Trump touts his effect on Pa. jobs. Is he right?
PHILADELPHIA — On the campaign trail, President Trump told a crowd in Hershey on Tuesday that he had brought back jobs to Pennsylvania, in particular in steel, energy and manufacturing.
Trump said steel mills in Pennsylvania are “roaring back to life” — while job cuts in the industry have recently been announced — and he said ramped-up natural gas production will create thousands of jobs. He blasted Democrats, including presidential candidate Joe Biden, who have said they would move to end the use of fossil fuels.
The real job figures are mixed.
In March 2018, Trump imposed tariffs of 25% on foreign steel and 10% on aluminum.
Steel jobs: The Bureau of Labor statistics found 36,249 workers in primary metal manufacturing as of June 2019.
Those jobs are up from 34,763 at the beginning of 2017, when Trump’s first term began, for a gain of 1,486 workers, or a 4% increase. Employers include U.S. Steel, AK Steel, Arcelor Mittal and related companies such as Carpenter Technologies.
But the number still hasn’t recovered to the high in 2001 of 56,489 workers in steel, the oldest date available from the BLS online. The long-term trend, experts say, can show deeper shifts in the industry than short-term boosts triggered by tariffs.
Current Pennsylvania steel workers earn $3.14 billion in wages and salaries annually, an average of $92,037, while generating $22.45 billion in economic output, as well as paying federal, state and local taxes, the American Iron & Steel Institute estimates.
Moreover, steel workers are a rounding error, compared to the 150 million or so Americans in the workforce.
Not quite: “U.S. Steel is opening up seven plants,” Trump said in remarks in 2018 at a Pennsylvania rally, claims he repeated elsewhere on the campaign trail.
Not the case. U.S. Steel announced a $1 billion upgrade in May at its Edgar Thomson Plant but no new plants. U.S. Steel also told the Pittsburgh Post-Gazette on Nov. 8 that the steelmaker had initiated a round of layoffs while declining to disclose the number of people let go. In the third quarter, the steelmaker announced its first quarterly loss since the first quarter of 2017 as it struggled with a drop in steel prices.
A spokeswoman for the Pittsburgh-based company declined to comment on Trump’s most recent rally remarks, referring instead to the company’s website and news release.
For steel workers, Trump’s claim depends on your time frame.
“If you are talking about 2018 to 2019, the steel industry has generally been in a precarious position, due to weak demand and oversupply, which has forced some steel producers like U.S. Steel and ArcelorMittal to temporarily shut down some operations” with job cuts, said Chris Olin, steel analyst at Longbow Research.
That said, there are steel companies planning to build new steel mills in 2021 to 2022, such as Steel Dynamics, Nucor and Big River Steel mini-mills in Texas.
“I’m talking about the low-cost recycling operations that are more efficient and less labor-intensive. The mills allocated some of the cash generated during the 2018 price spike for those long-term investments. In the end, the Section-232 protection did not do what it was designed to do. I believe prices are still below the point at which the 25% import tariffs were announced,” Olin said.
He expects more job cuts in the next six months.
Manufacturing workers: In manufacturing broadly, Pennsylvania currently employs 579,731 workers in the state, compared with 556,786 workers at the beginning of 2017. That’s a gain of 22,945, or 4.1%.
In 2001, 822,792 workers were employed in manufacturing, a number that has fallen steadily since that time as the U.S. transitioned to a service economy.
Energy workers: And in energy, the fracking boom in Pennsylvania led to a spike in oil and gas extraction jobs from 2001 to 2019, rising from 1,175 to a peak of 6,403 in 2014. The current jobs numbers total 4,912.
Natural gas distribution workers total 4,940 in Pennsylvania today, compared with 4,356 in 2001.
But oil and gas extraction jobs need to be supplemented by the second wave of energy jobs in renewables, liquefied natural gas, solar and commercial businesses converting to natural gas and away from oil, experts say.
“We’re sending our natural gas to be liquefied and sent to Japan, Korea and Europe. Yet we as the U.S. continue to fail to switch to natural gas from oil ourselves,” said Boris Brevnov, an energy investor. “That’s why the second wave of jobs is struggling.”
“I want the Commonwealth to position itself to be one of the most innovative in terms of energy jobs and solutions,” said Brevnov, a fund manager with the Liberty Permit Energy Infrastructure Fund in Conshohocken.
“Not just upstream, but across all energy applications. That’s the biggest unfulfilled part of Pennsylvania. We have so many advanced institutions, universities, on the cutting edge. And we’re not putting those technologies to use.”
Tariffs: The larger question is whether tariffs are helping or hurting.
Nationally, the steel tariffs on foreign importers produced a one-year boost for the domestic steel industry in 2018. The steel industry in Western Pennsylvania includes ArcelorMittal plants in Coatesville and Conshohocken and the U.S. Steel galvanizing plant near its former Fairless Hills works, and others.
But the good times have not lasted. U.S. manufacturers had to boost prices because of higher costs for steel shaped into higher-value finished products. That since led to falling demand and job cuts.
In Farrell, north of Pittsburgh, Russian-owned steelmaker NLMK Pennsylvania laid off 100 of its 430 steelworkers and cut 35 salaried office positions, citing higher import costs since the Trump administration slapped 25% tariffs on imports from Russia and other countries last year, the Sharon Herald newspaper reported.
The company’s president, Bob Miller, said his firm had paid more than $160 million in tariffs so it could keep buying steel.
“This is very frustrating,” the steel company president added. “The government is really hurting the little guy.”
By taxing imported steel, Trump hiked costs for the many U.S. industries that use steel.
Flush with optimism after Trump’s tariffs took effect, steelmakers went on an expansion spree, creating a capacity glut that Bank of America Merrill Lynch analyst Timna Tanners called “Steelmageddon” in an interview with Bloomberg.
“They overestimated how much steel they’d need,” Tanners said.
A group representing Pennsylvania toy manufacturers, distillers, hog farmers and retailers gathered in Philadelphia last year to sound the alarm on Trump’s trade war with China.
Tariffs destabilized businesses by making it nearly impossible to formulate business strategy, said Tariffs Hurt the Heartland, which held a panel on free trade with funds coming from big agriculture groups, ranchers and individuals.