Sens to DoD: Use American steel

Sens to DoD: Use American steel

Steel-state senators are urging the Defense Department to rely exclusively on American steel for the building of military vehicles, but that might be a tall order.

West Virginia Sen. Jay Rockefeller and seven of his colleagues sent DepSecDef Ash Carter a letter last month urging him to change the department’s metal-buying policies so they favor American-made metals, Rockefeller announced Monday. Although weapons and vehicles may be assembled inside the U.S., much of the metal that goes into them is poured in other countries, which Rockefeller and his colleagues say hurts American steelworkers. The lawmakers want Carter to change DoD’s approach to give an edge to the domestic steel industry.

They wrote:


Congress has previously expressed concerns to the department regarding the definition of “produced.” The definition allows armor steel plate melted in foreign countries to comply with the Specialty Metals Amendment simply by the performance of low-value secondary finishing processes in the United States. This interpretation is contrary to decades of administrative practice requiring melting in the United States. Without question, melting is the most critical stage in the production of amor steel plate, accounting for over two-thirds of the product’s capital and labor costs. Consequently, the department’s approach will allow capital and resource intensive processes to be conducted overseas, costing jobs and technology, harming our economy and allowing these products to be brought back into our country and considered “domestic.”

What the senators don’t address is that foreign steel may be cheaper than metals produced stateside, and more basically, that there may not be enough plants inside the U.S. that can even do the work. As you’ve read here before, people got upset when DoD wanted to spike production of its ambush-protected trucks, only to find there wasn’t enough domestically produced steel to meet the demand quickly enough. In fact, by one measure, the U.S. steel industry today can only meet about two-thirds of the domestic demand every year.

So — we keep coming back to these questions about an “industrial strategy,” and this is a classic case study. Should the United States protect its domestic steel industry with this proposed policy for its military vehicles, even though it could make them cost more at a time of reduced DoD budget growth? Or should it save money — and possibly save entire programs such as JLTV or GCV — but sacrifice the jobs of  steelworkers and coal miners, and continue to rely on “globally sourced” steel?

What do you think?

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“Should the United States protect its domestic steel industry with this proposed policy for its military vehicles, even though it could make them cost more at a time of reduced DoD budget growth?”

Yes.

Industrial policy? Hell yes. How dependent are we on China or Japan for key components of our weapons systems?

Probably not… for two reasons. One, they have a duty to the taxpayers to spend the money wisely. Paying more for the same product is rarely–though not never–spending wisely.

People “see” the benefit of helping local steel even though it costs more, but they don’t see all the 10,000 other things that extra money could have been used for instead. With the same amount of money, you might have been able to buy the truck _and_ new body armor, or the truck _and_ new radios, or the truck _and_ [fill in the blank]. Instead all you get is the truck.

That is to say, either you don’t get the new radios you might have gotten, in which case the troops are being shorted (but don’t know it), or you push on and buy them anyway, in which case the taxpayer is getting shorted (and may know it, but can’t do anything about it). In that latter case you “see” the military truck and radio, but you don’t “see” what all those millions of taxpayers would have done with their own money that is now gone, like buy their kids new bikes. So it was possible to have trucks, radios, and bikes, but instead because you paid so much more for the trucks it is “pick two.” Someone is getting cheated here, and likely as not it is the kids wanting new bikes for Christmas. You helped the steel industry, but only because thousands of local bike shops took it in the shorts, not to mention thousands of bright-eyed munchkins.

The second reason is that it almost certainly violates any number of international trade treaties that we have signed, which prohibit exactly this kind of subsidy/support. We can’t–or at least shouldn’t–sign treaties with someone and then break them whenever it seems convenient to do so.

This would make very bad policy. (First, let me admit I’m a Canadian, but I have no affiliation with the Canadian steel industry, and frankly, I’m a big supporter of the US Armed Forces having the capabilities they need to do the jobs they’re asked to do). The United States has a secure and reliable North American supply of steel via its own foundries and those in Canada. Shutting Canada out from providing steel for US defence contracts will only lower competition (i.e., raise prices to US taxpayers) and serve no viable industrial security need. As for jobs, Canada spends much on defence that goes to US companies (think of recent purchases of Boeing C-17s, Lockeed-Martin C-130Js, and Boeing CH-47Fs) … the US has far more to lose by starting a trade war with Canada than it has to gain. I wish US policymakers would understand that is in US’s best long-term interests to continue to trade freely with Canada.

