Excerpt: “This is comically bad staff work [by the governor’s staff]: there are no tariffs on inbound recycled scrap and there is an abundance of cheap scrap on domestic soil,” said Peter Navarro
WASHINGTON — The White House has slammed Gov. John Bel Edwards over the governor’s remarks about the recent closure of a LaPlace steel mill.
[Elizabeth Crisp | October 6, 2019 | Nola.com]
Edwards, a Democrat, had suggested Bayou Steel’s closure, which meant layoffs for 376 employees, could have been linked to the Trump administration’s trade war and corresponding tariffs.
On Sunday, Peter Navarro, assistant to the president for trade and manufacturing policy, called the governor’s remarks “a shamelessly partisan attack” in a statement to this newspaper.
“This is comically bad staff work: there are no tariffs on inbound recycled scrap and there is an abundance of cheap scrap on domestic soil,” he said. “Bayou Steel folded like a cheap tent under the weight of a leveraged buyout by Wall Street vultures picking the carcass of a highly inefficient and antiquated plant. Ironically, the Trump steel tariffs actually kept Bayou Steel as a going concern longer than it otherwise would have existed. Meanwhile, the Trump steel tariffs are rejuvenating an industry critical to our national security and economic prosperity; and we are witnessing billions of dollars of new investment across this great country.”
The governor’s office didn’t immediately respond to a request for comment.
Bayou Steel Group said in a statement that it was filing for Chapter 11 bankruptcy protection.
“This unfortunate situation was created by a severe lack in liquidity at the company, which resulted in a default with its senior secured lender, and created a situation where the company could no longer purchase raw materials,” the statement read.
Edwards has previously expressed concerns to the Trump administration over tariffs, which have affected several sectors of Louisiana’s economy.
“While Bayou Steel has not given any specific reason for the closure, we know that this company, which uses recycled scrap metal that is largely imported, is particularly vulnerable to tariffs,” Edwards said of the company’s shuttered operations in Louisiana. “Louisiana is among the most dependent states on tariffed metals, which is why we continue to be hopeful for a speedy resolution to the uncertainty of the future of tariffs.”
Trump has tweeted urging voters to pick one of Edwards’ GOP challengers, businessman Eddie Rispone or U.S. Rep. Ralph Abraham, in the upcoming election.
“Don’t be fooled, John Bel Edwards will NEVER be for us,” Trump tweeted Tuesday.
Vice President Mike Pence was in Louisiana on Saturday for a Republican “unity rally” featuring both Rispone and Abraham. Trump has announced that he is heading to Louisiana Friday — the eve of the election to stump for the GOP candidates.
The election is Saturday, with a Nov. 16 runoff between the top two vote-getters if no candidate gets more than 50% of the vote in the first round.
In a letter to the Louisiana Workforce Commission, Bayou Steel’s owners blamed “unforeseen circumstances and the inability to secure necessary capital” for the for the mill’s closure.
Nucor, the largest steel producer in the U.S., has seen a 28% decline in its share price since the start of 2018, from above $69 to about $50 per share. U.S. Steel, the second-largest in U.S., is down 76%, from about $45 to $10.77 per share. Steel Dynamics, third-largest, is down about 43%, from about $51 to $29.
The imposition of section 232 tariffs in March 2018 — 25% on most steel imports and 10% on aluminum — was supposed to protect domestic producers from cheap imports from China and elsewhere, but the main effect on the market has been to raise the sense of uncertainty, which has been seen mostly in declining inventories by steel-trading middlemen who account for the bulk of the steel market.
Last Thursday, Moody’s Investors Service, a credit rating agency, downgraded its outlook for the entire steel industry from “stable” to “negative”, with analyst Carol Cowan noting that benchmark steel prices in the U.S. have declined from about $800 a ton in the second half last year to $520.
Nucor, U.S. Steel and Steel Dynamics have all warned that their profits will suffer in the second half of this year. In August, U.S. Steel laid off 200 workers at its Great Lake Works plant.
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