Author: Signal Group

Dear Mr. Vice President:

On behalf of the American Primary Aluminum Association (APAA), I am writing to urge the Trump Administration to declare America’s primary aluminum industry and manufacturing sector as “essential” when drafting and enforcing shelter-in-place orders and other executive action in response to the COVID-19 national emergency.

We applaud President Trump and his team for invoking the Defense Production Act as part of the coronavirus response and taking strong leadership as we work together to keep all Americans safe. APAA is very supportive of the efforts already underway by the Trump Administration, and we understand the importance of mitigating further public health and economic risk from the COVID-19 national emergency.

Recently, businesses across the U.S. have been ordered to suspend operations unless they are deemed a critical industry, with the Trump administration specifically exempting industrial manufacturing as “essential.” America’s primary aluminum industry and our workers are an “essential” industry for U.S. national security purposes – as the Administration has recognized in its Aluminum 232 report – and must be allowed to continue production despite the COVID-19 national emergency. For instance, in Kentucky, where a public health emergency has been declared, Century Aluminum operates America’s only smelter capable of producing military-grade aluminum needed for national security purposes.

Primary aluminum manufacturing U.S. is “essential” to America’s national security infrastructure and the United States’ ability to produce aluminum is critical to maintain in these uncertain times.  In fact, aluminum is a key component in many medical devices that are manufactured in the United States. As Commerce Secretary Ross determined in 2018, aluminum is important to U.S. national security well beyond obvious defense applications and is critical to maintaining U.S. infrastructure such as our national power grids.  Unlike other manufacturing facilities, primary aluminum production cannot be simply turned off without incurring debilitating capital costs – a smelter must operate 24 hours a day, 365 days a year and once curtailed smelters rarely restart. During its COVID crisis, the Chinese maintained 100% of their primary aluminum production and the United States should do the same. 

With that in mind, it’s imperative that aluminum manufacturing facilities and workers be exempt from potential mandatory quarantines or shelter in place requirements as set by local, state, and the federal government.

We strongly support the Trump Administration collective efforts to combat COVID-19 but urge the designation of America’s primary aluminum industry and their workers as “essential” to the nation’s COVID-19 national emergency. We also respectfully ask that you encourage state and local governments to make the same designation.

Sincerely,

Mark Duffy
Chief Executive Officer
American Primary Aluminum Association

This week, U.S. Trade Ambassador Robert Lighthizer is on Capitol Hill attempting to “woo” Democrats into supporting President Trump’s trade deals with U.S. trading partners.

As the Trump administration continues to push its fair trade agenda, both on Capitol Hill and around the country, Democrats should return to their roots and embrace these common-sense fair trade policies that were once the bedrock of our party and understand that these plans support thousands of American workers, especially in places that are critical to reclaiming the White House in 2020.

During my time in the U.S. Congress fighting for the hardworking men and women of Pennsylvania, I represented New Kensington and dozens of other towns forgotten as steel and aluminum jobs moved overseas due to mass foreign government subsidization. These great American patriots are hardworking, tax-paying Americans and Democrats must remember that we were – and still are – the party of organized labor and American workers.

Laboring under the theory that “free trade” exists, some Democratic quarters have criticized the Section 232 tariffs that level the playing field for tens of thousands of aluminum and steelworkers as aimed at the wrong actors. What they fail to recognize is that “free” trade does not exist, someone pays the bill and far too often it is hard-working Americans that see their jobs offshored to the countries providing the most illegal subsidies. For many years, hardworking Americans in aluminum smelting communities had been harmed by global aluminum overcapacity driven by foreign government subsidies, provided by friend and foe alike.

Global aluminum overcapacity suppressed industry growth and put the domestic industry at an unfair disadvantage with countries who subsidized their production. A recent 2019 study by the Organization for Economic Cooperation and Development affirmed what many aluminum workers had seen for years – mass government subsidization of aluminum producers in countries such as Australia, Brazil, Canada, China, Russia, India, and the Middle East countries came at the direct expense of aluminum production in the United States.

These illicit trade practices had devastating effects not just in my home state of Pennsylvania, but across the United States and in states like Indiana, South Carolina, Kentucky, upstate New York, and Washington state. Between 2000 and 2017, subsidized overproduction by foreign producers forced 18 of 23 domestic aluminum smelters to shut down and more than 13,000 good domestic production jobs disappeared.

While it is an unconventional policy, the Trump administration’s Section 232 tariff program has breathed new life into the aluminum industry and given union workers reason to celebrate. And it is for this reason, that I urge all my Democratic colleagues to stand strong with American workers and support the Section 232 tariff program.

