobiles than even aluminum and plastics, steel’s main competitors. Each year, new car models are using lighter weight yet higher-strength steel components that provide a cost-effective answer to the demand for increased safety and fuel economy in automobiles and light trucks.

The total steel in the average 2010 vehicle is approximately 60 percent. A substantial portion of the steel in modern body structures, about 17 percent, is made up of new, advanced high-strength steels (AHSS). According to Ducker Worldwide, these grades have grown in use by 93 percent in 2010 and are projected to grow by over 300 percent by 2020, from a level of 81 pounds per vehicle in 2006. These modern steels provide a superior combination of high strength, crash energy management, excellent formability and dent resistance, enabling automotive engineers to reach new targets of safety, performance and cost efficiency.

Recent projects show that the latest AHSS grades combined with innovative steel processing methods and design optimization techniques enable steel to achieve 35-percent mass reduction in many applications, virtually equivalent to past mass reduction levels achieved by aluminum. Mass reduction with AHSS not only conserves material but helps reduce greenhouse gas emissions over a vehicle’s full life cycle. If, for example, currently available AHSS were applied throughout the present U.S. automotive fleet, greenhouse gas emissions from automobiles would be reduced by approximately 12 percent – an amount greater than the emissions generated by the entire American steel industry today. This reduction is already underway, as international automotive designers use increasing amounts of AHSS.

Other areas include:

• Bridges – These structures connect the nation – from state-to-state and coast-to-coast – and help transport billions of tons in freight each year. As such, they need to be strong, reliable and low maintenance. Yet the Federal Highway Administration (FHWA) estimates that more than 25 percent of America’s nearly 600,000 bridges are either structurally deficient or functionally obsolete. Steel bridges offer owners practical design and accelerated bridge construction solutions that are durable, cost-effective, and offer ease of maintenance and construction. High-performance steels can save up to 18 percent of a bridge project’s cost. New permanent modular steel bridges are now available, which can be constructed in a single weekend. To upgrade crumbling infrastructure, FHWA estimates that a 20-year investment of $131.7 billion is needed for bridges and highways alone. The American Society of Civil Engineers’ (ASCE) economic report on surface transportation (July 2011) found that deteriorating infrastructure will cost the American economy more than 876,000 jobs and suppress the growth of our GDP by $897 billion by the year 2020. The ASCE’s 2009 Report Card for America’s Infrastructure graded the nation’s critical infrastructure systems with a “D” and noted a five-year investment need of $2.2 trillion. Today, as the U.S. rebuilds infrastructure, bridges utilize technologies that save tax dollars. In addition, designers and engineers can specify new high-performance steels (HPS), developed by member companies of AISI with the Office of Naval Research and the Federal Highway Administration. These steels have superior toughness and can be welded with little or no preheat. Today, there are more than 400 HPS bridges in use in 45 States.
• Transportation – In a globalized economy, America’s infrastructure – which is steel intensive – is important to our competitive edge, considering the overall cost of congestion. The Texas Transportation Institute estimates that, in 2010, congestion in 439 metropolitan areas caused urban Americans to travel 4.8 billion hours more and to purchase an extra 1.9 billion gallons of fuel for a congestion cost of $101 billion. It’s also important to employment. According to the American Road and Transportation Builders Association, the U.S. transportation design and construction industry generates more than $380 billion in economic activity annually and sustains 3.4 million American jobs – nearly three percent of the nation’s GDP. The Department of Transportation reports that every $1 billion federally invested in highway capital supports nearly 37,500 American jobs.
• Other Infrastructure – Other steel-intensive infrastructure includes pipe for waterways, oil and natural gas exploration and distribution, and culverts and water tanks, among others. The energy sector is expected to be a strong source of steel demand over the next 10 years, particularly as the nation’s energy infrastructure is further developed. Electric companies will need to spend an estimated $880 billion to strengthen the nation’s electric distribution and transmission systems from 2010 to 2030 to maintain a reliable electricity supply.
• Containers – Steel cans are the most recycled food and beverage package in the world, giving steel an important role in providing America with sustainable packaging for foods essential to a healthy diet. Given the benefits canned foods offer (nutrition, convenience, value, versatility, year-round availability, economic impact and sustainability) AISI’s Canned Food Alliance works with Congressional offices and the U.S. Department of Agriculture (USDA) to ensure that canned foods play a role in federal food and nutrition programs.

About AISI
The American Iron and Steel Institute (AISI) serves as North America’s steel industry voice. The Washington, DC-based organization serves the industry in the policy arena and advocates usage of steel as a preferred material of choice. AISI also plays a lead role in the development and application of new steels and steelmaking technology. For more information, visit AISI’s website at www.steel.org.

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