DISCUSSION ON STEEL TARIFFS

The following articles appeared on the web site Labor Tuesday during the last two weeks of March 2002.


How Much Will Steel Tariffs Cost Steelworkers?

by Charles Walker

[This article first appeared on the web site Labor Tuesday on March 19, 2002. It has been edited for Labor Standard.]

You can’t blame steelworkers for taking to the streets, demanding that their jobs and their security be protected from the dog-eat-dog competition that’s driving some steel companies into bankruptcy and steel workers onto unemployment lines. But sometimes when the demands of some steelworkers are met, even partially, other steelworkers are forced out of their jobs, and then they’re the ones demanding that politicians help them out.

On March 15, the New York Times reported that Brazilian steelworkers were protesting at the U.S. consulate in Sao Paulo, the commercial and industrial center of Brazil, while calling on Brazilian legislators to impose tariffs on U.S. goods.

Brazilian union officials say that up to 5,000 steelworkers will be negatively affected by a recent U.S. regulation that imposes tariffs of up to 30 percent on some types of imported steel. An earlier Times report quoted British unionists as saying that the new U.S. steel tariffs could cost them 5,000 jobs.

Although the world’s peoples could use steel for many more schools, hospitals, libraries, and the like, the worldwide steel industry has more capacity (and steelworkers) than it can profitably use. As a consequence steelworkers, in effect, fight other steelworkers for the jobs that the steel bosses offer. As the AFL-CIO rightly says, the international competition for jobs produces a “race to the bottom.”

And of course, such competition is contrary to workers’ solidarity — the basic foundation of workers’ power and indeed the premise on which unions originated.

Different Strategy Needed

It’s too early to total up the number of steel jobs that will be lost in the next period. But it’s not too soon to point out that steelworkers worldwide need a different strategy to cope with the crisis plaguing steel companies, if they are to save their jobs and indeed help the world get the steel that many countries sorely need.

They need a different strategy simply because the present strategy isn’t working—if the goal of the strategy is to save steel jobs, no matter where. But even if the goal is to save only the jobs of some nation’s steel workers at the expense of others, the strategy has no long-term viability, for surely, as the expression has it, “what goes around, comes around,” which is another meaning of the phase, “the race to the bottom.”

But who will be the first to proclaim that the steelworkers’ strategy is a dead-end race to the bottom that can’t be halted soon enough? Will it be the United Steel Workers of America (USWA), the U.S. union that was born in the heroic organizing drives against steel barons long known for their arrogance, and at times bestiality? Not likely, it seems.

Union Mergers

While the steelworkers union fights a rear-guard battle to delay the inevitable shrinking of U.S. steel-making capacity, it merges with other unions. This helps pay the bills that maintain the privileged, secure lifestyles of the union’s ruling elite. In February, the steelworkers union announced that it had opened formal merger negotiations with the Brotherhood of Maintenance of Way Employees union, which has a reported 55,000 members. Previously the steel union merged with the rubber workers union and the Southwest’s Mine, Mill and Smelter Workers union, among others.

These mergers do increase the steelworkers’ political clout somewhat in Washington. But for what ends? And at what price to steelworkers’ real security and solidarity?

In the weeks before President Bush imposed new, three-year tariffs on some imported steel, the steelworkers’ union expended its political capital to pressure Bush to act. The union lobbied legislators of both parties and brought to the nation’s capital up to 30,000 steelworkers and supporters to “stand up for steel.”

Corporate CEOs Join Protesting Workers

Reportedly, hundreds of buses brought steelworkers, politicians, and even high school marching bands to rally for a 40 percent tariff on imported steel. At the rally, the protesting workers were joined by “steel company CEOs and Congressional representatives, Republicans and Democrats, from the industrial states” (People’s Weekly World, March 9).

One report quotes USWA President Leo Gerard, as saying that Bush’s tariff on steel imports was a “victory for grassroots activism.” No doubt the many union members and their supporters who campaigned for the tariff would agree, even if the “victory” is short-term, has loopholes (the highest tariff expires in one year), and leaves 600,000 retirees in danger of losing their health benefits.

Union Tops Making Deal with Bush?

Other reports indicate that the steelworkers union officials and President Bush cut a deal, though they don’t say it so bluntly. In return for the tariff, it’s reported, Bush expects steelworkers in West Virginia, Indiana, Illinois, Ohio, and Pennsylvania, where the next congressional elections could determine which party controls the new congress, to “remember in November.” And of course, Bush has his eye on his own reelection bid, later on.

The New York Times (March 10) coined the phrase “Bush Democrats” to describe the one immediate political impact that the Bush tariff is having. Bernie Ravasio, a local union officer told the paper that “this year and beyond union members would remember candidates who helped them, whatever their party line.” “Bush Democrats? I’d say that there’s a good probability of that around here now,’” Ravasio said. A fellow officer said of President Bush, “So, somebody takes care of you, you take care of him.”

