Written statement of L. Scott Barnes

Transcription

1 Written statement of L. Scott Barnes Chairman of The Committee on Pipe and Tube Imports (CPTI) And Vice President and Chief Commercial Officer of TMK IPSCO Before the Congressional Steel Caucus U.S. House of Representatives Washington, DC May 26, :00 a.m Rayburn House Office Building Good morning Congressman Murphy, Congressman Visclosky and the distinguished members of the Congressional Steel Caucus. My name is Scott Barnes and I am Vice President and Chief Commercial Officer of TMK IPSCO of Downers Grove, Illinois. Our company manufactures a variety of carbon steel pipe and tube products at plants located in Blytheville, Arkansas; Camanche, Iowa; Wilder, Kentucky; Geneva, Nebraska; Brookfield, Ohio; Catoosa, Oklahoma; Ambridge and Koppel, Pennsylvania and Baytown, Houston and Odessa, Texas. It is with great pleasure that I appear here today as Chairman of the Committee on Pipe and Tube Imports (CPTI). The CPTI represents the majority of the country s steel pipe, tube and fittings producers which employ over 27,000 workers nationwide. There are 42 CPTI member companies located in 28 states. These companies make an array of products used in automotive applications, residential and commercial construction, energy, infrastructure and fire protection. The pipe and tube industry is a vital component of the domestic steel sector as we represent nearly one-third of the sales for domestic flat-rolled products. Flat-rolled steel is the input for welded pipe and tube, while billets are the input for seamless pipe and tube. This morning I am pleased to join other industry and labor leaders to offer our views on the state of the industry and provide an overview of the key issues that the CPTI will focus on in the 112 th Congress. Last year in our testimony before the Caucus on March 25, 2010 we reiterated the many challenges the industry faced in a depressed economy. We also explained why it was necessary for many of our members to seek relief through the filing of unfair trade cases the majority of which have been against imports from China. Putting it into perspective, China has massively subsidized its steel industry, creating nearly 800 million tons of steel capacity and over 50 million tons of pipe and tube capacity. This contrasts with approximately 120 million tons of U.S. steel capacity and million tons of pipe and tube capacity. As a direct result of this massive overcapacity, pipe and tube imports from China soared to over 3.1 million tons in The Chinese took over one quarter of total U.S. pipe and tube demand and over a third in several product areas (see bar graph). To counter this massive surge of unfairly traded imports, CPTI members filed seven different sets of anti-dumping and countervailing duty petitions covering pipe and tube imports from China. These cases covered circular welded pipe, light-walled rectangular tubing, small diameter line pipe, OCTG, welded 1

2 stainless pipe, seamless standard line and pressure pipe, and drill pipe and drill collar products. In each and every one of these cases, the domestic pipe and tube industry proved to the Department of Commerce that the Chinese industry was subsidized and was dumping in the United States and demonstrated to the U.S. International Trade Commission in all seven cases that the industry was either suffering current injury or threatened with injury by reason of these imports from China (see attached chart of case results). The result of these cases and the imposition of duties to level the playing field has been a reduction in pipe and tube imports of almost 3 million tons from China between 2008 and 2010, with total reported pipe and tube imports from China falling to less than 200,000 tons in It is important for the Steel Caucus to know that the domestic pipe and tube industry has used this relief to move forward. TMK IPSCO installed a specialty threading facility in 2010 in Brookfield, Ohio which has resulted in the creation of new jobs. In addition, our company recently announced plans to locate our global R & D center in a 51,000 square foot facility in Houston, Texas, which will create dozens of additional new jobs. Over the past three years, CPTI members have invested or are in the process of investing nearly $2 billion in new plants in Youngstown, Ohio, Liberty, Texas, Baton Rouge and Bossier City, Louisiana, Little Rock, Arkansas, Mobile and Thomasville, Alabama, and Tunica, Mississippi. Besides the thousands of construction jobs, these new investments will result in the employment of over 2,000 new workers in the industry and additional jobs in the community. That is good news for the American economy. However, there is some not so good news as well. First, the WTO Appellate Body (AB) recently ruled that WTO members cannot find that the 95% state-owned steel industry in China is a public body acting like an arm of the Chinese government. That is ludicrous. It also ruled that countervailing domestic Chinese subsidies and applying the antidumping law to China can result in a double remedy. This is just one of many WTO Appellate Body rulings in recent years in which the Appellate Body has failed to follow the standards of review established during the Uruguay Round. Obviously these academic ideologues on the Appellate Body have never run companies in their own countries and had to compete with the Communist Government of China. The CPTI calls on the Congress and the U.S. Government to send a strong message to the WTO that no Doha Round Agreement is either possible or should be considered until the WTO demonstrates to the United States and the rest of the WTO members that it is taking concrete steps to rein in rule making instead of rule interpretation by the WTO Appellate Body. Second, like so many other U.S. manufacturing and agricultural industries, we are seeing massive transshipment and misclassification of pipe and tube products from China to avoid the payment of duties. In February 2010, the CPTI established a Customs Task Force to concentrate on these duty evasion tactics. The Task Force has worked with other industry groups to identity legislative solutions. The CPTI also continues to participate in the national steel training seminar program at various U.S. ports. On April 26, 2011, I participated in a multi-industry coalition meeting with Customs officials at U.S. Customs and Border Protection (CBP) in Washington. This meeting confirmed what we knew all long, that current law simply does not address this problem. Unlike the 2

