American industry reaps rewards of global boom in demand

Date: 20/07/2000

COAL and steel are emerging as the heroes and villains of America's 'old' economy as it struggles to keep pace with the Internet-driven 'new' economy.

The US coal industry is selling itself as the answer to the surging demand for electricity in a booming economy, while the steel industry is under attack for protectionist policies said to have cost consumers tens of billions of euro.

While Europe's coal industry struggles for survival, American mines are feasting on government forecasts of a 20% rise in domestic demand from 950 million tonnes to 1.3 billion tonnes as US power consumption rises. Coal is already the most important fuel for electricity generation, accounting for 52% of US power output in 1998.

Buoyed by these bullish forecasts, the industry has gone on the offensive against the powerful environmental lobby, seizing on government figures showing significant falls in emissions of nitrogen and sulphur pollutants from coal-burning in the past 30 years - and coal men claim they could fall to zero with the introduction of newly designed power plants.

The steel sector is, by contrast, on the defensive after US importers and foreign steelmakers claimed that quotas and subsidies have cost American consumers around €160 billion over the past 30 years and have undermined the country's free trade credentials.

A recent report by the American Institute for International Steel alleges that the US industry has seized control of American trade policy through large political campaign contributions and by hiring former trade officials to lobby in Washington. It says the large companies have switched from supporting import quotas to calling for tighter anti-dumping regulations against foreign companies which currently supply between 20% and 30% of the US market.

Big steel firms have become more efficient - the number of man hours needed to produce a tonne of American steel tumbled from 10.1 in 1982 to 3.8 in 1998 - and the smaller independent mini-mills which make most of their steel from recycled scrap and account for around 50% of US production are as efficient as the best European and Asian companies.

For the moment, the US industry is basking the global boom. But like its European counterpart, it will jump on the politicians the moment the going gets tough.

Coal and steel are emerging as the heroes and villains of America's 'old' economy as it struggles to keep pace with the Internet-driven 'new' economy.