Funny how staunch American capitalism only exists within the borders of the US. As soon as another country can make a widget cheaper than its US counterpart, outright socialist protection policies kick in, giving state subsidies to a company or industry that should be allowed to fail or realign…

Maybe if these senators and the rest of congress was willing to pay the increased costs. I rather doubt that however.

Yeah, that’s the problem with the cost of US weapons. It’s the price of the steel. Baa Baa.

Hell, if they’re going to protect the US steel industry, you’d think they’d also mandate that the steel be machined in US machine shops. It doesn’t do a lot of good to be able to produce the stuff and not be able to turn it into anything, now does it? While they’re at it, maybe they should consider having US engineers design the weapons too. Once the US defense industry hired 700,000 Americans. Now, spending at the same rate when adjusted for inflation, we hire 190,000. Gee, could that be a problem?

They would have to subsidize the steel industry for military procurement to make the DoD budget go the same distance in procurement.

Yes American weapons made in America! This who GCV or JLTV is a waste of time scrape those and use American parts to upgrade Humvee.

Really who voted negative to this? I had to give you a thumbs up. Yes obviously protect American jobs. No jobs no military, thats how it works whether we want it to or not. On anoter note people in the performance tuning world generally avoid chinese steel because of its bad quality. Eagle rods for example bolts love to come out on a DSM. Manifolds mad oversees crack faster then American exhaust manifolds. I know all of these things from experince, not a guess.

the saving from the cheaper overseas metal is lost into a negative after shipping and transportation is added. The real issue is we dont have enough mills for the raw materials and labs to classify/certify the materials. If they really wanted to stimulate the economy on both sides they would use next years 1 trillion plus in research grants because this years is already gone to build a number of modern mills with onsite labs, not only would it create construction jobs building them it would also add permanet full time jobs to failing economies unlike the part time jobs Obama is suggesting to fix a couple of roads and bridges. They couls start out as govt facilities for a few years and then sell to a private company to double thier money invested back.

That’s fine. I agree. Let’s protect American jobs but you guys neeed to be lending your voices to the debate when the bean counters and liberals cite the size of our military costs in comparison to China.

My point is yes American, or CA steel is worth the extra investment. It’s called RoI. Let’s look at it like this even if American steel was 25% more then chinese steel, the tax money put back into the system by employing US workers more then pays for it. So many steel mills are closed in western PA, maybe we could open more?

You may have a point on Chinese steel, but don’t forget there are many other steel producing countries we import from — Japan, Taiwan, Germany, and Canada spring immediately to mind. All have highly respected steel industries. Citing poor quality Chinese steel is not sufficient justification to reject imports from those other steel producing countries, even if you are 100% right in your analysis of the cost/benefits ratio of Chinese steel.

Also, I think it is important to say that this statement, “the tax money put back into the system by employing US workers more then pays for it” is a rational impossibility. That would be the monetary equivalent of a perpetual motion machine. You have created a positive feedback loop with the output of the function feeding into itself as the input. I suppose it would be nice if money worked that way, but it doesn’t.

If I take a dollar of tax revenue and spend it on US steel, part of the money buys the raw steel, part of it pays the workers that work the steel, and part of goes to overhead and transaction costs. It is an impossibility for the taxable income I collect off the worker to exceed the tax dollars I paid him unless the steel, the overhead, and the transaction have _negative_ influence on the cost, ie, the steel company is paying the government to take the steel off their hands. For that matter, even if I paid the work the entire dollar and no other costs were involved, the taxable income rate is only 35%, so in the best imaginable scenario I could only get back ~ 1/3 of every dollar paid him/ Assuming “pays for it” mean only the difference in price, in that specific case you’d be right with a 25% premium over Chinese steel, but for that case one has to allow zero steel costs, zero transaction costs, zero overhead, and zero tax deductions, so that 100% of every tax dollar paid out was also taxable income. I don’t think that is a real world scenario we can rely on.

One could argue that the delta between the cost of Chinese steel and the cost of US steel paying unemployment for a laid off steel worker returns the balance to the US side, but that isn’t the argument you made, and also implies that a steel worker can’t possible work at anything else.

And of course that might just stick a Chinese steel worker on Chinese unemployment, which increases the Chinese government’s expenses, which then turn around and demand a higher interest rate on the money they lent us to buy the steel in the first place. Or they get angry at us sticking a tariff on their goods while begging them for the money and refuse to lend us the cash at all.

I could go on and on. My main point is that these decisions shouldn’t be based on dreamy theories, like that spending N tax dollars to purchase something results in greater than N dollars in tax revenue as well as the something.

