Like someone almost flattened by a hurtling truck, steelmakers around the world sighed with relief when Big Steel barreled into Washington this fall with a load of unfair trade complaints. Instead of going after them, too, the domestic mills clipped only makers of sheet steel in Brazil, Japan and Russia.
Another truck is rumbling down the road, however. And this time, many other foreign steel producers could end up as roadkill.
Panicked by still rising shipments of imports, a coalition of U.S. steel companies is building a case against makers of other widely used flat-steel products from at least a half-dozen countries: India, Indonesia and South Korea, plus the original three. Members say this expanded complaint could be filed as soon as late January.
Meanwhile, some members of the coalition, which includes most of the nation’s biggest steel companies and their labor unions, are making a case for an even broader assault: a so-called Section 201 complaint that would seek across-the-board duties on steel from every country except possibly Canada and Mexico.
That would turn the anti-import fight into the biggest donnybrook since the early 1980s, when domestic manufacturers were recoiling from an onslaught of cheaper–and admittedly often higher-quality–foreign goods.
And even as the coalition gets revved up, a group of smaller steelmakers is set to smack overseas producers of lower-grade rod goods with a complaint as soon as this week.
Some foreign steel companies and their U.S. customers accuse the steelmakers of once again crying to big brother instead of learning to compete in a global market. But steel executives say their backs are against the wall.
“The United States has become the world’s steel dumping ground,” Curtis Barnette, chairman and chief executive of Bethlehem Steel Corp., told the Congressional Steel Caucus recently while arguing for political support.
Another volley of trade complaints would put the Clinton administration in a tighter vise, forcing it to choose between a collection of strategically important nations trying to export their way to prosperity and an alliance in vote-rich states pushing to save jobs through protectionism.
It may also inspire other industries to follow suit. Greg Mastel, a trade specialist at the Economic Strategy Institute in Washington, says U.S. makers of semiconductors, machine tools and perhaps even automobiles could bring trade complaints of their own if steel producers succeed in blocking imports.
To win price-hiking duties on foreign products, complainants must prove they’ve been injured by imports sold at illegally low prices.
There is no question that U.S. steel producers are in a world of hurt. Already, two Midwestern steel companies–Acme Metals Inc. and Laclede Steel Co.–have filed for Chapter 11 bankruptcy protection, and analysts list as many as four other small firms that could tumble into insolvency soon.
Others are shutting mills, suspending operations and laying off rafts of workers because of a steep falloff in orders and mountains of unsold inventories. All told, more than 2,750 steelworkers are now jobless, and their ranks are growing rapidly.
This week, Weirton Steel Corp. plans to idle one of its two blast furnaces–bedrock equipment steelmakers generally operate ’round the clock–and furlough 415 workers for at least five weeks. That is on top of 300 employees laid off last month.
Adding to this month’s toll, Northwestern Steel and Wire Co. is discharging the last of 400 workers whose jobs were eliminated when it pulled the plug on its money-losing wire-products business, and Birmingham Steel Corp. will put hundreds of employees on forced time off as it closes its mills for extended year-end holidays.
“The bellyaching is real,” says Waldo Best, an industry analyst with Morgan Stanley Dean Witter & Co. in New York. “There are a lot of people out of work going into Christmas.”
Steel executives blame the industry’s problems squarely on record tonnages of low-priced imports.
In its initial complaint, filed in late September, the 12-company coalition accused mills in Brazil, Japan and Russia of violating U.S. trade law by dumping hot-rolled sheet steel here, selling the products at prices below their production costs or own home-market prices.
In two preliminary rulings, the Commerce Department has sided with the coalition and has approved slapping on duties retroactive to mid-November, pending a more in-depth review of the case next year.
Since the complaint was filed, however, the government has released data showing steel imports rising to even higher levels. Hot-rolled sheet steel is pouring in from other dollar-hungry nations, while mills in the named countries appear to be shifting to other products, particularly plate and higher-grade cold-rolled sheet steel.
Many of the increases have been unprecedented. For instance, more cold-rolled sheet steel from Japan came into U.S. ports in four months this year than in the previous 10 years combined, while more plate steel arrived in August and September from South Korea than in the previous seven years altogether.
As the import numbers have gone up, prices have gone down. With an abundance of supplies, prices of flat goods on average are now off 20 percent from their peak in late spring and are at their lowest level since 1982, when many U.S. manufacturers were on their deathbeds.
Toting up these latest numbers, American steelmakers say they believe they can make a new anti-dumping case against mills in at least six nations: Brazil, India, Indonesia, Japan, Russia and South Korea. They say they won’t file their complaint, though, until late January or early February, after fourth-quarter financial results are reported.
With those results, which are expected to show losses at such big companies as Bethlehem and LTV Corp., “we feel that will make it a slam-dunk,” says John Lefler, president of Gulf States Steel Inc. in Gadsen, Ala.
The coalition may go further. Bethlehem’s Barnette says he and others are preparing a Section 201 complaint that would seek duties on all foreign steel products except from the nation’s partners in the North American Free Trade Agreement.
Meanwhile, Northwestern Steel and several other mini-mills–companies that make commodity-grade products from remelted scrap–are planning as soon as Thursday to bring a Section 201 complaint charging wire-rod makers in 39 nations with flooding the market.
And some may follow up with a complaint against steel bar producers in South Korea and Moldova, a former Soviet republic, in late January.
No matter how strong steelmakers think their next trade case will be, however, even some generally sympathetic industry analysts say domestic companies didn’t get sucked into what one calls a death spiral by imports alone.
Coming out of the 1990-91 recession, U.S. steel companies greatly expanded their production capacity over the last few years by upgrading old mills and constructing new ones.
“Too many mills were built,” concludes Charles Bradford, an independent analyst in New York.
In addition, demand was cut when the nation’s largest steel consumer, General Motors Corp., was shut down by strikes last summer. That caused inventories to back up in the supply chain.
Finally, the big slide in import prices may not prove dumping; instead, it may reflect only the shrunken value of currencies such as the South Korean won and the Russian ruble.
Picking up these arguments, foreign steelmakers and big domestic steel buyers are already preparing a counter-offensive in newspaper ads, through government lobbying and on the stump.
At a recent trade symposium in Chicago, Caterpillar Inc. Chairman Donald Fites warned American steel companies against seeking import quotas. He noted that Caterpillar is the biggest purchaser of steel plate in the world and buys virtually all of its domestic supplies from American mills on long-term contracts.
Still, Fites said the Peoria-based company would be hurt if the government blocks imports. Fewer low-priced imports would allow U.S. steelmakers to raise prices. And that, he said, could prompt manufacturers that employ many more than the steel industry to relocate overseas.
It’s a risk steel companies say they must take.
“This import injury,” Barnette told the Steel Caucus, “is threatening to destroy an American success story of industrial revitalization.”
