Canton Repository

July 23, 2003

Commission hears pros, and cons of steel tariffs

By PAUL M. KRAWZAK
Copley Washington correspondent

WASHINGTON — Innovative labor agreements sparked by temporary steel tariffs have allowed steelworkers to use their “brains and creativity” to improve productivity, the president of the United Steelworkers said Tuesday.

Leo Gerard was among those defending the tariffs President Bush implemented last year as the U.S. International Trade Commission held a third day of hearings to evaluate their effect.

Without the tariffs, which have helped stem the flow of imported steel and stabilized the market, the steelworkers never would have negotiated the changes that are making American steel companies more competitive, he said.

Supporters of the tariffs have credited the fees on foreign steel for the widespread consolidation and restructuring that is occurring in the industry, which has been plagued with record low prices and a spate of bankruptcies.

Opponents countered that the duties have had little if anything to do with the progress U.S. steel companies made.

“While the record is replete with generalizations about how the (tariff) relief has been essential to the industry, there is an absence of any real evidence that this is the case,” said William H. Barringer, an attorney who represents foreign steel makers who oppose the tariffs.

The key to the consolidation and new labor agreements, he continued, “was the ability (of the industry) to get rid of pension and other unfunded legacy cost liabilities,” such as health insurance. “This occurred in the bankruptcy process, a process which began long before any import relief.”

On the pro-tariff side, some of the most striking testimony involved International Steel Group, the company that New York turnaround artist Wilbur Ross formed upon the ashes of LTV in Cleveland.

One of the giants in the industry, the faltering LTV laid off all its workers and shut its doors in December 2001.

Ross bought the remains of the company in April 2002 and reopened it as International Steel Group. Going on to acquire the bankrupt Acme and Bethlehem steel companies, Ross scuttled inefficient steel-making capacity, streamlined management and worked with the union to create an innovative labor agreement.

“It marks a new relationship between workers and management,” Ross said.

He and Gerard increased productivity by trimming the number of job classifications from more than 30 to five, creating “the most generous profit-sharing provision” the steelworkers ever negotiated, and giving employees more control over their work schedules, they said.

“These changes have reduced the number of man hours needed to produce a ton of steel from 2.5 hours to about one hour,” Ross said.

Ross and Gerard argued that the tariffs be extended into 2005.

“If the (program) is snapped away from us... more lives will be destroyed and more companies will be eliminated,” Gerard said.

Area lawmakers testifying in favor of continuing the tariffs included Sen. George Voinovich, R-Columbus, and Reps. Bob Ney, R-St. Clairsville, Tim Ryan, D-Warren, and Ted Strickland, D-Lucasville.

The commission heard a very different story from Dale Cann, the president and owner of Nesco Container Corp. in Fenton, Mo.

“I am out of business today because of the U.S. steel producers and the utter failure of U.S. steel producers to respond to my needs,” he said.

The company, a steel drum maker, switched to Korean steel after becoming dissatisfied with the quality of domestic steel, which Cann said was “inconsistent and poor and often contained pinholes.”

The tariffs tacked a 30 percent fee on imports during the first year and made Korean steel impossible to afford, he said. Cann added that American steel makers were unable to provide the steel he needed.

He said the federal government denied him an exclusion, which would have exempted the Korean steel from duties, after American companies claimed they could produce the same steel.

The commission has until September to issue a report to Bush, who must decide whether to extend the 15-month-old duties for a full three years, modify them or end the tariffs early.

Another hearing, scheduled for Thursday, will include testimony from Republic Engineering Products in Fairlawn, Ohio, and Timken Co. in Canton.