By Nick Carey
DETROIT, March 7 (Reuters) - Higher U.S. tariffs on importedsteel will mean more jobs at some American steel mills but raisethe risk of layoffs at others, industry executives said onWednesday.
On the winning side of President Donald Trump's plans toimpose a 25 percent tariff on imported steel are U.S. steelmills with excess capacity that can be restarted, albeit with asignificant delay, to meet increased demand. On the losing sideare steel makers that rely on the import of specialty steelproducts not manufactured in the United States.
Bob Miller, chief executive officer of the U.S. operationsof Novolipetsk Steel PAO, knows exactly how hisbusiness and workers will be affected - and it is not good news.
"This will absolutely lead to layoffs," Miller said,explaining that U.S. producers do not make the steel slabs heneeds to supply sheet steel to customers like Caterpillar Incand automakers.
If Trump's steel tariffs are imposed without exemptions,Miller says Russia-based Novolipetsk Steel will shelve plans toinvest $600 million to add capacity at factories in Pennsylvaniaand Indiana and lay off hundreds of American steel workers.Within three to four months the company would have to cut 50percent of the 1,200 steel workers it employs today because itwould run out of raw materials, he said, adding that ifcustomers refuse to accept higher prices, the company's U.S."business case could disappear."
"Personally, I think my 1,200 U.S. steel jobs are just asimportant as anyone else's 1,200 steel jobs," Miller said.
But at U.S. Steel Corp the company is readying to rampup operations in expectations that the tariffs will spur demand.U.S. Steel on Wednesday said it would begin restarting one oftwo idled blast furnaces at its Granite City, Illinois, steelplant – a process that will take up to four months and couldsupport 500 jobs.
The company is "actively reviewing the anticipated increaseddemand for steel produced in the United States," a U.S. Steelspokeswoman said.
The two companies are emblematic of how the proposed tariffon steel has exposed division within the industry andhighlighted the challenges of rebuilding capacity in acapital-intensive sector.
U.S. steel makers have said the domestic industry has 30million tons of annual idled capacity and can ramp up to meetdemand - which totaled around 107 million tons in 2017, 36million of which was imported.
Granite City and an AK Steel Holding Corp mill inAshland, Kentucky, are the only two idle U.S. plantssufficiently well maintained to be brought back any time soon,industry analysts said. Between them, they have 5.3 million tonsof capacity available.
For many other mothballed mills, "it is highly unlikely theywould come back at all" because it would be too expensive to doso, said Clarksons Platou Securities analyst Lee McMillan. "Wewould likely see higher prices because of capacity constraints."
U.S. steel makers are expected to increase prices if tariffsare imposed.
Independent analyst Michelle Applebaum said the U.S. steelindustry should be able meet most demand, but even plants likeGranite City and Ashland, which have been kept ready to restart,take four to six months to be ready for production.
"This doesn't happen overnight," she said.
This worries steel consumers like energy storage andtransport company Plains All American Pipeline, whereCEO Greg Armstrong said shortages could hamstring some pipelineprojects.
"We buy not only pipe but valves and things that are notmanufactured in the United States," Armstrong said. "I don'tthink it's appropriate to put a tariff on something that youcan’t buy in the United States."
Steel suppliers like California Steel Industries Inc, which imports 1.5 million tons of steel slabsannually, argue that Trump's bid to save U.S. steel jobs willcost them.(Reporting by Nick CareyAdditional reporting by David GaffenEditing by Leslie Adler)
