In its latest assault on green technology loans that have been supported by the Obama administration, Fox News is now targeting a loan to the Michigan-based steel company Severstal North America. According to the company and the Department of Energy, respectively, the loan will allow Severstal North America to create hundreds of jobs and help cut thousands of metric tons of carbon dioxide emissions every year.
Fox Falsely Claims Loan Goes To "A Russian Company"
Fox: Money Going To "Russian Company" With "Close Ties To The Kremlin." On the October 27 edition of Fox News' Fox & Friends, co-host Brian Kilmeade said:
KILMEADE: $730 million in taxpayer money going to a Russian company called Severstal. It's run by Alexei Mordashov, which is a great vodka, I imagine. He's known as "Russia's Man of Steel" and has close ties with the Kremlin. [Fox News, Fox & Friends, 10/27/11]
Loan Is Actually For Severstal Dearborn LLC, Part Of Severstal North America. From the Department of Energy:
U.S. Energy Secretary Steven Chu today announced the offer of a $730 million conditional loan commitment to Severstal Dearborn, LLC. The funding will support the modernization of existing facilities in Dearborn, Michigan, in addition to the design, manufacture, and construction of new facilities to produce the next generation of automotive advanced high strength steel (AHSS). [Energy.gov, 7/13/11]
Severstal North America Is Headquartered In Michigan And Is A Subsidiary Of The Russian Company. From the website of Severstal North America:
Severstal North America is a steelmaker in the United States with headquarters located in Dearborn, Michigan. [...]
Severstal North America is a wholly owned subsidiary of OAO Severstal, Russia's largest steelmaker by volume and one of the most global. [...]
In 2008, Severstal North America greatly increased its participation in the lucrative and robust North American steel industry with key acquisitions of respected fully integrated steel companies in Sparrows Point, Md., Warren, Ohio, and Wheeling, W.Va. The purchase of the Severstal Wheeling also included a coke oven operation to supply essential coke to Severstal North America's plant as well as an electric arc furnace. The growth in 2008 allowed OAO Severstal to achieve operating and supply synergies. [SeverstalNA.com, accessed 10/27/11]
Fox Hosts Rep. Darrell Issa (R-CA) To Spread Distortions About Severstal's Jobs, Environmental Impact
Issa On Fox: Company Making "Type Of Steel For Which There's An Excess In The Market.... No Jobs Created, No Green Energy." From October 27 edition of Fox News' America's Newsroom:
ISSA: We'd like to have a reversal on the commitment because first of all, this purchase would've gone through with or without the government backstop. Secondly, there were no jobs created. One of the great scandals here is -- remember, this is just making steel -- as a matter of fact, the type of steel for which there's an excess in the market. But more importantly, the jobs that are being quote, "created" here are being moved from other plants.
So this is an example - no jobs created, not green energy, not necessary to make this happen and not a U.S. investor, so on every possible count the American people care about, this loan never should have passed the sniff test. [Fox News, America's Newsroom, 10/27/11]
Industry Leader: The Market For Advanced High Strength Steel Is Growing. An October 26 Pittsburgh Tribune-Review article reported that U.S. Steel CEO John P. Surma said "We believe the demand for advanced, high-strength steel will increase significantly over the next decade," he said. "The grades of steel we will be capable of producing at this new facility will position steel to remain the material of choice for our auto customers." [Pittsburgh Tribune-Review, 10/26/11]
Industry Is Reportedly Ramping Up Production. From the Pittsburgh Post-Gazette:
The federal government's quest to double the average car's fuel economy by 2025 has intensified a long-running battle between steel and aluminum producers over one of their biggest customers.
Both industries are pouring millions of dollars into new mills capable of making the lighter, stronger metals needed to take 400 pounds -- about 10 percent -- out of the average car. That's the weight reduction needed to meet the proposed fleet standard of 54.5 miles per gallon, according to Ducker Worldwide, a research firm that advises steel and aluminum producers.
The drive for lighter vehicles has helped aluminum make steady inroads into what is the steel industry's second biggest customer. [Pittsburgh Post-Gazette, 10/09/11]
Using The Advanced High-Strength Steel Produced By Severstal In Auto Manufacturing Increases Fuel Economy And Safety. From the website of Machine Design magazine:
Advanced high-strength steels help automotive designers cut weight and increase crashworthiness. What material is seeing the most rapid growth in automobiles? If you guessed aluminum or composites, you'd be wrong. It's advanced high-strength steel (AHSS). The material comprised just a small fraction of cars and light trucks a few years ago, but it could grow to over 30% of vehicle weight within 10 years. [...]