For what it is worth, my view is that we should always commit as few resources as necessary to obtain products of sufficient quality for our purposes. That may mean China (or Germany, or Canada) sometimes, and the US other times. Anything else which is done to engineer some kind political result is unlikely to succeed due to the complexity involved, and unfairly prejudices some taxpayers who will have to foot the higher than necessary bills to the benefit of others which happen to be more politically connected. Longterm that is a recipe for every single person in every single industry forming a trade lobbying group to get their product subsidized and protected until we all go down in flames.

Germany, Japan, Tawain, South Korea all have industrial policies, which create full employment in their countries. What jobs don’t support domestic needs support foreign customers, like cars in the U.S. That’s why they have full employment and we don’t. NAFTA, GATT, the World Trade Organization — all support globalization, which is another way of saying a uniform standard of living for all workers. We need to fight back and impose tarriffs to raise foreign prices so they latch our (which include environmental, safety a decent standard of living costs). If anyone objects, too bad. We have the Navy that can turn away their ships. Then we need a president who will stand up for America, regardless of what “The World” will say. And it starts with abrogating ALL “trade deals”.

Sure it worked for the Soviets, what could possibly go wrong.

Just to be clear I wasn’t talking about Chinese steel. I hear many criticize the defense budget and how the US accounts for almost half of what the whole world spends on defense but in that same discussion little is made about our propensity to spend it domestically.

Your perpetual motion machine point is valid. The one apsect you don’t address is that we have a national defense interest to maintain the means of production under our control for obvious reasons.

Best example. And China is cheap, but only because the Yuan is controlled by the goverment. That’s why the US goverment tries to persuade the Chinees to let it go free on the market.

I hope you realize that the US has grown because it has open borders (for trade!!). What do you think will happen if the US closes it borders for import. Export will drop also, and the profits of the company’s will evaporate (and workers will be fired.… etc etc etc).

We need American steel and we need American jobs, but most od all, we need to get this American economyrolling again. We have to take care of ourselves first and outsider’s second. Time to sh–, or get off the pot, senator’s and congressmen and women.

Use the steel from the world trade center. O is already being used in china !

The Steel Workers Union.…hummmm. Votes and money for a certain political party. However I do agree that we should be in a position to never need to depend on another country for any metals, oil, food, medicine, etc.

The South Korea, Columbia, and Panama Free Trade Agreements were ratified by Congress last week. Low estimates for what those nations spent lobbying for these agreements were $15 million. More jobs and more of our industrial might being shipped overseas while our US “representatives” earn their 30 pieces of silver.

My concern is that it effectively exports technology to produce advanced materials out of the country and then allows those foriegn economies to profit from something the US has made the capital investment. I think the problem is that these Senators want to support Steel Workers without a more comprehensive approach. It may well be the righ choice but it looks like its being made for the wrong reasons and without regard for the American tax payer. If the Government wants US steel it needs to make the investments to bring down that cost, otherwise the end result is a military with either too few armored vehicles or a shift in research and purchasing into armor materials that aren’t steel to get around the higher price. One nets only the industrial status quo with a diminished military the latter diminishes the industry. That’s why they need to consider a capital investment approach or multi-year bulk purchasing contracts designed to generate sustained industrial growth.

WHEN THIS COUNRTY WAKES UP AND SEE WHAT THEY DID TO THIS ONCE GREAT COUNTRY THAT WON THE BIG ONE…WW2.…IT WILL BE TO LATE AND WE WILL BE GONE.….SO LET ME SAY NOW “GOODBY“FOLLOW AMERICANS…

Yes, definitely use American made steel. We have steele in Ohio and Pennsylvania needing to be used , Nothing but the strongest should be used for our military and our buildings as well. Have read of Chinese steel being inferior and buckling during use.

The Pentagon has ordered that all solar panels be US made for the installations. A revamped McDs in my hometown has gone “green” with panels made in China over the parking lot. We must recall that in 1965 most of the American gross domestic product was manufacturing. By 2004 it was down to NINE PERCENT of the GNP. We need many more immigrants such as Joe Maglica, who founded MagLite flashlights in Ontario, Calif. Buck Knives moved to northern Idaho from El Cajon, Calif years ago…the over 110 yr old company did not move to Pakistan or China. Maglica has said that sure, I could make lights cheaper in China, but what would happen to my skilled, dedicated American employees, well paid with good benefits. The plant has expanded due to the demand.