Since the Section 232 tariffs were implemented, by the end of this quarter U.S. primary aluminum production will have increased by 67 percent, bringing back thousands of jobs and resurrecting small towns hit hardest by unfair trade. These jobs – jobs which now have a future due to the administration’s trade policy – are strong jobs that bring economic well-being and prosperity to many small towns across the United States.

According to the Economic Policy Institute, Section 232 aluminum tariffs have restored over 200,000 new jobs. During this same period, the rest of the U.S. economy grew by over 1.7 million jobs – chipping away at the argument that skeptics raised suggesting tariffs would have negative impacts on downstream industries.

The facts show that the tariffs are working and overall have not had widespread negative effects on the economy. According to the Economic Policy Institute, there has been a 9.1 percent growth in both aluminum and steel downstream industries, underscoring the notion that the concerns of Doomsday tariff critics are simply wrong.

As Democrats, we once stood for common sense trade policies that supported American workers and put our industries first. Amidst economic changes, like globalization, automation, and the displacement of workers, I’m concerned that my party has lost sight of what made Democrats the party of working men and women in the first place.

If Democrats want to win back my home state of Pennsylvania and retake the White House in 2020, we need to stand with ordinary American workers and support fair trade policies. Maintaining a strong Section 232 tariff program is an essential component to the vitality of America’s manufacturing industry.

Democratic Congressman Ron Klink was first elected to the United States Congress in 1992 and served four consecutive terms representing American steel and aluminum workers in Pennsylvania’s 4th Congressional District.

With more Democrats announcing their campaigns for president in 2020, it is critical for these candidates and the party understand the lessons the 2016 election has to offer. Some, like Senator Kirsten Gillibrand of New York, have recognized that one of the keys to the victory of Donald Trump was his ability to appropriate Democratic messaging, notably that our trade system was not working well for many working class Americans.

For decades, American manufacturing has been forced to bear the worst of excess global capacities across numerous industries like aluminum and steel. The system was not working, and our country became a dumping ground for our competitors and allies. President Trump tapped into the frustration felt by these workers in Ohio, Indiana, Michigan, Pennsylvania, and Wisconsin. Democrats must adopt trade policies that stand up to foreign governments that manipulate global markets at the expense of our workers. This was once at the core of our Democratic ideals. Abandoning these principles will only ensure that President Trump has a second term.

My home state of Indiana has the highest percent of manufacturing employment in the United States and has long believed in the tradition of “Made in America.” We built a strong manufacturing base up and down the value chain by supporting the common sense trade policies that put our workers first. The aluminum industry in my state is an example of what happens when we allow foreign governments to manipulate markets.

For nearly a decade, the American aluminum industry was forced to bear the burden of the excess capacity crisis. About 80 percent of domestic aluminum smelters across the country were forced to shut down between 2010 and 2017. Tragically, that led to the elimination of more than 14,000 good domestic jobs. Even the aluminum smelter in my state was forced to idle at the end of 2015 after laying off more than 660 workers. President Obama previously tried to work with our trading partners to address the excess capacity crisis but was often meet with resistance and ultimately was not able to yield the results that the industry needed to remain viable.

My service on the Senate Armed Services and Intelligence Committee helped me to understand that healthy aluminum and steel industries in this country are vital to our national security. We cannot allow our national security to lie entirely in the hands of others. A recent report published by the Organization of Economic Cooperation and Development confirms that widespread subsidization across all the major aluminum producing countries, including Australia, Brazil, Canada, Norway, China, India, Oman, Bahrain, Qatar, Saudi Arabia, and the United Arab Emirates, is one of the principle drivers of the excess capacity crisis. These foreign governments pumped billions of dollars into their aluminum industries to artificially maintain and expand capacity. The price of aluminum then collapsed and devastated the American aluminum industry and thousands of workers.

The Section 232 tariffs were imposed in 2018 to address the worst effects of the excess capacity crisis. American primary aluminum producers have since been able to restart their idled capacity and will have increased production by 67 percent by the end of this quarter. I joined a panel last month to discuss the groundbreaking white paper from the Economic Policy Institute on the Section 232 aluminum tariffs and their effects. Using facts and not speculative economic modes, the study showed that the tariffs have not harmed downstream industries. Moreover, domestic manufacturing continues to expand, with the sector adding more than 260,000 jobs over last year, according to the latest employment report.

In 1980, my father made his final campaign stop at the Alcoa smelter in Warrick, Indiana. The Section 232 investigation and ultimate imposition of the aluminum tariffs helped the facility restart operations. At the time of the restart announcement, Alcoa representatives thanked the federal and state officials for their support, stating that “Alcoa appreciates the actions the Trump administration has taken” to address the challenges faced by the American aluminum industry including from Chinese excess capacity.

