Barack Obama wrong about size of U.S. steel production, work force

When Donald Trump made a high-profile speech outlining his approach to trade, he did it in Monessen, Pa., a town near Pittsburgh where a big steel mill has been shuttered for the past three decades.

A day after Trump’s speech, Barack Obama brought up the history of American steel during a joint appearance with the Canadian prime minister and the Mexican president, who were meeting for a summit in Ottawa.

Reporters asked the three leaders what they would do to counter the anti-free-trade sentiment exemplified by Trump. Obama acknowledged the shortcomings of trade agreements, but he argued that reverting to tariffs and a possible trade war was the wrong way to improve the situation. He pointed to technological change as an irreversible factor.

"This nostalgia about an era when everybody was working in manufacturing jobs, and you didn’t need a college degree, and you could go in and as long as you worked hard you could support a family and live a middle-class life -- that has been undermined far more by automation than it has been by outsourcing or the shift of jobs to ... low-wage countries," Obama said. "I mean, the steel industry is producing as much steel in the United States as it ever was. It’s just (that) it needs one-tenth of the workers that it used to."

Several readers asked us to look into Obama’s comparison -- that "the steel industry is producing as much steel in the United States as it ever was. It’s just it needs one-tenth of the workers that it used to."

It turns out that Obama was wrong on both counts.

Steel production

Frank Giarratani, an economist at the University of Pittsburgh who specializes in the steel industry, provided us with numbers calculated by the U.S. Geological Survey for raw steel production. The data goes back to 1900.

The high point came in 1973, when the United States produced 137 million metric tons of raw steel. By 2013, the most recent year available, that had fallen to 87 million metric tons -- a decline of more than one-third from 1973. That’s not even close to "as much" as the peak, which is what Obama said.

"We do produce a lot of steel, but current production is far below the post-WWII peak," Giarratani said.

Raw steel production is also down a bit since 2008, when the figure was 92 million metric tons. That was the last year before Obama took office and, perhaps more important, the last year before the Great Recession really hit. Production plunged in 2009, before eventually rebounding.

Other current economic trends have also had an impact. For instance, the ongoing decline in oil and gas drilling due to low prices is driving companies to cut back on tubing orders, contributing to a slowdown in steel production, said Jeff Manuel, an associate professor of historical studies at Southern Illinois University-Edwardsville.

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"I live near U.S. Steel’s Granite City Works in Granite City, Ill.," Manuel said. "This mill is currently shut down due, as I understand it, largely to slack demand from oil and gas companies in the Gulf Coast region."

Steel industry employment

Tracking employment is a little trickier than tracking production, but several experts said that the one-tenth figure Obama cited is off base.

Data from the American Iron and Steel Institute pegged the all-time employment high at 650,000 employees in 1953. More recent data from the institute, for 2015, shows that the steel industry directly employs about 142,000 people in the United States. That’s closer to one in five jobs left, not the one in 10 Obama cited.

"So one-tenth is an exaggeration," said Benjamin H. Liebman, an economist at Saint Joseph's University who specializes in international trade.

The automation trend Obama mentioned did contribute to the downsizing. "The major reason that steel employment has fallen drastically over the last 40 years is improved technology," Liebman said.

According to the American Iron and Steel Institute, "labor productivity has seen a fivefold increase since the early 1980s, going from an average of 10.1 man-hours per finished ton to an average of 1.9 man-hours per finished ton of steel in 2014."

American steel production has increasingly shifted away from the extraction of ore for raw material and towards the recycling of scrap metal, which typically requires fewer workers. "Now, more than 50 percent of all steel produced in the United States is from a process that recycles scrap metal," Giarratani said.

The White House acknowledged that Obama’s remark was incorrect, and instead told PolitiFact that "the U.S. is producing considerably more steel than when the president took office." However, the statistics the White House used to back up that assertion were based on 2009 data, which captured the post-recession low point.

Our ruling

Obama said that "the steel industry is producing as much steel in the United States as it ever was. It’s just it needs one-tenth of the workers that it used to."

In reality, production is down by more than one-third from its historical peak in 1973, and the employment picture -- while still severely shrunken -- is down to about one-fifth of its 1950s level, rather than one-tenth. We rate the claim False.

https://www.sharethefacts.co/share/2a7d3cfd-4d6c-40a7-80b3-df2e6c563bb8