Detroit -- Hundreds of millions of taxpayer dollars designated for green manufacturing are being spent on one of America’s most carbon-intensive heavy industries: Big Steel.
The Rouge plant in Dearborn, Mich., is an icon of old American manufacturing — the steel mill that anchors the legendary Ford Rouge complex that has produced everything from Model As to WW2 airplanes to today’s F-150 pickup. It is now a symbol of how President Obama’s Advanced Technology Vehicles Manufacturing program to build earth-friendly electric cars has run amok: the Energy Department has approved a $730 million subsidy for the Rouge mill (now owned by Russia’s Severstal) to produce steel.
Huh?
The logic is that the steel will find its way into the more fuel-efficient cars that Obama has mandated. But automakers have been demanding lighter and stronger materials since the invention of the automobile. And the steel business is locked in an eternal competition with the aluminum industry to meet auto-industry specs. By Washington’s skewed supply-chain logic, Detroit Edison’s Motown coal plant — which supplies power to Rouge — should also get green loans because it endeavors to deliver cheaper energy to make steel.
Severstal’s owner, Russian billionaire Alexei Mordashov (one of the world’s richest men with a net worth of $19 billion) has understandably made headlines given that his huge multinational didn’t need taxpayer money because high-strength steel is already in significant production. “It would seem to be a waste of taxpayer funds to subsidize (Rouge) when there is already more than enough production available for this material,” Rep. Darrell Issa wrote to Energy secretary Stephen Chu.
But there’s the larger question: When, asks Issa, did Obama’s Department of Green-Tech Winners and Losers start classifying steel as a green-auto component?
The Energy Department’s explanation — that steel production supports 260 jobs and 2,500 more in the construction industry — sounds more like a jobs program than “advanced technology research.”
Indeed, like the bailed-out GM and Chrysler, the White House seems to be motivated more by sustaining an industry with Big Labor ties (United Steelworkers Union represents Severstal workers).
Your tax dollars at work.
Hmmm. It used to be said 'follow the money.' Now it should be 'follow the unions'.
Reply to this commentLinkReport AbuseThe only way this subsidy would make sense is if it went towards converting the factory to produce the type of steel needed in nuclear reactors. It would actually be beneficial since there is only one plant in the world that can make that specific grade and it was impacted by the quakes in Japan. Unfortunately, that makes too much sense and would go against liberal dogma that nuclear power is the greatest threat to world...except for global warming, smoking, trans-fats, black conservatives, and anything that makes common sense.
Reply to this commentLinkReport AbuseWhat's wrong with a program that keeps jobs in America? So it was done under a Green rubric. So what?
Reply to this commentLinkReport AbuseWhat's wrong? Number 1: the principal owner of the plant has a net worth of $19 billion. A man with $19 billion does not need public financing to fund his private business ventures.
Number 2: in what we can assume to be the best case scenario, this steel plant will employ 260 people. How many of these would be employed *without* the $730 million in federal money is unknown. But even if we assume that all 260 jobs would not exist in the absence of the $730 million, that comes to $2.8 million per job. If we add in the 2,500 construction jobs -- jobs which are unlikely to last more than it takes to do whatever upgrades this subsidy is intended to fund -- we get $265,000 per job. Either way -- $2.8 million/job or $265,000/job -- the cost-benefit ratio is unacceptable.
Number three: in case you hadn't heard, the national debt currently stands at about $15 trillion, or 100% of GDP. The federal government is currently spending 26% of GDP and taking in revenues of just 19% of GDP. This debt *will* be paid by you and me and -- most importantly -- by Americans too young to vote and not yet born. If this level of taxation without representation does not nauseate you, then -- to quote a fading GOP presidential candidate -- you simply have no heart.
Reply to this commentLinkReport AbuseI don't know enough about this loan to comment on its usefulness, when and under what terms it's getting paid back, how essential it is to building fuel efficient vehicles, etc. But there are a couple of trends in this blog that I find misleading:
1) Implying investments don't help American jobs because there is some percentage of foreign ownership (similar to Fiskars). In major manufacturing these days it is the norm, not the exception, to involve multiple countries and have some level of multi-national ownership. This is a Detroit steel mill creating Detroit jobs.
2) The post does not mention this is high strength, lightweight steel to enable great efficiency without compromising safety. In fact, if all cars used this we would all be safer not to mention more efficient. This post likens this steel to coal.
Again, not arguing about the loan itself, just that this post continues some patterns of being misleading.
Reply to this commentLinkReport AbuseAt least they aren't making the steel in Finland
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