In the 2018 midterms, some of my fellow Democratic senators who were vocally opposed to the Section 232 aluminum and steel tariffs lost their seats. With many Democrats announcing their campaigns for president in 2020, it is important for us to remember the principles that made us the party of the American worker and recognize that President Trump won in 2016 in large part by integrating these principles. The Democratic Party can win in 2020 if it learns lessons from 2016 and embraces trade policy that rebalances the market to support thousands of American workers.

Evan Bayh served as a United States senator from Indiana from 1999 to 2011 after serving as the 46th governor of Indiana from 1989 to 1997.

Today, the American Primary Aluminum Association (APAA) released a white paper building upon a recently released report by the Organization for Economic Cooperation and Development (OECD) confirming that subsidies provided by foreign governments to primary aluminum producers in those countries are widespread across multiple regions and that these subsidies are having negative effects on market-based producers in the United States and elsewhere.

The APAA’s full white paper can be downloaded here.

“The OECD’s report confirms that widespread subsidization across multiple countries is creating a race-to-the bottom whereby governments who provide subsidies maintain and expand capacity and countries where subsidies are not provided like the U.S., see capacity shrink,” said Robert DeFrancesco, Counsel for APAA. “The report found that from 2013-2017, significant subsidies were provided by China, India, the Gulf Cooperation Council (GCC) countries, Norway, Australia, and Canada.  It is no coincidence that the aluminum industries in each of these countries were able to expand their capacity despite an ongoing collapse in the global aluminum price.  Further, the subsidies themselves distort market dynamics and create a misperception that these regions are inherently more cost-competitive than other non-subsidized regions; without the subsidies producers in those regions would not be able to maintain and expand capacity.”

“The OECD’s recent report underscores assertions that the APAA has been making for months – that illegally subsidized primary aluminum has crippled the U.S. primary aluminum industry,” said Mark Duffy, CEO of the APAA. “The cheating and illegal subsidization, carried out by countries like China, India, the GCC, and others, have created an uneven playing field for American primary aluminum producers. The Section 232 aluminum tariffs help level the playing field for American workers and restore an industry decimated by unfair foreign competition.”

The data shows that many producers receive subsidies from multiple countries which help to maintain and expand capacity that would otherwise be uneconomic to operate.

While China is a significant contributor to the problem, it is not the only contributor. The International Trade Commission (ITC), and now the OECD report, confirmed that financial and input subsidies provided by governments around the world have tilted the scales in favor of producers in those regions at the expense of American producers. Without these subsidies, global capacity and production would be lower and prices higher allowing market-based players to compete on a more level playing field.

These findings support the continued application of the Section 232 aluminum tariffs to be broadly imposed across all import sources and countries. The recently released OECD report can be viewed here: https://bit.ly/2Ayynaw

About the American Primary Aluminum Association (APAA): The American Primary Aluminum Association represents the majority of America’s primary aluminum industry and advocates to advance the interests of the domestic industry and its workers through the Aluminum Now campaign. APAA is registered and incorporated in Washington, DC and operates as a non-profit trade association. For more, please visit: www.aluminumnow.org

Please download the PDF for the full report prepared by Counsel to the APAA.

APAA White Paper OECD Report January 2019

Atlanta’s rolled and recycled aluminium firm Novelis Inc. has seen few short-term negative effects of the Trump administration’s blanket tariffs on aluminium, according to company execs. However, the firm still plans to petition the government for exclusions on certain cross-border aluminium shipments.

Company execs told local media in upstate New York that the biggest impact to the firm was the tariffs assessed against the one-third of its aluminium shipped in from Canada.

“In the near term it wouldn’t have a huge impact on the business,” explained CEO Steven Fisher to MSNBC this spring. “Unfortunately with a higher tariff that’s going to mean higher prices to our customers and end consumers.”

Fiona Bell, Novelis’ Director of Communications and Government Affairs for North America, said that the company continues to see a significant call for aluminium in several major sectors.

“Novelis is experiencing strong demand for high-strength, lightweight aluminum from our customers across the automotive, beverage can and specialties markets. As a result, our team in Oswego recently achieved several records in production while maintaining safe and efficient operations.

“Novelis is seeing a limited impact from the import tariffs on metal crossing the border into the U.S. and to offset this, we have applied for product exclusions from the Department of Commerce.”

Despite tariffs making supplies from its northern neighbors more expensive than usual, Novelis’ plant in Scriba turned in record-breaking numbers in October.

