Michael Siegel, Chairman & CEO, Olympic Steel, Testimony

Our next witness is Michael Siegel Trezza, excuse me. Our next witness is Michael Siegel, chairman and CEO of Olympic Steel. Thank you and thank you for your attention. Good afternoon. I am Michael Siegel, chairman of the board and chief executive officer of Olympic Steel Incorporated. On behalf of Olympic Steel, our nearly 2,000 employees, our customers, and our communities, I thank you for the opportunity to appear before you today to discuss the overcapacity crisis in the global steel production sector and how it is negatively impacting the American steel industry and the stakeholders I serve. This crisis has originated from the interventionist practices and policies of huge steel players like China, although not them exclusively, which has forced our industry and markets to become flooded with dumped and subsidized imports. As such, it is incumbent upon the United States, particularly the USTR and the Commerce Department, to immediately strengthen our enforcement of anti-dumping and countervailing duty laws to protect our jobs and communities and to work with other countries to stop and fix this current destructive situation. Olympic Steel is a publicly traded US taxpaying metal service center headquartered in Cleveland, Ohio. We specialize in the distribution and processing of large volumes of flat-rolled carbon, stainless, and aluminum sheet, plate, coil, pipe, and tubing products. These include hot-rolled, cold-rolled, and coated steels. Our customers include transportation equipment manufacturers, including automotive, truck, trailer, and rail manufacturers; construction and farm machinery; storage tanks; environmental and energy generation equipment; food service and electrical equipment. These are the largest manufacturers in their sectors, as well as general line small OEMs and fabricators. However, the global crisis of steel overcapacity is threatening our company just as it is threatening other segments of the US steel industry. As we are observing, the pricing and profitability of the entire domestic supply chain are all in danger from this onslaught. We are seeing the effects throughout industrial America, where many smaller players are continuing to go out of business. In addition, with the transfer of manufacturing abroad, also brought on by steel overcapacity in China and other countries, it is harder for us as distributors to find customers to which we can sell steel. The surge in China's steel production is unprecedented against any measure. In 2000, the steel capacities of the United States and China were almost the same. In 2015, however, Chinese steel production capacity increased by nearly a billion tons while American steel production has actually decreased. China must now export two to three times the total US consumption every single year. I ask you, where can that steel go in the world if not here, as it does even today? Despite assurances by the Chinese government, Chinese steel production is growing, threatening the entire world's industrial capacity. China refuses to enforce its environmental regulations, destroying our planet, nor does it enforce international safety standards, which is killing their own citizens. How long do they get to play the victim, claiming we had our turn at industrialization so we must let them have theirs? Forget the facade of the rule of law, forget the sanctity of intellectual property, forget cyber warfare. We just want the enforcement of our trade laws. You have the power to do something to save jobs here now. China's overcapacity is also having a noticeable cascading effect on the rest of the world as well. We are also seeing surges from other countries, particularly from Asia, which are using Chinese substrate and converting it into finished product in finishing facilities in their own country. This material arrives at our borders not as Chinese steel but from a country of origin like Vietnam, which has few steelmaking facilities. This cascading effect aggravates an already dire situation in the American steel industry and, moreover, is harming other developing nations. The overcapacity crisis has also reached other countries, including England. After announcing that the new Royal Navy frigates would be totally produced with foreign steel imports, Tata Steel UK has recently announced the permanent shuttering of their facilities in England, setting the overcapacity of China's steel sector and its damage to the local environment. I can only hope and maybe pray that we never find ourselves in a position where we must build our future military with imported steel because we couldn't take action now to preserve our steelmaking capacity. The overcapacity crisis has fueled an unprecedented surge of dumped, subsidized, and unfairly traded steel. Olympic Steel is a proud and longtime participant of this industry, supplying good wages, jobs, and long-term security to our employees and communities, but this situation is threatening our welfare and ability to prosper. This crisis is caused by foreign governments like China who seek to do us harm. It is the direct result of subsidies, a disregard for environmental regulation, currency manipulation, a lack of safety enforcement, and governmental access to capital for investment at below-market rates. One might even contemplate that this might be strategically designed to weaken our military and our ability to provide security to our shores. As such, the United States must assert its ability to both enforce its trade laws and coordinate with other fair-minded nations to immediately stop this destructive situation. Finally, the United States must not accept promises of action at some future date, which typically passes with nothing actually changing for our benefit. For the sake of our communities, our families, our security, please act now to save our steel industry before it disappears into a PBS historical narrative. Thank you.

Yeah, I would agree with Mr. Winkler. I would add, though, through our industry associations, which I know you've heard from, and also association counterparts in other countries—not only our partners in NAFTA, Canada, and Mexico, but the Latin American steel industry and also Europe—have also expressed concerns. In having dialogue, we certainly would be willing to participate as an industry association in providing information and discussion wherever those forums might be to reach a solution. I think it may be debated in different parts of the world whether overcapacity is 500 million metric tons or 700 million metric tons, but I think there's full agreement as to the crisis we've reached in overcapacity. It is not good for the global economics of any steel-producing nation around the world. So I would hope, and as I mentioned, certainly recognize that this problem exists in other steel-producing countries and associations that I would expect would be willing to participate as well.

You asked about the process. I think when you go back to our founders, the founders of the country decided that our government was going to be deliberative, that it was going to be a slow, deliberative government. Quite frankly, I think that's a very good way to do it. So the process could always be frustrating for those of us who run businesses and make decisions literally by the minute, sometimes by the second. To sit here and say, 'Boy, this is really inefficient,' would not do justice to the process. I think the process is important. What we do here is a rule of law, and we're trying to understand the framework in which this is not just frivolous but in fact is a very serious and dire issue. So I think the process is very important, and I think the process here is very well done. I think other countries have their process, which is not for us to comment on, but the deliberative process generally works well. I would not want to leave this opportunity without also recognizing the good work done by legislators and our representatives in adding to the tools in the toolbox here recently and what was accomplished in some very important new trade legislation for the first time in 20 years. So we thank the administration and everyone involved in that. I think it's difficult to compare what other countries might see and how they take action within their own borders on illegal trade practices. We recognize it's a difficult process, but I know having heard testimony from the previous panel, and you've heard it all, that it's extremely frustrating when you're looking at the eyes of your employees and you've got a mill with no load on it and you're sending people home. That brings an urgency to the situation. But we recognize a process needs to be followed, but again, always seeking out more effective tools, being efficient, and being more responsive should always be our goal.