After more than a decade working behind the scenes to protect the US steel industry from unfairly traded imports, Kevin Dempsey has taken over as interim chief executive at the steel industry's trade group, the American Iron and Steel Institute (AISI). Dempsey assumed the role as the steel industry grapples with the fallout from the Covid-19-related economic downturn, creating a difficult situation to manage at home while also remaining focused on supporting the domestic industry in the face of global oversupply.
Tell us about your background that set you up for your new role
I've been at AISI for 11 years, since I came in 2009. My role up until recently was as the senior vice president for public policy and general counsel. So I've been leading our public policy initiatives for more than the last decade, and obviously that's a big part of what's on my plate in my current role.
Before I came to AISI, I practiced international trade law for 14 years. I did a lot of steel work, but not just steel work. The key thing was I worked with domestic manufacturing industries in trade cases, antidumping and countervailing duty cases. I worked on the steel 201 (tariffs) in 2001/2002, so I've been through the previous steel crisis and know what that's like.
What do you think are the top three issues facing the US steel industry?
Certainly right now you've got the challenge of global overcapacity and government interventions around the world. The challenge with the demand situation because of Covid. The other major issue that we're constantly focused on is competing materials, there's always been a competition with other materials for our markets in automotive and construction. We think we've got a great story to tell because steel is extremely innovative. We've been developing all these new grades of steel to help our customers in the automotive industry make cars that are lower in mass while just as strong and just as safe.
In March, we saw the entire North American auto industry shut down. What was that like for the steel sector?
It's an extraordinary situation. For steel, we want to do whatever we can to help our customers in the automotive sector. We were staying in close touch with them. Obviously, it was an extraordinary challenge for them, and they had to respond in ways that made most sense for their industry. Our role was to be supportive to be there to provide assistance in any way we could.
We did prioritize getting the USMCA (US-Mexico-Canada Agreement) trade agreement implemented because that, I think, will be a boost for our North American supply chains and the steel that goes into automotive manufacturing throughout North America.
Are you concerned about the health of the overall US steel industry?
Our industry can be very competitive and our companies have made a lot of investments to stay competitive and healthy in normal times. Obviously, the Covid situation is a completely unexpected circumstance. With all the state shutdown orders, that's something simply nobody could have predicted.
My concerns are not with the state of our industry, it's these external factors, the Covid situation right now, and the external threat from global overcapacity which has been driven by government policies in other countries.
What's your outlook for the steel industry in the rest of 2020?
It's a difficult one. Obviously the overall economy has taken a big hit, and I think most of the forecasts are that GDP is contracting, by exactly how much is hard to say. We will be down this year, the question is how much. I think we're seeing some gradual improvement in recent weeks. Our capacity utilization is beginning to creep up … and we're hoping to see that improve, but a lot depends on how quickly the broader economy recovers in the second half of the year.
I would note that yes, capacity utilization, it frankly dropped more quickly during this Covid-19 crisis than it dropped back in 2008/2009. More quickly although we did not fall as far as we did in 2008/2009 where we dropped into even lower levels, in the 40s back then. It's been sharp but hopefully we're starting to see an improvement. How quickly we can get to improvement is going to depend on a number of broader economic factors.
Turning to imports - which have fallen in recent years - how low do they have to fall for the AISI to be satisfied?
There are going to be some level of imports into the US, and we're not saying there shouldn't be any imports. I think the thing we look at is what's the import market share. For a number of years we had seen a fairly high market share.
I think now year to date we're at 18pc market share compared to the 21pc in the same period of 2019.
We want to be competing with fairly traded imports, not with dumped or subsidized imports, and we still face a lot of challenges from subsidized production from China and elsewhere that continues to distort world markets.