Protection Racket

Dec. 21, 2004
Does the U.S. need to maintain basic industries? Experts differ.

As the U.S. International Trade Commission, at the behest of the Bush Administration, continues to investigate alleged dumping of steel by foreign producers, Washington so far is not answering a basic national-security question: Does the U.S. need to maintain a viable domestic steel industry to ensure the country's national security? The same question can be asked about assuring domestic production capacity for aluminum, machine tools, and semiconductors. For steel, the answer "seems to be yes," the same as it would be for petroleum, responds Russell Sutton, president and CEO of Ferguson Steel Co., an $86 million Indianapolis steel fabricator. "We need petroleum and we need steel to be able to conduct an ongoing defense should our supplies [from] offshore be cut," he states. Not so, counters Martin Anderson, a senior lecturer in management at Babson College, Wellesley, Mass. "If we truly got into a war in which all our steel was cut off -- [and] try to imagine that very difficult scenario -- we could simply recycle enough scrap to make whatever we needed, until we got our bombers and missiles off the ground," he argues. "More likely we would take over the foreign source with nuclear weapons," he predicts. What's more, Anderson bristles at the notion of protecting domestic steel from competition. "To put it simply, protection is always a stupid and counterproductive policy," he asserts. "The easiest way to keep a domestic industry is to open it to the full forces of global competition." The national-security argument for maintaining domestic steel capacity doesn't work either for Robert Reich, the former U.S. Secretary of Labor who now is professor of social and economic policy at Brandeis University in Waltham, Mass. One reason: diversified global sources of supply, he explains. Another factor: "Steel is less critical to national defense than it was years ago before new materials technologies provided many substitutes for steel." Those arguments are not persuasive enough for Thomas J. Duesterberg, president and CEO of the Manufacturers Alliance/MAPI, Arlington, Va. Even with U.S. ability to tap a "reasonably integrated" North American steel market, "it's probably important" that the country have some domestic capacity to draw on if there were a "real live shooting war," he contends. Nevertheless, Duesterberg says talk of subsidies to preserve domestic production capacity is premature. "We don't necessarily have to think about subsidy to maintain good chunks of our industry," he states. Pittsburgh-based Andrew Kapusta, metals director for the Lockwood Greene unit of J.A. Jones Inc., extends Duesterberg's thinking beyond steel to aluminum, machine tools, and semiconductors. Kapusta advocates maintaining domestic capacity in these industries, but rejects subsidizing them or imposing protectionist tariffs on imports. The U.S. doesn't "necessarily" have to have a basic steel industry, says Amy Glasmeier, a professor of geography and regional planning at Pennsylvania State University in University Park. However, she says, there's a strategic argument for maintaining a U.S. specialty metals capacity, which can be "encouraged through investments in science and technology, human skills, and things like that." Meanwhile, Edward Turzanski suggests the national-security question about the domestic steel industry may be outdated -- and misdirected. Such traditional strategic assets as steel, oil, coal, and gas "are not as critical to our security" as are breakthrough technologies and other capabilities that give the U.S. qualitative military and intelligence advantage, asserts Turzanski, a political science professor at LaSalle University in Philadelphia. "By far, the most important areas of technological challenge are maintaining qualitative advantage in air delivery of military personnel, material, and ordnance -- and [in] those technologies which allow the U.S. to discern the capabilities and motives of allies and adversaries."

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

 John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.
      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).
      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.
      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”
      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.
      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.


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