“We just finished a $10 million upgrade to one of our recycling facilities,” explained Plant Manager Kevin Shutt. In addition, the Scriba plant is planning to upgrade operations with a US$13.5-million exhaust system in the near future.

“Automotive demand is very strong,” he continued. “Right now we are in a great position, we have more sales than we have capacity, so every pound that we can produce we can sell.”

Novelis is a subsidiary of Mumbai’s Hindalco Industries Ltd. Based in Atlanta, the firm accounts for almost half of Hindalco’s consolidated revenue. The world’s largest recycler of aluminium, Novelis conducts operations in ten different countries, employs around eleven thousand people, and reported US$10 billion in revenue for the most recent fiscal year.

December 20 ITC Cover Letter & USCMA Comments December 20

President Donald Trump’s aluminum tariff won’t make beer taste better, but it’s succeeded in boosting the economy, according to a report published Tuesday by the Economic Policy Institute.

The research, from the left-leaning think tank, argues that tariffs imposed on aluminum and steel have led to increases in U.S. employment, production and investment.

The Beer Institute, a trade association for the American brewing industry, called tariffs on aluminum a “tax on beer,” saying that cans make up more than 11 percent of the manufacturing cost in the U.S.

“We’ve seen a 5 to 10 percent increase in our costs despite our aluminum being sourced domestically,” said Ryan Krill, co-founder of the Cape May Brewing Co. in New Jersey. “We’ve estimated the total cost increase will be $30,000 next year. I appreciate what the Trump administration is trying to do, but there’s been unintended consequences.”

The EPI says benefits have outweighed negatives.

Beer industry claims of harm from the aluminum tariff were in “downstream distribution sectors,” according to the EPI report, “with 91 percent of the 20,300 jobs lost in ‘retailing, supplier and induced’ segments.” Changing tastes have more to do with any decline in beer’s popularity than a 10 percent tariff on aluminum, it said.

U.S. beer sales by volume fell 1.2 percent in 2017, according to the Brewers Association.

Richard Trumka, head of the AFL-CIO, is chairman of EPI’s board of directors.

Supporters of the tariffs imposed by the Trump administration on steel and aluminum are making the case that they have worked as intended, without the huge job losses opponents had predicted.

“We found absolutely no evidence of broad, negative impacts on the economy of steel and aluminum tariffs to date,” said Robert E. Scott, senior economist at the Economic Policy Institute, who authored the report with support of the U.S. aluminum company Century Aluminum.

Ten percent tariffs on aluminum were announced in March. Since then, the institute note, three smelters have being restarted and one has announced a capacity expansion. It said the U.S. aluminum companies have added about 300 jobs, and companies that process aluminum into finished products have expanded, generating $3.3 billion in investments that could employ 2,000 more workers. Overall, U.S. manufacturing has added more than 200,000 jobs since just before the tariffs were put in place, according to the Labor Department’s November jobs report last week.

Tariffs collected on aluminum products increased by $124 million in October, despite a 4 percent decline in the value of imports, according to data released by Tariffs Hurt the Heartland and compiled by The Trade Partnership.

But the full effect of the higher costs and disrupted supply chains are still working their way through the economy, “It’s very easy to say ‘Ah, ha, these haven’t happened yet.’ … The last thing anyone wants to do is lay off workers,” said Dan Anthony, vice president at The Trade Partnership, an economic consulting firm that has done several studies of tariff impacts.

Pressure is growing for the administration to lift the tariffs on U.S. allies. In announcing its support for the USMCA trade agreement reached this year by the United States, Mexico and Canada, the U.S. Chamber of Commerce called for steel and aluminum tariffs to be removed.

“These tariffs — imposed on our partners as a negotiating tactic — have invited $15 billion in counter-tariffs on U.S. agricultural and manufactured goods,” U.S. Chamber President and CEO Thomas Donohue said in a statement. “They must be eliminated without delay.”

But supporters say there should be a period of time to verify that products are no longer sold here at artificially low subsidized prices.

“There are some important national security considerations,” said former Sen. Evan Bayh, D-Ind., who is working with the American Primary Aluminum Association. “I don’t think we ever want to be in a position where we have products that are essential to the United States military that are made from aluminum or steel entirely outsourced through foreign producers, that would put us at their mercy in time of conflict.”

Critics say there has been little evidence the tariffs are affecting overcapacity in China, which continues to subsidize its aluminum industry. Even supporters are concerned the blanket tariff approach may not be the most effective action.

“The remaining problem in the industry is this massive excess capacity based in China, and unfortunately, the way the tariffs are structured, they didn’t really address that issue head-on,” said Scott.