Industrial groups urge Biden to prioritize actions to address electrical steel supply chain crisis

A group of industrial stakeholders, including the Alliance for Automotive Innovation, have sent President Biden a letter urging “your administration to make it clear that electrical steel is critical to the national and economic security of the United States and to prioritize actions that will create a sustainable supply.”

Electrical steel is used in the manufacturing of transformers, electric vehicle chargers, electric motors and other equipment. In 2021, a report from IHS Markit suggested that the rapid growth of the hybrid and electric vehicle segment could potentially cause demand for electrical steel to outpace supply from 2025. (Earlier post.)

In the letter, the groups noted that:

The limited availability of domestically manufactured electrical steel poses challenges to the widespread adoption of electric vehicles, delays timelines for utilities to restore power following natural disasters, and is a contributing factor to an insufficient inventory of distribution transformers to meet the demand for new home and commercial construction.

As reported by the Department of Energy (DOE) in 2022, the United States is dependent on a single manufacturer [Cleveland-Cliffs] for GOES, which severely limits electrical manufacturers’ ability to source domestically and meet certain domestic content thresholds. While two domestic manufacturers have committed recently to increase GOES production, even with this expanded output, domestic supply levels will still fall far short to meet electrification goals and satisfy demand created by the IIJA and IRA. Further, plans to expand domestic steel capacity and manufacturing of critical electrical equipment, such as transformers, are now in flux as DOE contemplates new efficiency standards that would upend the market and manufacturing process.

The group called for the convening of an “Electrical Steel Summit” to bring together stakeholders for a strategic discussion on the current challenges to sustaining and growing domestic production of electric steel.

In addition to the Alliance for Automotive Innovation, signatories to the letter are: American Public Power Association; Edison Electric Institute;
GridWise Alliance;
International Brotherhood of Electrical Workers; Leading Builders of America;
National Association of Home Builders;
National Electrical Manufacturers Association; and National Rural Electric Cooperative Association.