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Saving the Steel Industry

Thursday, April 19, 2001 at 4:23 PM

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The steel industry is in trouble. For at least the last three years industry leaders have warned of the current crisis. The situation has now exploded, leaving factory shut-downs and lost jobs in its wake. The list of reasons for the trouble are as long as the unemployment lines many steel workers are now facing. Today some experts doubt that American steel can or should survive. Mike West looks at what's being done to save an industry with deep roots in Cleveland.

Mike West- Last December financial trouble in the steel industry made national news. One of the country’s largest steel producer filed for bankruptcy. The near closing of LTV put the spotlight on steel makers everywhere and the reason for their troubles. Over a dozen other steel companies have also recently visited bankruptcy court, including several in our area.

Congressman Dennis Kucinich was one of the first political leaders to speak out on the steel crisis. He helped write up the “steel revitalization act” now working its way through capitol hill.

Dennis Kucinich- We’re trying to save jobs here in Cleveland. It’s the same situation that’s facing cities across the country. We have over 150 sponsors of our bill, HR 808, the steel revitalization act. Members of congress know how serious this is.

MW- One of the most controversial sections the bill would make it harder for other countries to sell steel in the U.S. That issue began to surface as far back as 1998. That’s when the amount of steel coming from places like China, Japan, and Korea jumped dramatically. The experts say that’s when steel makers in those countries suddenly had to find new customers in america after the bottom fell out of the asian economy, leaving more steel than customers. Foreign producers were willing to sell steel for less than it cost to make, or for less than they sold it in their home countries. Both practices are known as dumping and are against international trade rules. Proving violations to the international trade commission has been costly to steel companies and difficult to prove. Mr. Kucinich says the problem isn’t going to go away without the government stepping in.

DK- It’s very grim because unless we are able to stop these illegally dumped imports from coming into our country, we are looking at the loss of market share. We’re looking at American steel makers not being able to sell their product because they can’t be competitive. Keep in mind we have the best steel, we have the best trained people… they work under safe job conditions. All of that is being destroyed by steel which is being dumped here made by people who are making next to nothing.

MW- The “revitalization act” also calls for providing more government backed bank loans and incentives for companies to merge.

Congressman Kucinich admits it will be a tough package to pass. The “act” doesn’t have the support of the president. President Bush has said he wants to cut the loan program, not increase it.

In Ohio there are at least 110,000 steel or related jobs plus billions in payroll and other taxes the state would hate to lose. Bob Hagan is an Ohio senator from Youngstown. He sponsored a recently passed law that greatly increases penalties for contractors caught using foreign steel in state construction projects, but says it’s more symbolic than a solution.

Bob Hagan- Does it help the steel workers today? No. What it does is send a clear message that we are encouraging people to use steel that will keep employees here in the state of Ohio employed

MW- Governor Bob Taft has tried to help the industry. Mr. Taft and many other Ohio political leaders have written stacks of letters asking the president for more federal assistance. But Senator Hagan says so far it hasn’t worked.

BH- I don’t think the governor can have a lot of impact at least relative to imports, this is a national issue. The governor can use his office as the bully pulpit to encourage someone in his own party to start enacting more fair trade laws increase tariffs on steel. I think that significant ar least on that end of it, but basically he can’t do much.

MW- However, Senator Hagan says there are other steps the governor could take to help steel workers if not the companies they work for.

BH- That I encourage him to do is to make sure that those individuals that have lost their jobs at least are protected with some sort of health care—he can do that. He can encourage the use of state dollars to make sure that we’re funding health care programs instead of leaving people hanging out to dry.

MW- But not everyone agrees foreign steel is the problem. For example, some experts say LTV Steel would have been better off pumping money back into its plants when the cash was flowing, instead of buying other businesses that wound up being costly mistakes. Others blame union wages and claim some older plants are inefficient. Even leaders at fellow steel maker, Middletown-based AK Steel have said the government should not help the losers when their company has managed to stay afloat by making cut backs and sacrifices. Mark Parr is a steel specialist at McDonald Investments in Cleveland.

Mark Parr- The companies that have shown the greatest ability to achieve consistent profits have common theme of a low cost production orientation. I think from a standpoint that steel is a commodity product you know it is a basic building block of many manufactured goods. Cars, appliances, ship excetera. The fact that it is a basic commodity input, requires a low cost orientation to ensure profitability.

MW- So if (you) can find a way to make steel cheaper than the next guy, you’re likely to stay in business. Parr feels American steel is here to stay. One of the reasons is the fact that steel is very heavy and if you make products out of steel you want to be close to where it’s made to save transportation costs.

MP- As the future of steel goes, so goes the future of our manufacturing economy. Steel is an intrical part of almost everything produced in this country and it has been for many decades and it will be for many decades to come. From a standpoint that you and I both believe the American economy is going to be moving ahead over the next several decades. I think that also means good things for the steel industry as well.

MW- But the short term out doesn’t look as rosy.

MP- From a near term planning horizon we should all be looking for no better than more of the same which is essentially a weak manufacturing demand.

MW- The American steel industry is here to stay. Some politicians have even brought up the fact that country cannot let all of the mills go away in case the U.S. went to war and found it no longer had the ability make steel and defend itself. But the size of the industry and the traditionally high paying jobs that came with it are certainly in question. In Cleveland, Mike West, 90.3 FM.

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