Donald Trump signs Keystone order
President Donald Trump shows his signature on an executive order on the Keystone XL pipeline, one of several orders he says will help American workers and industry.
(Evan Vucci, Associated Press)
WASHINGTON -- The Keystone XL pipeline stole the show Tuesday with President Donald Trump's executive order to proceed with the project that will pipe Canadian tar sands oil through the United States to Gulf of Mexico refineries. Trump's green light on that and the Dakota Access pipeline, which will pipe oil from the shale fields of North Dakota to Illinois, meant little directly for Ohio.
Yet Trump signed yet another order that could -- big emphasis on "could" -- help Ohio's industry. He ordered the commerce secretary to develop a policy requiring U.S.-made steel for new and retrofitted pipelines.
"We are -- and I am -- very insistent that if we're going to build pipelines in the United States, the pipe should be made in the United States," Trump said.
A potential long-term beneficiary is the Vallourec Star steel pipe plant in Youngstown, says Philip Bell, president of the Washington, D.C.-based Steel Manufacturers Association. The plant is owned by a French company, but the Youngstown workers are American.
So what does this really mean for Ohio, for Trump, and for the steel industry? And why is there ambiguity?
Here are some answers.
What does this executive order do?
It directs the secretary of commerce to "develop a plan under which all new pipelines, as well as retrofitted, repaired, or expanded pipelines" in the United States "use materials and equipment produced in the United States, to the maximum extent possible and to the extent permitted by law."
Trump has nominated Wilbur Ross, a wealthy investor who used to scoop up distressed companies and restructure them, for commerce secretary. It is unclear what, exactly Ross will do in terms of this order. But Ross knows the steel industry.
Ross bought the bankrupt Cleveland-based LTV Steel and several other companies and ultimately sold them to ArcelorMittal, extracting worker concessions but keeping steel mills running.
What will be in this plan?
That's to be seen. The Commerce Department, working with other government agencies, has up to 180 days to develop the plan and submit it to the president.
Until then, no one knows "precisely what they can and can't do," says Christopher Guith, senior vice president of the U.S. Chamber of Commerce's Institute for 21st Century Energy.
How can this be ambiguous? Isn't American steel just that -- American steel?
Yes and no. Consider pledges made earlier for steel used in the Keystone XL pipeline. The builder, TransCanada Corp., said in 2012 that half of the pipe for the United States portions, or 332,800 tons, would come from a company in Arkansas, and the rest would come from Canada, Italy and India.
But TransCanada added a caveat, whose key words we'll put in italics: "It is important to understand pipeline companies do not purchase raw steel. Rather, we purchase sophisticated manufactured products such as high strength steel pipe and pumps that are fabricated from steel and other metals."
The raw steel for the pipe, in other words, could have been melted and poured -- a labor- and financially intensive process -- anywhere in the world before being shipped to the United States for fabrication. That happens a lot, according to authorities on manufacturing. Nevertheless, the finished pipe still would have counted toward that old 50 percent pledge by TransCanada.
That's why the Alliance for American Manufacturing says it hopes the Commerce Department will require that every step of the process occurs in the United States, supporting many more American workers.
Are there other ambiguities?
Yes. Miles of pipe was already laid for the Dakota Access project before it stalled amid Native American protests over environmental safety and proximity to sacred burial lands. As USA Today reported, 90 percent of the project is already completed across its four-state route.
And only 57 percent of that steel is American-made, short of Trump's 100-percent goal. Will the other 43 percent be dug up and replaced? That's unlikely.
How big of a deal is steel in Ohio?
Ohio ranks second in the country in steel production, behind Indiana, according to the Ohio Steel Council. It made 12 percent of the steel in the United States in 2011.
The industry -- both raw steel and steel product manufacturing -- employed 115,000 Americans in 2011.
If details won't be known for six months, why are people making a fuss now?
Coming less than a week into Trump's presidency, the order signals that the president is serious about his campaign commitment to put American workers first.
"This is the first step, and the president really delivered on his campaign promise to put American steel back at the backbone of the U.S. economy," White House spokesman Sean Spicer said.
Even Sen. Sherrod Brown, an Ohio Democrat critical of other policies expected of Trump, said he was "pleased that he's making the right moves" with a "Buy American" order -- although Brown added that Trump as a private citizen "has outsourced many jobs."
Brown has pushed to require that all government-funded projects use American materials if possible, but has failed to get the Republican majority in Congress to go along.
Hold on. The president's own party won't accept a blanket "Buy America" policy, yet Trump is doing this. Are Republicans mad about this?
The order concerns pipes, so it is not an edict covering everything the government oversees. Republicans in Congress have gone along with exceptions from time to time, so this is not novel.
A bigger debate could come when Trump presents a plan to rebuild the nation's roads and bridges, as he says he will. He has not released details.
What's wrong with a blanket policy, anyway?
Some conservatives, and some businesses, say builders should have access to the best materials at the best price, period. It's why appliance manufacturers, for example, tend to fight trade decisions that could limit access to cheaper foreign steel.
"It constrains the business community from doing what it knows how to do, which is build things efficiently and safely with the bottom line top of mind," says says Guith, of the Chamber of Commerce.
Will Trump's order turn around the steel pipe industry and help Ohio steel plants and workers?
Not by itself.
First, remember, most of the Dakota Access pipeline is complete.
There also happens to be a surplus of cheap foreign pipe already sitting in warehouses and on docks, Bell said. And the Keystone project's timeline may or may not match the time frame for the Commerce Department to develop and launch its "Buy America" pipe plan. These are all details the industry has not had time to assess.
There could always be other pipeline construction, of course. But that will depend on energy prices -- and right now, low energy prices have suppressed demand for new pipelines and the necessary steel, authorities from steel and manufacturing interests say.
What's the bottom line here?
Trump's executive order "is the first of several little things," said Bell, whose organization represents Vallourec. "It is important to know that when it comes to the steel industry, victory comes in stages."
Scott Paul, president of the Alliance for American Manufacturing, said, "We'll have to see the details before we know where the jobs come from, but this could be a step in the right direction."