Testimony of Thomas Conway

International Vice President (Administration)

United Steelworkers

Before The

U.S. House Steel Caucus Hearing

May 26, 2011

Good morning Chairman Murphy, Co-Chairman Visclosky and steel caucus members. I am Tom Conway, the International Vice President of the United Steelworkers (USW). The USW is the largest industrial union in North America with 850,000 active members working in a broad range of manufacturing industries, including basic steel and steel products. In short, USW members are the heart of the nation’s industrial base.

Thank-you for inviting me here today. While things have improved somewhat since I was last here, the American economy remains fragile and uncertain. High unemployment, underemployment, wage stagnation and home foreclosures all show an economy still struggling to regain its footing. For American manufacturing communities the 2008 crash is still causing devastation and comes on top of the ongoing destruction the manufacturing sector has endured. Over the last decade alone six million manufacturing jobs and 55,000 manufacturing facilities have been lost. A greater and greater amount of manufactured goods is being imported and more and more U.S. companies are off-shoring manufacturing. The Economic Policy Institute estimates that our trade deficit with China alone from 2001-2008 caused the loss of 2.4 million manufacturing jobs here. New data from the Department of Commerce show U.S. companies cut their workforces in the U.S. by a staggering 2.9 million during the 2000s while adding 2.4 million jobs overseas, many of them in manufacturing. A recent report, Manufacturing Insecurity: America’s Manufacturing Crisis and the Erosion of the US Defense Industrial Base, describes the danger the nation faces as a consequence. The health of our manufacturing base and our defense industrial base are inextricably linked and both in peril.

But what is happening is not irreversible if we can find the political will to act. The world has changed but what has not changed is the creativity, the productivity and determination of our people and certainly of USW members. While bad trade policies and near total neglect of our manufacturing base has lead us to the brink of disaster, a proactive agenda of good trade policies and thoughtful national manufacturing investments can turn us toward prosperity. The Make it in America Agenda proposed by Mr. Hoyer offers a combination of measures that can help to reverse the decline so we can put people back to work in productive ways making steel and other goods that can be sold at home and exported abroad. For example, bills that expand Buy America to taxpayer-funded infrastructure projects, like Congresswoman Sutton’s bill involving clean drinking water infrastructure, or the Chair and Vice Chair’s bills expanding the reach of Buy America for iron and steel use, are a good start.

Today I’d like to offer some additional actions Congress can take to help manufacturing regain its strength as an engine of growth and prosperity and one that supports a vibrant and growing – not shrinking – middle class.

We Need Tax Policies Encouraging Manufacturing Innovation and Investment in the U.S. We need to enact tax incentives for companies to produce domestically – not off-shore. For domestic manufacturers to compete against global competition we need to make permanent and expand the R& D tax credit so research investments can draw capital to create tomorrow’s jobs in America. Hand-in-hand, we need support for testing and deployment of new technologies in our factories so manufacturing capabilities can grow and support job creation in supply chains. Strong patent and intellectual property protections are also of utmost importance to protect manufacturing investment and give companies the incentive to innovate and invest in cutting edge technologies in America. Tax incentives for industrial efficiency projects should also be provided and expanded to assist manufacturers, like steel, to better compete here and abroad.

We Need Investment in 21st Century Energy Infrastructure. America must not cede the clean energy sector to foreign competitors, like China, which are investing massively to capture jobs, capacity and technology in the fast growing clean energy sector. To compete to win we need to encourage the use of advanced clean energy technologies. Expanding the manufacturing tax credit under 48c of the tax code, one of the bills in the Make it in America Agenda, would help our companies expand production of materials, and goods used in clean energy projects, as would the Advanced Vehicle Technology bill, which reauthorizes DOE’s vehicle technology research programs so that the next generation of advanced vehicles can be built in America.

Investment in rare earth mineral production also is key for developing our own capacity so that manufacturers of clean energy products will not be held hostage to Beijing’s industrial strategies. China holds 90% of the world’s rare earth mineral reserves but deliberately restrains their export -- in clear violation of the WTO -- to give Chinese producers a huge competitive leg up and which encourages clean energy manufactures to locate in China to access these needed materials. We complained about this violation in the 301 petition the union brought against China in the clean energy sector, which is still pending. The Make it in America Agenda includes some measures to address this.

We Need Strong and Expanded Workforce Development. The nation’s economy is only as strong and competitive as its workforce. America’s workers are the most innovative in the world and deserve a government willing to invest in them to make sure they have the skills and training to keep pace with fast-changing technology and to compete and beat fierce – often unfair – foreign competitors. That requires constant upgrading of skills and training for America workers who want to rise to the challenges and know they can win if given a fair chance. Various bills in the Make it in America Agenda are geared to helping workers get support to develop the skills they need and to be trained in new fields to compete in the 21st century.

We Need a Bold Recommitment to Infrastructure. America’s infrastructure is crumbling from decades of neglect. The deficit in infrastructure is huge – standing at $2.2 trillion according to the American Society of Civil Engineers – and every bit as dangerous to the nation’s economic health and national security as the fiscal deficit. We are failing backward as fierce competitors from around the globe are rushing forward.

While Shanghai and Paris have state of the art high speed rail systems, we dither. This cannot continue without further jeopardizing our manufacturing sector, like steel, and the economy and our national security as a whole.

Congress must act boldly to commit substantial and sustained investments in upgrading and expanding critical infrastructure. It will make business more cost-efficient and our goods more competitive. Multi-year and comprehensive investments in a wide variety of infrastructure projects are needed, which could, in part, be accomplished through an infrastructure bank of some kind, but which in any form must include strong Buy America requirements so our taxpayer dollars can be effectively used – as the public desires -- to create manufacturing jobs here.

We Need to Get Our Trade House in Order. Our massive trade deficit, especially with China, is symptomatic of the challenges we face in maintaining or expanding our manufacturing base. Congress can act right now to stop one of the most damaging of unfair trade practices -- currency manipulation -- and hold foreign countries accountable under US law when they intentionally undervalue their currency to gain an unfair advantage. The Make it in America Agenda includes a bill sponsored by Levin, Tim Ryan and the Chairman Mr. Murphy, which passed last year and does just that.

We cannot make the same mistakes over and over again and expect a different outcome. We need fair trade and strong enforcement as part of any national manufacturing strategy.

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