Media Fails To Probe Multinational’s Refusal to Buy American

Swiss-Russian owned Duferco Farrell Corp. refuses to comply with the Buy American requirements in the $787 billion stimulus package.

One consequence of that decision is the Deferco rolling mill located in Farrell, Pa., north of Pittsburgh, lost a major customer—Wheatland Tube Co., situated a few hundred yards down the street in Farrell.

Another is that Duferco, which opposes buying American, milked that loss for more tons of false publicity than an overloaded truck of steel coils at a weigh station.

Duferco Farrell made itself out to be a victim of Buy American, claiming the provision cost it a customer, and The Washington Post and The New York Times swallowed that whale whole, without making any effort to dissect it.

Here’s what really happened: 

Wheatland Tube, a pipe maker, stopped buying rolled steel from its Farrell neighbor because Duferco gets steel slabs from Russia and has refused to buy from domestic producers.

Wheatland is sensitive to the issue of imports, having been burned by unfair competition from China. It is among the plaintiffs in trade cases alleging unfair competition. But, more immediately, Wheatland officials feel that under the Buy American provisions, its products must be produced with American-made steel, or they can’t be bought with stimulus funds.

Bill Kerins, president of Wheatland, said he backs Buy American because it provides opportunities for American workers. It is, essentially, American tax dollars dedicated to providing jobs for American workers. And, polls show, a large majority of Americans support it. They oppose anyone spending their tax dollars to create jobs in foreign countries. He has said that more and more of Wheatland’s customers are demanding that it  meet the requirements of  Buy American.

Kerins made it clear to the Sharon Herald [1], the local newspaper for the town of Farrell, that he’s perfectly willing to buy rolled steel from Duferco again, if the company obtains slabs from domestic producers. Here’s what he said: “We’re prepared to do business with Duferco Farrell when they’re able to be in compliance with the Buy American provision, and we hope they’re able to work that out.”

That would leave you with the sense that Duferco could work something out, right? Well, not if you read The Washington Post or The New York Times. Neither bothered to quote Kerins or the United Steelworkers. Both limited themselves to quoting Duferco–a one-sided story. They failed to adequately question. As a result, both provide a completely false impression.

The Washington Post, in a May 15 [2] story, says, “The new buy American provisions, the company said, are being so broadly interpreted that Duferco Farrell is on the verge of shutting down.”

The Post story also says, without citing a source, that Duferco “manufactures its coils at its Pennsylvania plant using imported steel slabs that are generally not sold commercially in the United States.”

Finally, it quotes Duferco executive vice president Bob Miller saying, “I’ve got 600 United Steel Workers [sic] out there who are going to lose their jobs because of this. And you tell me this is good for America?”

The New York Times followed [3], on June 3, with an editorial slamming Buy American and citing the Duferco case. The editorial gives Duferco and one other example as the reason Buy American is “perilous,” saying Duferco “has cut 600 jobs in Pennsylvania after it lost orders from its biggest customer because some of its goods are partly produced abroad.”

That’s just not true. And if the Times or the Post had done an ounce of reporting work, they’d have known it. Look up the Sharon Herald clips, available online.

Duferco began furloughing hundreds of workers last fall – long before Wheatland stopped buying from them. When the USW local there signed its labor agreement in November, Duferco already had laid off more than half [4] of the mill’s unionized workers.  Manufacturing workers across American began losing their jobs last fall as a result of the downturn in the economy – not Buy American provisions.

In addition, there are other serious problems with the Post story. It says Duferco uses steel slabs not generally sold commercially in the U.S. If the Post had spent a minute listening to Kerins from Wheatland or to the USW, it would have gotten a different story. Kerins’ quote – saying Wheatland is prepared to do business with Duferco when it complies with Buy American – clearly suggests he knows there’s a way for Duferco to do that.

In fact, there is. Two domestic steel companies have offered to supply Duferco with the 10-inch steel slabs it prefers, at the specifications it says it requires, at a market-based price. Both firms have informed Duferco of those offers [5].

Duferco mostly imports its 10-inch slabs now from OJSC Novolipetsk Iron & Steel Works (NLMK) of Russia, which is the Russian part owner of Duferco. NLMK also owns a mill in Portage, Indiana, called Beta Steel Corp. Like most U.S. mills, its work force has been cut back, so orders for its 8-inch slabs would give its American workers paychecks again.

Wheatland has informed Duferco that it is willing to modify its specifications so that NLMK 8-inch slab produced in Indiana may be used.

Duferco’s response: Shipping slabs from NLMK facilities in Portage, Ind., to Farrell, Pa., a distance of 375 miles, is prohibitively expensive, as is the cost of shipping the 10-inch slabs from the Maryland or Alabama mills to Pennsylvania. So Duferco must continue sending steel the thousands of miles from NLMK facilities in Lipetsk, Russia to Farrell, Pa.

Really?

Somehow that doesn’t smack of the truth. In fact, it sounds like Duferco is making every effort to avoid buying American, while its customers, its workers and even potential suppliers are all scrambling to help it buy American and re-employ its workforce.

What is really going on here is Duferco perverted this situation in an attempt to smear the Buy American provision. The Post and the Times made no serious attempt to check out the multinational’s lame allegations.

Not much more could be expected from a Swiss-Russian-owned corporation. That multinational has no allegiance to America. It just wants to use this country to generate profits. If Duferco can get its hands on American tax dollars to profit in Lipetsk, it will be all the happier. But for The Washington Post and The New York Times to support that is, really, un-American.