3 Department of Commerce, which must act statutorily within reasonable time periods to either investigate unfair trade practices or after orders are imposed to investigate alleged circumvention of dumping orders, there is presently no statutory requirement that the Department of Homeland Security through its Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE) agencies timely investigate and render a decision in response to domestic industry complaints. Therefore, the CPTI urges the Steel Caucus to strongly support The Enforce Act when it is reintroduced in the House in the coming months. This legislation will provide the necessary tools to ensure that CBP can execute their authority in commercial enforcement so there is an end to customs fraud. Third, we believe that massive steel overcapacity in China combined with the Chinese governments manipulation of its currency is directly resulting in significant import increases of pipe and tube products from third countries that are utilizing Chinese steel inputs. We have seen approximately a 1.5 million ton increase in pipe and tube imports from other Asian countries. While we believe some of this is simply transshipped product, much of it is the result of the purchase of Chinese flat-rolled steel or Chinese round billets for the production of welded or seamless pipe and tube from Chinese government-owned steel facilities at prices that are well below world market prices. Chinese currency manipulation allows state-owned Chinese steel producers to export unemployment through a direct export subsidy of an undervalued currency. We applaud your efforts Chairman Murphy and other members of the Caucus to reintroduce The Currency Reform For Fair Trade Act, H.R. 639 and we hope that the House will again pass this legislation as it did in September We are also optimistic that the Senate will take similar action and enact legislation to end this injurious and trade distorting practice. Chairman Murphy, you recently introduced the Infrastructure Jobs and Energy Independence Act, H.R. 1861, legislation that would enhance the nation s energy policy forward by expanding oil and gas exploration and dedicating these revenues to repair the nation s infrastructure. The CPTI supports this legislation because we believe that it is a responsible approach to solving this ongoing problem. We also hope that your colleagues join you in moving this legislation forward in the 112 th Congress. We also support the proposal that would retrofit America s trucks to a fuel source system using natural gas. Those of us in the industry that manufacture energy tubular products recognize the economic and environmental benefits of natural gas and the opportunities that energy programs have on increasing demand for tubular products. I also wanted to mention the industry s continued interest in advancing the dialogue in energy exploration and discoveries of new natural gas reserves in shales throughout the country. The CPTI has carefully monitored and participated in the dialogue in shale play development. As most members know, there have been recent discoveries in nearby shales, more specifically the Marcellus Shale, that provide encouraging signs for economic growth and recovery through development of these reserves. Our company, TMK IPSCO, is a member of the Marcellus Shale Coalition and we have actively 3

