Coal, steel struggle after Trump’s 1st year

PITTSBURGH » When Donald Trump brought his presidential campaign to Pittsburgh in early 2016, he promised that as president he would restore the region’s coal and steel industries.

“There are few places that have been more devastated by our trade policies than Pittsburgh. Don’t worry, we’re bringing it all back,” Trump told 9,000 supporters at David L. Lawrence Convention Center.

As Trump prepared to give his first State of the Union address to Congress on Tuesday — a little more than a year after he took office — Pittsburgh and Pennsylvania’s economies are a mix of pluses and minuses. So are the coal, steel and manufacturing industries that he vowed to rebuild.

Yes, the U.S. economy is expanding, as measured by new jobs and modest Gross Domestic Product growth, which has increased between 2 percent and 2.5 percent since December 2016, the month before Trump’s presidency began.

Most workers can expect to see a little more take-home pay this year, and 401(k) retirement savings accounts are increasing in value as U.S. stocks surge to record highs.

The national joblessness rate is the lowest it’s been since 2000, a positive sign he highlighted during a visit Jan. 18 to H&K Equipment Co. in North Fayette .

But Trump can’t — or at least he shouldn’t — take all the credit.

“It’s a continuation of the same trends that have

been in place for years,” said PNC Chief Economist Gus Faucher, noting contributing factors include policy changes and spending packages dating to the Obama and George W. Bush

administrations.

“This has been the third largest economic expansion in U.S. history — more than 103 months of growth.” Steel slumps in Pa. During a June 2016

speech in Monessen , Trump vowed to bring manufacturing jobs back to Pennsylvania, but statistics show the industry has shrunk statewide over the past year.

Pennsylvania’s primary metals manufacturing industry lost 2,000 jobs between December 2016 and December 2017, according to the Pennsylvania Department of Labor and Industry’s Center for Workforce Information & Analysis.

The total number of jobs in primary metals dropped from 34,700 to 32,700.

The same held true for iron and steel mill ferroalloy manufacturing.

Jobs there dropped from 11,300 in December 2016 to 10,500 in December 2017, Labor and Industry reported.

“I think the state of steel is improving a lot in the United States because the economy is growing and imports have fallen, but the steel industry is contracting in Pennsylvania,” said John Tumazos of Tumazos Very Independent Research LLC. in Holmdel, N.J., an industry consultant.

He noted that Nucor Corp. recently announced plans to build a $250 million micro-mill with 250 jobs in Sedalia, Mo.; Commercial Metals Co. recently built new mills in Arizona and Oklahoma; and Big River Steel built a mill in Arkansas.

“The only significant investment in the last decade in Pennsylvania has been the Allegheny (Technologies) rolling mill (in Harrison), which was a replacement of a 1952 rolling mill,” Tumazos said.

He said the most significant things to happen in Pennsylvania over the past year were an increase in steel prices and the reopening of an Allegheny Technologies plant in Midland.

“Allegheny Technologies cut a deal with a Chinese company to import slabs from Indonesia to restart the Midland cold rolling mill for 100 jobs,” he said. “That’s the biggest excitement that I can think of in Pennsylvania, imported slabs to start a mill for 100 jobs.” Bump in coal production In the last year, the number of jobs nationwide in coal mining and in oil and

gas extraction have increased while natural gas distribution jobs have decreased, according to the Bureau of Labor Statistics.

Coal mining employment increased 1.4 percent to 50,900 jobs in December 2017 compared to December 2016. Oil and gas extraction employment increased 0.7 percent to 178,900 jobs. Natural gas distribution employment dropped 0.1 percent to 112,300 jobs.

There’s not much a presidential administration can do for coal companies beyond regulatory relief, said Sam Andrus, IHS Markit’s senior director for North American natural gas research.

“What they’ve at least done is taken the foot off the throat,” he said.

Coal production increased about 6 percent nationally and about 8 percent in Pennsylvania in 2017.

“The last year has seen a bump in production nationwide,” said Steve Gardner, president and CEO of ECSI LLC, an engineering consulting firm in Lexington, Ky. “A lot of it has been in the (metallurgical) coal market.”

Exports increased in both metallurgical coal, which is used to make steel, and thermal coal, which is used to produce steam in electric power plants.

The electric utility sector has shut down many coalfired power plants, but the remaining plants are among the most efficient, so plant closures might slow down, he said. Similarly, consolidation in the coal industry has led to fewer but more efficient companies, he said.

The Trump administration has helped by removing some of the regulations that were driving plant closures, Andrus said.

Trump has helped the natural gas sector mainly by appointing a full quorum to the Federal Energy Regulatory Commission, which allows it to start handling pipeline permits again, he said.

Beyond that, Andrus said “it’s been really more the market driving things and not much of an impact from the administration. Where you’re likely to see an impact is on the demand side if there’s a response to the tax law changes.”

Fracking has opened up

so many resources, particularly in the Appalachian region that includes Pennsylvania, West Virginia and Ohio, that supply is exceeding demand. The main constraint is the ability to move natural gas from the areas where it’s extracted to where it’s needed, he said.

The other positive signal is that Trump and Congress seem to finally be focusing more on the economy, he said.

“That’s probably been the learning that’s taken place,” Andrus said. “The best way to help industry, to help employers, to help federal finances, is to grow the economy.” ‘103 Months of growth’ Nationally, joblessness peaked at 10 percent in October 2009, shortly after the recovery from the Great Recession officially began in June 2009. Unemployment fell to 4.7 percent by the end of 2016 and 4.1 percent in December, Bureau of Labor Statistics data show.

In Pennsylvania, unemployment dropped from 5.6 percent in December 2016 to 4.1 percent at the end of last year. Joblessness in greater Pittsburgh, which peaked at 8.5 percent in February 2010, was 4.7 percent in November. Further, fewer workers are reporting being “under-employed” or being forced to work only part-time, said Faucher, PNC’s chief economist.

Job and wage growth are slowing, however.

Wages are up about 2.5 percent over last year, which is “better than inflation but still a disappointing pace given the fact that we’re 8.5 years into the expansion,” Faucher said. “At this point, we would expect to have stronger wage growth, closer to 3 percent.”

After adding roughly 3 million jobs in 2014, the United States added 2.7 million jobs in 2015, 2.2 million jobs in 2016 and 2.1 million jobs last year.

It’s unclear how long the stock market’s recordbreaking upward trajectory will last .

Under the new federal tax bill, Faucher said, “workers will generally have slightly larger paychecks, but most of the benefits of the tax cuts go to corporations and shareholders, who tend to be upper-income households.”