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Steel Modernization Plan Vital

Click to see original imageAll is not well with the American steel industry a poor situation anytime but cnrclal now in the light of global anxieties. Big steel has been sending signals for some time: Regulation by EPA and other agencies is too costly; unfair competition through “steel dumping”by foreign producers impairs markets; and tax laws and depreciation schedules are archaic in some cases. In consequence, spokesmen say, retained profits are insufficient to permit necessary plant modemization and replacement. “There just aren’t enough dollars,” claims David M. Roderick, board chairman of U.S. Steel Corp. The steel industry has facilities that are antiquated compared with some plants in Japan, Europe, and South America where companies receive the patemalistic assistance of government., The problem was dramatized weeks ago when U.S. Steel and Jones and Laughlin announced plans to close 16 unprofitable plants. (U.S. Steel later agreed to keep two of the units open when workers reversed their votes and agreed to accept wage concessions to save their jobs.) To what extent, in America, should govemment assist and encourage the steel industry, particularly with so many other industries also facing challenges? Obviously some moves are in order. Government must be continually mindful of the economy and the vital “building blocks” that make it go. And it should be sensitive to inequities, unfair conditions, and the need to keep laws up to date. Steel is basic in the economy and in national defense. Ominous global conditions today should be a reminder that we must never allow steel to become a hostage of world politics, as oil has become. Currently, in spite of the “trigger price mechanism” (TPM), established by govemment to control ”dumping,” 17 to 18 million tons of imports are expected this year, say industry spokesmen. This despite President Carter’s dec aration that he wanted the practice stopped. (Dumping is defined as selling at less than cost, usually through government help in one form or another.) One industry official says 41 percent of the entire western market is served by imported steelenough production to warrant two or three new plants and up to 15,000 jobs. Thus, foreign tgroducers have absorbed e natural expansion in market. There hasn’t been a new steel mill built in the West since the World War ll era. Roderick stresses that t.lie industry recognizes that competition is the heart of free enterprise. “All we are asking,” he says, “is fair competition in which the price for products offered in the marketplace is detemiined by the cost to make them – not the policies of foreign govemments who lseek to keep their own people working at the expense of jobs and opportunity here in this country.” Lloyd McBride, president of the United Steelworkers union, pointed recently to the 1974 world steel shortage and warned: “At that time the same people who had been sending steel into our countrkat discount prices upped eir prices as much as $200 a ton over domestic prices because the market would bear that kind of price.” His comments underscore the importance of a strong domestic industry to supply U.S. needs and prevent exploitation by foreign powers, either in wartime or peacetime. Under free enterprise. the burden must be with the industry, of course. But there must be sensitive govemment cooperation and the partnership of ,labor to keep costs competitive. Wal Street Journal recently quoted Rep. Sam Gibbons as saying that in 1977 wages for American steelworkers were 67 percent higher than those of the average industrial worker. This report bears scrutiny along with all other aspects of the problem. It’s for Congress through its Congressional Steel Caucus and chairman Rep. Joseph M. Gaydos (1) Pa.) to analyze the situation with thoroughness and dispatch, and recommend stetrs by both govemment an private enterprise to solve the problem, strengthen Q industry, and ‘get the gram of needed expansion and modernization under way.