The reason these steelworkers say they are leaning on Bush is this: “‘We all remember Clinton and Gore showing up in ’92 and promising to save the mills and then abandoning the issue and betraying us; we never heard from them again,’ said Mr. Ravasio, adding that the Clinton administration had concentrated on economic globalization at the expense of the Democratic Party’s old-line, blue-collar backbone in the mills.”

USWA Strategy — A Failure

The steelworkers union planned to cope with the rise of fierce competition in the worldwide steel industry by making concession after concession to the steel bosses, and it’s fair to say they carried out their plan to the letter. Nevertheless, hundreds of thousands of steelworkers lost their jobs. “The steel industry as we know it,” the union recently complained, “is nearing extinction. Much of it has already crumbled.” In other words, to judge from the number of lost jobs, the union’s strategy has been a failure. It’s as simple as that, unless the union’s strategists want to argue that it could have been worse. But that’s not an argument—that’s an unvarnished rationalization, since everything could be worse.

But they could be better, too. Things would be better for the union and the ranks if it would or could organize the non-union U.S. steel plants that are turning out 50 percent of the nation’s domestic steel, as imports account for a reported 18 percent of U.S. steel sales. While the union spends big bucks and mobilizes its members to march on Washington, hand in hand with the CEO’s of the old-line steel industry, it’s conspicuously silent about the unorganized segment of the domestic industry that should be on the receiving end of the union’s organizational and political firepower.

Now let’s see if we understand the steel union tops’ thinking, which has resulted in the ranks taking one hit after another. Their thinking seems to go like this: Give the steel bosses concessions; ally with first one corporate political party and then the other; don’t organize the unorganized; and pursue one merger after the other, no matter if it doesn’t help the remaining unionized and working steel workers keep their jobs, their peace of mind, and their dignity in knowing that they won their own fights without slumming with the bosses.

Just a note to jobless steelworkers who may be wondering where their next job is coming from: Please read a recent report from France where some occupations are very short of workers due to the adoption of a national 35-hour workweek. Now there’s a strategy worth looking into, n’est-ce pas?


Local Auto Union Leader Disputes Steel Tariffs Article

by Hal Sutton

[Hal Sutton, trustee, UAW Local 1268, is writing here in a personal capacity. His union position is mentioned for identification purposes only. His comments appeared on the Labor Tuesday web site for March 26, 2002.]

“Things would be better for the union and the ranks if it would or could organize the non-union U.S. steel plants that are turning out 50 percent of the nation’s domestic steel, as imports account for a reported 18 percent of U.S. steel sales. While the union spends big bucks and mobilizes its members to march on Washington, hand in hand with the CEO’s of the old-line steel industry, it’s conspicuously silent about the unorganized segment of the domestic industry that should be on the receiving end of the union’s organizational and political firepower.”—Charles Walker, “How Much Will Steel Tariffs Cost Steelworkers?” (Labor Tuesday, March 19, 2002)

Walker’s article has some glaring weaknesses that become apparent from a cursory study of the “FACTS on the Steel Crisis” document I pulled off the USWA website that follows this brief critique.

First of all, the absolute proportion of imported steel on the U.S. market (or market share), which is grossly understated by the 18 percent figure cited by Walker, is not essential in determining its impact. According to FACTS, “last year’s import total of 30.0 million tons is 23% above the 24.4 million tons imported in 1995, and nearly double 1991’s total of 15.9 million tons.” Of greater importance, the practice of dumping by foreign steel manufacturers has forced U.S. steel manufacturers — minimills as well as integrated manufacturers — to depress their prices to untenable levels, which has directly resulted in the present catastrophic wave of bankruptcies.

The impact of the Bush administration tariffs? They might enable U.S. manufacturers to raise their prices to levels sufficient to stem the bleeding and prevent the liquidation of many of the companies that are currently undergoing the Chapter 11 process. The tariffs will do nothing to revive the fifteen or so companies that have already been liquidated — those productive forces have been effectively destroyed.

Furthermore, the U.S. steel industry will continue to be saddled with those massive legacy costs that place it at a huge disadvantage when competing in a global market against foreign corporations that have no such liability, because their national governments provide universal national health care insurance. Indeed, the entire U.S. manufacturing industry is at a competitive disadvantage on the global market because of the lack of universal national health care insurance in the U.S. From the standpoint of government policy makers, perhaps this would be the most compelling argument in favor of national health care insurance.

So, how should U.S. organized labor respond to this challenge to the continued viability of the nation’s productive forces? According to Walker, it’s simply a matter of conducting more organizing. To be sure, organizing has always been the lifeblood of the labor movement. When unions neglect this responsibility they inevitably suffer painful consequences. However, there has been no lack of organizing effort on the part of the U.S. labor movement in recent years. But, there has been a terrible lack of effective organizing. And, the solution to this problem does not lie in simply working harder or training organizers more effectively.

