Iowa steel and Philadelphia shipyard projects face labor and pricing hurdles

White House cites projects as proof Trump’s tariff strategy is working

Two multibillion-dollar manufacturing projects that President Trump has promoted to revive old-line U.S. industries face significant cost, labor, and customer-acquisition hurdles as they move toward construction, The Wall Street Journal reported Monday. The $15 billion Iowa steel mill and the $5 billion Philadelphia shipyard expansion are part of Trump’s push to revive old-line industries in iron-ore mining, steel production and East Coast shipbuilding, and they check all the boxes for Trump, the Journal reported: they are big, audacious, expensive, and expand industries he sees as barometers for America’s manufacturing and national security.

Administration officials described both projects as proof that Trump’s tariffs and diplomatic strategy are drawing foreign investment to U.S. industry. Critics and analysts told the Journal they doubt the soundness of the business plans, drawing comparisons to past ambitious Trump-backed manufacturing initiatives that did not materialize as planned.

In Iowa, Mesabi Metallics—a company owned by India’s Essar Group with an unproven record in the U.S. steel industry—is developing what the Journal described as one of the largest and most expensive steel mills in the country. Trump announced the Iowa steel-mill project last month in an Oval Office ceremony, praising Mesabi Metallics’ plan to invest $15 billion in a plant that will dwarf most existing U.S. steel mills of the same type. The plant would add up to 10 million tons of steel annually to the U.S. market, with initial production targeted for 2030. The mill is expected to employ about 1,700 workers when completed.

Mesabi CEO Joe Broking said the company has long sought a way to use iron ore from its mine to make higher-value finished steel rather than just selling the ore to someone else. That iron ore will give the plant a feedstock advantage over competitors that mostly rely on scrap-metal feedstock, according to Broking, allowing it to produce a higher-quality steel. “That gives us the ability to produce the highest quality steel that electric arc furnace producers have not been able to produce,” he said.

The Philadelphia project, owned by Korean company Hanwha Shipping, is part of South Korea’s commitment last year to support the U.S. shipbuilding industry through a $150 billion investment fund following talks between Trump and visiting South Korean President Lee Jae Myung. The yard aims to raise commercial ship production from two vessels a year to 20, the Journal reported, and needs additional space to support the expansion. The yard has doubled its workforce to 2,500 over the past two years to handle the extra demand.

Both projects confront the structural pressures that drove heavy industry out of the United States, the Journal reported. Workers are scarce, U.S. wages are high, pricing is uncompetitive, customers have moved on, and industrial space is tight. Critics, including some Democrats, told the Journal that the Iowa project was pieced together quickly to aid Republicans in next month’s midterm elections; Mesabi Metallics says that isn’t the case.

The Journal cited a Wisconsin Foxconn plant as a cautionary example. Taiwan’s Foxconn initially planned a $10 billion facility to manufacture high-definition screens, but supply-chain problems and high costs led to the project being significantly downsized, the Journal reported. Part of the site was later converted to a data center.

Mesabi Metallics’ own history has been complicated. The company took nearly 20 years to complete its iron-ore mine in northern Minnesota, overcoming years of delays, missed deadlines and a bankruptcy, according to the Journal. Building a new steel mill from scratch will require Mesabi to find people with the technical and management expertise for a steel business it has not been in before, although its parent company, India’s Essar Group, previously built and operated steel mills in India. “It was not a small task to restart that project and to bring together over 2,000 contractors. We now have well over 250 full-time employees,” Broking said.

The U.S. steel sector has expanded in recent years as tariffs squeeze out imports and drive up domestic profits, and the planned Mesabi mill will further Trump’s goal of building out that capacity, according to the Journal. The mill could also become a victim of its own success as it adds to the U.S. steel supply. “You’re going to have excess production capacity, and that’s going to create much more competition between mills to drive down prices, and that hurts profits,” said Josh Spoores, an analyst for steel market forecaster CRU. Incumbent U.S. steelmakers were caught off guard by the size of Mesabi’s plan, the Journal reported.

In Philadelphia, the shipyard faces its own customer challenge beyond Hanwha. The current order book outside the Hanwha work consists of three containerships for Hawaii-based Matson Inc. at $330 million each—twice the price of a mega vessel built in South Korea or China, according to the Journal. No other Korean firms—some of which build around 40 ships on average a year—have shown interest in investing in U.S. shipbuilding. “It’s hard to justify a high valuation multiple for a U.S. shipbuilder like Philly from a foreign buyer, based on pure economics,” said Basil Karatzas, head of consulting firm Karatzas Marine Advisors.

The Philadelphia Shipyard dates to the Revolutionary War and built U.S. Navy vessels for nearly two centuries until military shipbuilding stopped in the 1990s. Today, the yard builds private ships that operate in U.S. waters to comply with the federal Jones Act, which requires ships to be built, crewed, flagged and insured in the United States. The Jones Act requirements make the yard an expensive place to build, the Journal reported.

The White House defended the projects and Trump’s broader record. “He has a proven record of securing historic investment, creating high-paying jobs, and bringing manufacturing back to the United States,” a White House spokeswoman said. Officials pointed to projects that they said arose from Trump initiatives during his first term, including an LG Electronics appliance factory in Tennessee and the expansion of a Denso auto parts plant, also in Tennessee, as proof that his policies are working.