[Use of AHSS allows] automotive designers maintain or reduce vehicle weight in the face of increasing safety and crashworthiness requirements. [Machine Design, 5/3/10]
DOE: Severstal's New Facilities Could Reduce Petroleum-Based Fuels Consumption By Nearly 30 Million Gallons Annually. From the DOE press release announcing the loan:
The facilities will produce a wide range of advanced high strength steels, which will enable manufacturers to reduce the weight of steel components used in vehicles, creating a 10 percent reduction in total vehicle weight while meeting increasingly stringent safety regulations. Severstal's AHSS project has the potential to reduce petroleum-based fuels consumption by nearly 30 million gallons annually, and thus avoid over 260,000 metric tons of carbon dioxide emissions. [Energy.gov, 7/13/11]
Severstal North America Estimates The Loan Will Create And Save Thousands Of American Jobs. From a July 13 Severstal North America press release:
In total, Severstal's AHSS investment will create estimated 2,500 construction jobs, 260 permanent manufacturing jobs, and enable the retention of 1,400 existing manufacturing jobs. [SeverstalNA.com, 7/13/11]
Severstal Supplies U.S. Auto Manufacturers. From an October 27 Detroit News article: "Fifty percent of Severstal's automotive steel goes to Ford, General Motors Co. and Chrysler Group LLC; 30 percent is used by Tier 2 suppliers making parts for those American automakers. Severstal produces steel for 23 of Ford's 24 vehicle platforms." [Detroit News, 10/27/11]
Fox Suggests Severstal Didn't Need The Loan To Create Jobs
Fox News Implies That The Personal Wealth Of Severstal's CEO Is Relevant To The Subsidiary Corporation's Eligibility For A Loan. From the October 27 edition of Fox & Friends:
KILMEADE: Alright if one of the world's richest men, he's a Russian steel mogul worth $18 billion dollars - well he asks you for a loan, what would you do? Would you give it to him? Well, the U.S. DOE said yeah, I'll give it to him.
In fact, we gave it to him. $730 million in taxpayer money going to a Russian company called Severstal. [Fox News, Fox & Friends, 10/27/11]
Severstal is controlled by Alexei Mordashov, a chief executive whose net worth is listed at $18.5 billion by Forbes magazine, and is known to have close ties to the Kremlin.
Issa asked Energy Secretary Steven Chu why taxpayer money is needed when "announcements made by Severstal during the loan consideration process indicated that the company had ample means to carry out the project." [FoxNews.com, 10/26/11]
But A Severstal NA Spokesperson Says It Won't Be Able To Go Forward With Expansions Without The Loan. From USA Today:
Severstal doesn't have its money yet, but expects to close with the DOE within weeks. The company already has updated two facilities with its loan money, expected the government loan to in essence repay itself, and it plans to open a third in 2013 -- but won't if the DOE loan unexpectedly falls through, Severstal spokeswoman Katya Pruett says. [USA Today, 9/26/11]
The Loan Program Requires Recipients To Be "Financially Viable" Without The Loan. From the Department of Energy website:
The Secretary must find that the loan recipient is financially viable without "additional Federal funding associated with the proposed project." In today's interim final rule, the Department interprets the term ''financially viable'' to mean that an applicant must demonstrate a reasonable prospect that the Applicant will be able to make payments of principal and interest on the loan as and when such payments become due under the terms of the loan documents, and that the applicant has a net present value which is positive, taking all costs, existing and future, into account." [ATVM Loan Program Interim Final Rule, 11/12/08]
Fox News Has A History Of Pushing Bogus Green Loan Stories
Fox News Anchor Bill Hemmer: "Others Are Suggesting This Is Another Solyndra. Is It?" From the October 27 edition of America's Newsroom:
HEMMER: Apparently a taxpayer loan has been intended for a Russian steel company doing business in Michigan. 730 million dollars worth. The Energy Department says the money - it's been committed, but not spent. Others are suggesting this is another Solyndra. Is it? And do you expect a reversal on this commitment, because the money has not been put out there yet. [Fox News, America's Newsroom, 10/27/11]