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Steel industry of the United States Essay

After a review of the case facts about the effect of trade restrictions on the steel industry of the United States, the identification of the following interest groups are obtained. The steel production industry is an important part of the American economy. It provides a significant backbone to the construction industry of the country and steel producing countries such as Japan, Korea, and China. It is a particular interest group which would heavily be affected by federal government policies in lieu of what happened in the Steel Crisis of 1998.

Besides from its economic significance, the steel industry is also a major employer.  Employing many thousands of people, the performance of this sector has a major influence on the wider economy. The macroeconomic metrics of the country or country of origin will be significantly be affected once these workers run out of jobs. Most of the private contracting companies employ fewer than four people, but when it comes to the value of work done, the industry is controlled by a small number of large corporations.

The construction industry consists of a large number of trades working in often difficult situations using many different types of plant. Work is normally carried out on

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third party premises and casual labor is often used with the result that compliance with health and safety legislation is sometimes sporadic.

Furthermore, within the sector there are a number of types of company, each with very different outlooks and methods of operating. These companies may well be considered as yet another interest group. Trade restrictions and its effects may vary on these companies depending on its scale and capability to adapt to certain restrictions. Albeit, larger companies have a larger tendency to adapt to trade restrictions compared to smaller ones.

The next tier up consists of small and medium sized enterprises[1] that undertake larger contracts than the self-employed and often have their own premises. They may undertake general construction work or act in a specialist capacity. At the top end of the scale are the large construction companies, a number of which are public limited companies who undertake large, long-term contracts whether for local consumption or abroad.

A perfect example of this is Corus. Corus is a global company that supplies steel and aluminum products and services to consumers worldwide. The Corus brand signifies a mark of excellence, constancy and power. Their global expertise plus the local customer service helps them to offer value, consistency and innovation.

Likewise, the Netherlands, Germany, France, Norway and Belgium, Corus hires over 47,000 employees from more than 40 countries. They have annual proceeds of over £10bn and chief operating facilities in the UK. The Company comprises four divisions, Strip Products, Long Products, Distribution & Building Systems and Aluminium, and has a global network of sales offices and service centers.

Meanwhile, according to reports of the federal government under the present administration, the American construction market includes both publicly and privately funded projects. Considering these facts, it can also be said that the American government is another vital interest group affected by restrictions.

Based on the case, the government is tasked to analyze the housing, industrial, commercial and repair and maintenance sectors prior to the implementation of any trade policies such as restrictions. Sub-industries supported by the steel industry include agricultural construction, health centers and hospitals, commercial buildings, industrial units, private and public housing, non-residential buildings, shops, schools and universities, and the like.

Projects are undertaken in the Public (government institutions) as well as Private sectors (corporate players) in recent years in contrast to the number and value of contracts awarded in the Public sector has risen steadily. Many projects in the public sector are offered on a tender basis, which puts pressure on contract deadlines or profit margins. This can have a knock-on effect on health and safety, one area that the industry is working hard to address.

On the other hand, when it comes to the government’s expenditure, it is greatly affected by the Public sector, Public Private Partnership (PPP) enterprise and steel research and development, joined with high steel prices for imported steel enthusiasm for assets improvement could affect supply and demand and thereby raise steel prices.  These things provide more disadvantages than benefits for consumers within the construction industry.

Nowadays, the steel industry is facing progress in other countries such as the UK with housing projects and other related activities.  In some parts of UK, particularly in the south east, there is still housing shortage due to higher house prices. This can be attributed the lower steel prices coming from the absence of trade restrictions for imported steel from cheaper sources in Asia. In this viewpoint, the United States government should review its stand on trade restrictions on steel.

In conclusion, the industry itself could have the biggest influence on the implementation of trade restrictions within the steel industry of the United States. Lobbying efforts should be done wherein the benefits could be felt in a domino effect. Once restrictions are lowered or barriers to entry removed, companies could easily import cheaper yet quality steel into the market which in turn could be bought by consumers: a win-win situation.

Reference:

Devereaux, Charan, et al. (2006). Case Studies in US Trade Negotiations Vol 2. Standing Up for Steel. P. 193. Institute for International Economics.

[1] relative to the size of the industry for a particular country

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