What an idea, buy American, then maybe we could start using American oil? I was once told If we can build the alaskan pipeline we will be self reliant, no more OPEC oil. BULL

And pushed by Mr. Obama as anafta was pushed by Mr. Clinton, That is when I quit being a registered Demo & vbecame Independent. They all play the same game. And screw the American worker, until we vote out all of the tainted congress on both sides of the money street & get the dollars out of politics we are living in a has been society. Where it is really going to get worse is now that corporations such as G<E< want to build plants in China to sell to the coming out of 1 billion customers it will end that China will get rights to GE’s intellectual property including that obeained by reseaerch from govedrnment paid for researech & development for our military. Fighting 1 billion souls possessing our advanced technology would quickly break our treasury just buying bullets.

Wats wrong with this? If the US gov would protect US industries we would not be in such a bad spot. Its the politicians that SOLD US OUT.

When the pipeline was first built to bring oil from Alaska it was law that the oil was for American consumption only. The first openimg of the spicket filled a tanker headed for Japan. Big business is going to do what it wants unless our own government has the will to regulate for the nations good with the right laws & then enforcing them !!!

To be fair, all of the Nay votes were Democrats and more Republicans voted for it than Democrats. Even Patty Murray (D-WA) voted for the 3 new Free Trade Agreements. Just when I had started to suspect she may have a brain, she sells out like the rest. It doesn’t matter which party you vote for, they’re both corrupt beyond imagining. That’s why our defense industry is in the state it’s in too. Meanwhile, China reported its GDP growth will probably only be 9+% this year and the US is hoping for any positive number, but “free trade” is good for us.

There’s a reason that we don’t use American steel.

That reason is countryside poisoned by tailings piles and solvent dumping. It’s cities where people have to wear masks to keep from choking on smog and soot. It’s men with ruined joints and twisted spines, women with weird cancers and twisted children.

Industry is either dirty and dangerous, or clean and safe and terribly expensive. The proposed tariffs are eliminating the advantage Chinese foundries enjoy by doing things the cheap and dirty way.

China isn’t the only country outside the US that makes steel!

Buy American! GO USA
Pay now or pay for the consequences later.……

How do you get a Politician to move?

Declare “lunch” is over.…..

But it’s ok for them to break trade treaties at a whim. What happens if we enter into a military action that that country doesn’t agree with and decides not to supply the steel we require? What do we do then?
We need to put americans back to work, even if this means having to update current steel mills utilizing the newest technologies. We need to refurbish some that are currently sitting Idle to be ready for a possible escalation in military requirements.
I really don’t care about foreign countries and their job markets. I care about here and us.

LIKE I HAVE BEEN SAYING WE DO NOT PRODUCE ENOUGH STEEL TO BUILD OUR SECURITY FORCES VEHICLES. SCARY.

WE MUST REBUILD OUR MANUFACTURING BASE AS WELL AS DEVELOPING OUR INTERNAL ENERGY RESOURCES NOW WHILE WE STILL CAN! I’M NOT SUGGESTING AN “ISOLATIONIST” POLICY JUST AN INTELLIGENT POLICY. WE CAN NO LONGER AFFORD TO BUY OFF OUR ENEMIES WHEN THEY SPEND THOSE DOLLARS BUYING WEAPONS TO KILL AMERICANS. IF WE CAN’T TAKE CARE OF OUR OWN CITIZENS HOW CAN WE EVER TRULY HELP OTHERS? OUR REPUTATION ABROAD IS WE DO NOTHING THAT IS NOT IN OUR OWN SELF INTEREST. IF THE MAJOR AMERICAN CORPORATIONS FOCUSED THEIR TIME, MONEY, ENERGY AND RESOURCES ON AMERICA FIRST IN LESS THAN FIVE YEARS WE WOULD HAVE THE LOWEST COST OF LIVING INDEX IN THE WORLD!

Hmm, Lets see, Japan bought steel and scrap metal from the US for a Decade and built a Massive fleet. We used our industrial prowess and our resources and built a bigger fleet and blew their fleet away. Every Japanese ship we sank was irreplaceable, Every American ship sunk was replaced by 5.
How can we do that when we buy the majority of our steel from Overseas partners?

How has not investing in it working for us? How is China’s investment working for them? My main point focused on the fact that the workers would spend money in our 2/3rds based consumer economy on top of the trickle of taxes. That in turn will generate jobs because of the new consumers to buy products. If we looked at this in a vacuum and said that using tax money to higher workers to pay back a fraction of there initial cost is not what I meant an up surd. If you look at it wholistic, if the government bought more US products that would offset the need to have the government function as job welfare. Steel won’t solve it all but its a great start in an area that America traditionally excelled in. We need to stop looking so much at the short term and bottom dollar and start think what the long term implications are.

