"The United States has become one of the lowest-cost producers of steel in the world," said Michelle Applebaum, a top-ranked steel analyst with her own Chicago research firm. Who's the high-cost producer? "China."
One reason is that the U.S. is rich in basic resources, especially those that go into steel. And many U.S. manufacturers have long relationships -- and long-term, fixed-price contracts -- with suppliers. As rising demand for raw materials has driven up world prices, American producers have been relatively sheltered.
"Nobody in America is buying ore at the inflated prices the Chinese are paying," Applebaum said.
The big exception is oil, but almost every country is paying its rapidly escalating price.
Wage gap narrows
Perhaps the most fiercely held assumption about the economy has been that U.S. manufacturers could never compete globally because Americans earned vastly more than foreign workers.
During the last several decades, though, the wages of many American workers have not grown at anything like the rates they used to. In the last decade, they haven't grown at anything like wages in much of the emerging world. So the wage gap is narrowing.
Also, as rapidly industrializing countries such as China, India and Brazil demand more raw materials, driving up prices, labor costs are a dwindling factor in global competition.
"Forget about labor costs. That's all Kool-Aid talk," said DiMicco, steel company Nucor's CEO. "Hot-rolled sheet [one of the major products of the steel industry] is selling for $1,000 a ton today. Our labor costs for everything are under $10" per ton, he said. "It's become virtually insignificant."
And at least some old-economy companies are hustling to stay out front. This month Nucor applied for permits to construct a $2-billion steel mill in St. James Parish, La. If approved, it would be the first integrated steel plant built in the U.S. in about four decades, DiMicco said.
"It's back to basics," he said.
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peter.gosselin@latimes.com
