Economic & Industrial

Economic and social impact of the steel industry

Economic and social impact of the steel industry
Mining News Pro - Steel plays a vital role in the modern world. In addition to being one of the most important materials for building and infrastructure, steel is the enabler of a wide range of manufacturing activities. It also creates opportunities for innovative solutions in other sectors and is indispensable in research and development projects around the world.

According to Mining News Pro - This report, commissioned by the World Steel Association and prepared by Oxford Economics, looks at the role of the worldwide steel industry in today’s international economy. Our study is unusual in being truly global, whereas most economic impact studies focus on the impact on a single country, or (at most) group of countries. Consequently, there is no import-related “leakage”, as in a traditional study, as imports are cancelled out by exports at the global level. This report is also noteworthy because it quantifies the share of key customer-sector activities that can justifiably be described as “facilitated by” the steel sector. This again sets it apart from “standard” economic impact studies, which do not attempt to measure these wider impacts. THE GLOBAL STEEL INDUSTRY IS HIGHLY PRODUCTIVE The steel industry is active in all parts of the world, transforming iron ore into a range of products that are sold for a total annual value of US $2.5 trillion. The industry employed more than six million people around the world in 2017, and the “added value” of its production processes totalled almost US $500 billion. This figure comprises the industry’s employment costs, capital costs, and net profits, and is the standard way of allocating global or national output (GDP) between sectors. Dividing this by the total number of workers, we find that the steel industry’s productivity per worker exceeds US $80,000—three times the average across all sectors of the global economy. IT HAS A FAR-REACHING SUPPLY CHAIN … But this is only one way in which the steel industry punches above its weight. It also has an unusually large global supply chain. This study calculates that, for every $1 of value that is added by work within the steel industry itself, a further $2.50 of value-added activity is supported across other sectors of the global economy, as a result of purchases of raw materials, goods, energy, and services. We also find that for every two jobs in the steel sector, 13 more jobs are supported throughout its supply chain—meaning that, in total, some 40 million people work within the steel industry’s global supply chain, generating over US $1.2 trillion of added value. This economic activity extends across multiple sectors and countries, far beyond the major steel-producing locations. … AND ENABLES HIGH-VALUE ACTIVITY ACROSS MANY SECTORS Steel is also a key input in the work of many other industrial sectors, which produce items essential to the functioning of the wider economy—including hand tools and complex factory machinery; lorries, trains, and aircraft; and countless items used by individuals in their everyday lives, from cutlery to cars. Steel is also used in the construction of homes and other buildings, bridges, pylons, and transmitters.

Therefore, to capture the full impact of the global steel industry, this study also analyses the use of steel in seven other key industries,1 to estimate what value-share of these sectors’ work is attributable to steel, over and above the simple value of the steel embedded in their products. We do this using both a “narrow” and a “broad” approach, to reflect different interpretations of the share of customer work that is made possible by the use of steel. These narrow and broad measures can be regarded as imposing minimum and maximum values on the share of customer activity that may be attributed to the use of steel. Narrow (minimum) approach Our “narrow” approach assumes that the share of work facilitated by steel equates to the share of steel in each customer’s total purchases of external inputs. By this metric, we estimate that the steel industry facilitated a further US $1.2 trillion of value-added output in 2017, and supported an additional 49 million jobs around the world. Combining this finding with our earlier results, we calculate that the total value-added contribution either supported or facilitated by steel in 2017 was US $2.9 trillion Equivalent to 3.8 percent of global GDP that year, this activity is estimated to have supported a total of 96 million jobs.

By country of activity, China accounts for 36 percent of the steel industry’s annual contribution to global GDP, the US for 11 percent, and Japan for nine percent. China also accounts for 36 percent of global jobs supported or facilitated by steel manufacturing, followed by India with 30 percent.

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