4 participated in the effort to educate the business and local communities about the positive impact of this energy discovery. Not only will the work in the shale produce gas, it will create more demand for steel tubular products and aid in the recovery of the industry and result in job creation. It was recently reported that natural gas producers already invested more than $4 billion in Pennsylvania on lease and land acquisition, new well drilling, infrastructure development and community partnerships. These investments are expected to continue as projects advance in the region. I also thank Chairman Murphy for speaking at the Steel Business Briefing Marcellus Shale Conference on May 23, Mr. Chairman, your ideas and those of the Caucus are critical in ensuring that these shale projects continue and that Best Practices are adhered to ensure that work is done in an environmentally safe manner. Finally, Rep. Visclosky, members of the CPTI also thank you for your support and commitment to the industry. In particular, we applaud you for reintroducing the America Steel First Act, H.R. 1703, legislation which will ensure that iron and steel produced in the United States is used for federally funded infrastructure and transportation projects. Chairman Murphy and Vice Chairman Visclosky, the CPTI appreciates the leadership and support you have provided to the industry. We want to work with you in this Congress on legislation that will ensure that the domestic industry can compete now and into the future. Thank you for providing me with the opportunity to appear today. 4

5 List of Antidumping (AD) and Countervailing Duty (CVD) Cases Filled on Imports of Certain Steel Pipe and Tube Products Circular Welded Non-Alloy Steel Pipe (Standard Pipe) Cases Filed in 2007 and Final Determinations Issued in 2008 AD margins China % CVD margins China % 2. Light-walled Rectangular Tubing (LWR) (Ornamental Tubing) Cases Filed in 2007 and Final Determinations Issued in 2008 AD Cases on Imports from China, Korea, Mexico and Turkey and CVD v. China AD margins China % AD margins Korea % AD margins Mexico- 2-5% AD margins Turkey % CVD margins China % 3. Welded Stainless Pressure Pipe from China, Cases Filed in 2008 with Final Determinations Issued in 2009 AD margins China % CVD margins China % 4. Welded Small Diameter Line Pipe Cases Filed on Imports from China Cases Filed in 2008 with Final Determinations in 2009 AD margins China % CVD margins China % 5. OCTG Case Filed in 2009 with Final Determinations in 2010 AD margins China % CVD margins China % 6. Seamless Carbon and Alloy Standard, Line, and Pressure Pipe, Case Filed in 2009 with Final Determinations in 2010 AD margins China % CVD margins China % 7. Drill Pipe Case Filed in 2009 and Final Determinations in 2011 AD margins China % CVD margins China- 18% 5/17/11

6 Imports of Certain Pipe and Tubes from China (2002 to 2010) Imports in 1,000s of net tons Year Standard Pipe Oil Country Tubular Goods , Line Pipe Mechanical Tubing Structural Pipe and Tubing Stainless Pipe and Tubing Total ,066 2,173 2,548 3,024 1, Prepared by the Committee on Pipe and Tube Imports (CPTI) February 14, 2011

7 Market Share (Percentage) Import Penetration Levels Pipe and Tube The Committee on Pipe and Tube Imports updated: April 2011 Year

8 Net Tons (Thousands) U.S. Export Trends Pipe and Tube Year The Committee on Pipe and Tube Imports updated: April 2011

9 Imports of Certain Chinese Pipes and Tubes China Imports , China Imports Data from AISI Imports-3 Report and SIMA. Committee on Pipe and Tube (CPTI) February 14, 2011

10 Scott Barnes Vice President and Chief Commercial Officer Mr. Barnes joined TMK IPSCO as Vice President and Chief Commercial Officer in June of 2008 when TMK, one of the world s largest oil and gas pipe producers, purchased IPSCO s U.S. tubular assets. Prior to the acquisition, he was Vice President Commercial at IPSCO, a position he held since Mr. Barnes originally joined IPSCO in 1985 as an outside sales representative and progressed through various sales, operations and administrative positions with increasing responsibilities. Mr. Barnes is responsible for the sale of OCTG, premium connections, line pipe, standard pipe and HSS products in the Western Hemisphere. In 2011, Mr. Barnes assumed the responsibility for TMK IPSCO s government relations and leads the company s collaboration with national and local government officials. Mr. Barnes is a member TMK IPSCO s senior management group and plays a key role in the strategic planning, budgeting and development of capital programs for the business. Most recently he led the commercial expansion into Canada and Latin America. Prior activities include the commercial integration of TMK North America and IPSCO s NS Group acquisition. Mr. Barnes earned a BA and MBA from The Ohio State University and has attended Executive Programs at Northwestern Kellogg School of Business. He is active in the tubular industry serving as the current Chairman of the Committee on Pipe and Tube Imports, a member of the National Association of Steel Pipe Distributors and the Metal Service Center Institute s Tubular Product Council, and serves on the legislative committee of the Marcellus Shale Coalition.