And your point is? Employ Koreans or employ Americans? When it comes to us they damn sure put themselves first. Time we did too.

As a manufacturer I’d rather be machining American made steel and aluminum over any import.

I think we still make some steel (the high quality kind too) here in the United States, without the level of pollution and medical problems you see elsewhere. In my opinion we MUST maintain that ability. Regarding where we get the rest of our steel for the DoD, ideally it would be somewhere other than China, and quality should never be compromised.

It’s not just steel we should be worried about:

The U.S. government is seeking a $2.4 million fine against Textron Inc.’s Cessna unit after a 7-foot wing section tore off of a Corvalis, a high-performance propeller plane, during a test flight.

Cessna workers at a plant in Chihuahua, Mexico, used an unapproved method to build the plane’s carbon-fiber wings and untrained employees signed off on the work, according to a Federal Aviation Administration letter released last week. (http://​www​.pbn​.com/​C​e​s​s​n​a​-​p​l​a​n​e​s​-​w​i​n​g​-​f​a​i​l​u​r​e​-​p​r​o​m​p​t​s​-​2​4​-​m​i​l​l​i​o​n​-​F​A​A​-​f​i​n​e​,​6​1​413)

The humidity in the sweat shop was too high for the plys to bond properly. Imagine that!

And then when you go to war and your steel supplier doesn’t agree with your politics and tells you to hit the road you are S.O.L.

Of course, their new 162 is all built in China. Buy one at your own risk.

Kinda Galls you up when ou remember 2–3 years ago when the push for nukes peaked up abit. of the 18 proposed new Nuke power plants proposed only 1 made the cut. The Plant going to Georgia is being assembled entirely of steel component made in Cheng Du, PRC.

How about Canada, for instance? Remember, the US’s largest trading partner. The one with which the US signed a Free Trade Agreement? The country that buys all sorts of defence hardware from the US (C-17, C-130J, CH-47F being some high-profile recent examples. Canada is about to start building a bunch of new ships for its Navy … would you want it to put in place a “Buy Canadian Steel Only” rule? As a Canadian taxpayer, I certainly wouldn’t! Less competitions means higher prices! It’s the same for the US … shut out the Boeings and Lockeed-Martins of this world from subcontracting to whoever (a) is a reliable, secure, and trustworthy supplier, and (b) gives them the best price, and the cost to US taxpayers will go up, simple as that.

We have much more to gain than lose by just shutting the import door. If you look at the import/export balances, we keep losing ground and increasing our permanent unemployment. Which means those workers at our exporting companies are benefiting at the expense of those workers being displaced by foreign importers. We could limit imports by country which exceed our exports. But let’s keep it simple. The U.S. economy needs to support itself as first priority. That’s the only right thing to do.

Wake Up, America! The Wall Street types who support and finance whatever company pays them have bought and paid for the Washington politicians. Globalization is the death of the nation state, America included. We either have American companies employing American workers earning good wages and benefits or we have a world-class worker, with lower wages and no benefits, dropping back to the Karl Marx days. There is no walking this line. We’re either on one side or the other. And if we want to come down on the globalization side, we don’t need any defense department because we’ve already sold out to the new masters of the universe — General Electric, the big banks, and the international car companies (which include Ford, GM and Chrysler).

This is how people lose their freedoms. When the politicians can’t stand up for what’s right, the only solution — history suggests — is for poeple turn to despots and dictators. But I see we have more of a criminal type oligarchy taking control, like the Russians in the last 20 years and the European aristocracies over the last 300 years. Time for a New American Revolution?

Please don’t use steel from India. It will break every time. Compare it to American steel. See which one breaks first. I wouldn’t want my sons flying any aircraft with metal from other country’s. Thank You.

Hell yeah! We lose nearly $1 trillion a year in our trade imbalance, most of it to Communist Red China. A trillion dollars would create a lot of jobs here in the US. Ironically, this so called “free trade” has not only destroyed our industrial capacity and idled 1/5th of our workforce, it has also caused us to stop exporting. Funny thing, when you don’t make anything here, you don’t have anything to export. It’s not friggen rocket science, people.

Lots of steel and other metals parked in the Arizona Desert ..Also at the Phila Navy Yard reserve basin alone there is enough steel floating to build another CVAN—-Go get it .…

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