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Dan Dimicco: Solution to US downturn twofold, balanced trade and infrastructure

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Republished from American Metal Market: by Anne Riley
June 21, 2012

Dan Dimicco: Solution to US downturn twofold

NEW YORK — The demand recovery required to stimulate job growth and pull the U.S. economy out of its pro- longed downturn is right under politicians’ noses, accord- ing to Nucor Corp. chairman and chief executive officer Daniel DiMicco.

“The reason we had a recession was demand disappeared. Here’s the challenge in front of us—it’s very simple—where’s the demand? How do we find demand in this kind of en- vironment? The answer is staring us in the face,” DiMicco said in his keynote address Wednesday at the Steel Success Strategies XXVII conference in New York co-sponsored by AMM and World Steel Dynamics Inc.

DiMicco said the solution to lackluster demand in the Unit- ed States is twofold: Prioritize the rebuilding of America’s crumbling infrastructure and narrow the burgeoning trade deficit, particularly for energy and manufactured goods.

“When demand for goods and services is strong, the economy is going to be strong. It’s pretty basic stuff— even though I’m an engineer, I understand that,” he said. “So when nothing good seems to be happening in the U.S. economy or is happening at a snail’s pace, where does the massive increase in demand come from? It has been right in front of us since Day 1 of the crisis: It comes from two basic, currently available and pre-existing demand strong- holds that are there as low-hanging fruit.”

The first key to stimulating domestic recovery is a renewed focus on infrastructure, DiMicco said, noting that revitalizing the U.S. system could translate into some $400 billion a year of new demand over the next six years. “That’s de- mand that’s out there. It doesn’t have to be dug up or found, no magician needs to be summoned, no sorcerer, no fortune teller. It’s there. We just need to take action,” he said.

The second area that requires action involves the bal- looning trade deficit, DiMicco said. “The demand is there; the goods are being brought into the country in excess of what’s going out. We don’t have to create that demand. We just have to rechannel it. And when we’ve got that much unemployment, shame on us for not rechanneling it.”

By even conservative estimates, the United States could create some $350 billion in demand annually by reversing the trade deficit, meaning—when paired with the proposed infrastructure build—there is more than $750 billion worth of latent demand at the U.S. economy’s doorstep, he said. “That’s $750 billion in demand waiting to stimulate this economy. And we’re doing (nothing),” DiMicco said. “Where’s the leadership? I’ve been asking that question for at least four years.”

3 Responses to “Dan Dimicco: Solution to US downturn twofold, balanced trade and infrastructure”

  1. Harry Moser says:

    Excellent article! I especially agree re the trade deficit.
    In addition to helping the nation, companies can often improve their bottom line by manufacturing in the U.S. by using total cost of ownership analysis to decide what they can profitably reshore. The non-profit Reshoring Initiative, http://www.reshorenow.org, provides for free a Total Cost of Ownership (TCO) software that helps corporations calculate the real offshoring P&L impact.
    I was one of the business experts in Pres. Obama’s Jan 11, 2012 Insourcing Forum. I emphasized, and the assembled executives supported, the need for companies to more consistently utilize TCO analysis instead of price variance in making their sourcing decisions. Two hundred and fifty companies and analysts are already using the TCO Estimator and are finding that using TCO often leads to a domestic sourcing decision. User data suggests that about 25% of what has been offshored would come back if companies decided based on TCO instead of on price.
    You can reach me at harry.moser@reshorenow.org for help using our tools for sourcing decisions and when selling.

  2. Bruce Bishop says:

    In 2003, Warren Buffett recommended that we impose “balanced trade” by limiting imports from China to the amount that China buys from us. Two U.S. Senators, Dorgan and Feingold, introduced a “balanced trade” bill in the senate in 2006. It died in committee. You can Google “balanced trade,” and you must.

    There is an excellent book entitled “Trading Away Our Future,” by Raymond Richman, Howard Richman and Jesse Richman — three economists who run the excellent website http://www.idealtaxes.com.
    In their book, the Richmans make the case for “balanced trade,” and offer an alternative method of implementation to Buffett’s original proposal.

    Most of the discussion about China stealing our jobs and destroying our economy centers around “currency manipulation.” If that were true, it would mean that we are powerless to stop the flow of our jobs and our wealth to China. If currency manipulation was the problem, then there would be nothing we could do except to beg China for mercy. Obama tried that, remember? They told him to go scratch.

    In an article entitled, “America’s Job Losses Are Permanent,” (Counterpunch, 10/28/10), former Assistant Treasury Secretary Paul Craig Roberts says, “To keep eyes off of the loss of jobs to offshoring, policymakers and their minions in the financial press blame U.S. unemployment on alleged currency manipulation by China and on the financial crisis.”

    In my opinion, the Obama administration has NO interest in saving or in bringing back the middle-class jobs. As more and more Americans become dependent on the government for assistance, there are more and more votes for the Democrats. Obama would be a fool to stop that process.

  3. Arthur Taylor says:

    Bruce:

    You are right about Obama: He is merely a commodity, bought and sold by the rich. However, Mitt is no answer either (and I’m a Mormon). Take a look at Mitt’s positions on trade and FTA’s. He’ll be worse.

    I’m writing in Nader, whom to date seems to be one of the few honest men involved in this increasingly corrupt game we call “American democracy”. I voted or him the last time and my conscience has been clear ever since.

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