No, the malaise that grips the organizing efforts of the contemporary labor movement is the result of the ineffectiveness of the conduct of the class struggle by the existing labor leadership. The leadership is indeed trying harder, with the tried and true methods of the Post-War [post–World War II] boom—the only methods that it knows.

In order to overcome the problems that confront the contemporary labor movement, it must unequivocally break with the old methods of the Post-War boom, and adopt methods and policies that can effectively confront the class war reality of the global race to the bottom, which is more accurately described as a race to oblivion.

In the contemporary period, nationalization of the nation’s manufacturing industry, as well as true global solidarity, are the only effective answers that the U.S. labor movement can provide to the race to oblivion. And with this approach, all the tactical and political questions that were veiled or sublated by the long period of the Post-War boom must finally be confronted.

Will Union Officials Be Forced to Launch a Labor Party?

Factory occupations, general strikes, and, most important of all, the labor party must now inevitably be brought to the forefront as the working class in the U.S. struggles for its very survival.

Incidentally, I have not yet studied the details of the election law reform that was enacted by Congress last week, but from the brief reports I encountered on the news media, it appears that the restrictions on soft money donations could finally force the U.S. labor movement to launch a labor party. The soft money restrictions appear to be a dagger aimed at COPE, UAW-CAP, and all other such PACs that have been operated by organized labor in the U.S. The bill appears to effectively prevent the U.S. labor movement from influencing the existing the political parties as it has in the past. There might well be no other recourse for organized labor but to transform these various PACs into a labor party.

By going for labor’s political jugular, the U.S. ruling class might just be forcing the U.S. labor movement to take this fundamental step forward—kicking and screaming to be sure.

In solidarity,

Hal Sutton


USWA Fact Sheet: FACTS on the Steel Crisis

Four years after the Asian financial crisis first triggered an unprecedented glut of steel imports into the United States, the devastating consequences of unfair trade and government inaction are growing worse:

Imports continue to decimate American steel markets. For an unprecedented fifth straight year, steel imports reached 30 million tons, declining only in comparison with the previous four record years. Last year’s import total of 30.0 million tons is 23% above the 24.4 million tons imported in 1995, and nearly double 1991’s total of 15.9 million tons.

Steel prices keep falling. Starting the year at their lowest levels in two decades, steel prices declined still further in 2001, falling to just 68% of pre-crisis levels in December—an average drop of $130/ton.

Job losses hit 1980s levels. Last year, 20,600 jobs were lost in America’s basic steel industry—the highest annual total in 16 years. In January, steel employment dropped even more sharply, as another 9,600 jobs were eliminated—the highest monthly total since July 1986. Since January 1998, the crisis has wiped out a total of 46,700 steelworker jobs, including 3,100 in the nation’s iron ore mines.

Plant shutdowns reached epidemic proportions. Of the 51 steel mills and related facilities shut down or idled since 2000, 40 closed in 2001, compared to the previous year’s total of 10 shutdowns.

Steel bankruptcies more than doubled. During the past year, 17 steel companies filed for bankruptcy protection, compared to just six in 2000. Since the end of 1997, 30 American steel companies have filed for bankruptcy.

Half the nation’s bankrupt steel companies have now been forced to cease operations entirely. Fifteen (15) steel companies have ceased operations, 14 of them in 2001, compared to just one the previous year.

Nearly one-fifth of America’s steelmaking capacity has been shut down. In the past two years, 21 steelmaking facilities with the capacity to produce over 25 million tons of raw steel—19% of the nation’s steelmaking capacity—were shut down or idled. Almost 90% of that capacity reduction—more than 22 million tons—occurred in 2001, when 17 steel mills shut down. The remainder was eliminated in four shutdowns the previous year.

Shutdown capacity is almost evenly divided between integrated steelmakers and minimills. While some analysts mistakenly believe that minimills—which produce steel by melting scrap in electric arc furnaces (EAFs)—haven’t been hurt by unfair trade and record-low steel prices, 11.7 million tons, or 46%, of shutdown U.S. steelmaking capacity was EAF production from 14 minimills which were shut down or idled since 2000. The seven integrated mills closed in the same time period have the capacity to produce 13.6 million tons (54% of shutdown capacity) utilizing blast furnaces and basic oxygen furnaces (BOFs) to convert iron ore into steel.

Last June, President Bush launched a multilateral initiative on steel, finding “a 50-year legacy of foreign government intervention in the market and direct support of their steel industries.” On a level playing field, there would be no steel crisis, but there is no level playing field. Only prompt and comprehensive action by our government can resolve a crisis caused by the actions of foreign governments.

February 8, 2002