[Congressional Record Volume 142, Number 55 (Thursday, April 25, 1996)]
[Senate]
[Pages S4256-S4257]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               RESURGENCE OF THE AMERICAN STEEL INDUSTRY

 Mr. ROCKEFELLER. Mr. President, I wish to draw the Senate's 
attention to a most important development that seems to have gone 
virtually unnoticed by a great many in the general public. As the co-
chairman of the Senate Steel Caucus, I am pleased to report that the 
story of the resurgence of the American steel industry is a genuine 
American success story. In the April 16, 1996, edition of the New York 
Times, there was an extensive article which outlined many of the ways 
in which American steel companies have been able to rebound from huge 
losses and, in some cases, bankruptcy. Today the American steel 
industry is simply the most cost effective, and highest quality steel 
industry in the world.
  During the 1980's, as many of my colleagues will remember, the steel 
industry was confronted with many serious problems, not the least of 
which was the fact that foreign steel producers, with the approval of 
their governments, targeted our steel industry for extinction by means 
of dumping and other unfair trade practices. In response to the threat 
of our using our antidumping and countervailing duty laws, foreign 
governments negotiated voluntary restraint agreements [VRA's] with the 
United States that kept a lid on imports of unfairly traded steel.
  These VRA's were desperately needed medicine which gave our steel 
companies the extra boost they needed to rise from the ashes. In 
addition, Congress worked on a bipartisan basis to maintain the 
effectiveness of U.S. antidumping and countervailing duty laws. 
Effective use and administration of our trade laws were--and remain--
absolutely vital to the health of our steel industry.
  That is why I fought so hard, when we were negotiating the Uruguay 
round of the GATT, and when Congress was writing the legislation to 
implement the round, to make sure that the sanctity and effectiveness 
of our fair trade laws were maintained. Today, some are trying to 
undermine our trade laws through covert means, to find ways of getting 
around our trade laws. Mr. President, we can't afford to let that 
effort succeed. America's steel industry, the backbone of our economy, 
can't afford to let that effort succeed.
  However, our trade laws alone didn't bring about American steel's 
resurgence. Since 1980, U.S. steel producers have invested over $35 
billion in modernization--a figure higher than the industry's total 
cash flow! But the revitalization of America's steel industry has been 
costly and painful. Between 1980 and 1992, the workforce was cut by 57 
percent and 450 facilities were closed.
  Most of the 235,000 people whose jobs were lost in those down years 
won't benefit from the resurgence of America's steel industry, but the 
polishing-up of the rust belt will benefit thousands of other workers 
and their families.
  Today, the United States has a world class steel industry. American 
steel is the lowest cost producer for the U.S. market; U.S. labor 
productivity--man hours/ton--in the steel sector leads the world; the 
quality of American steel is second to none; and the United States is 
emerging as a center of innovative steelmaking technology.
  As we all know, successful competition in today's global marketplace 
requires a vigorous manufacturing base. Steel is fundamental to that 
base and continues to be essential to manufacturing, infrastructure and 
defense--mainstays of our economy.
  Mr. President, I ask that the New York Times article entitled, ``Big 
Steelmakers Shape Up,'' be printed in the Record.
  The article follows:

                [From the New York Times, Apr. 16, 1996]

  Big Steelmakers Shape Up--U.S. Mills Win Back Business at Home and 
                                 Abroad

                           (By John Holusha)

       Sparrows Point, MD.--Richard Moore was laid off from the 
     Bethlehem Steel Corporation's sprawling mill here in 1981, 
     one of tens of thousands of workers shed by the American 
     steel industry as it fought to cut bloated costs and fend off 
     surging imports.
       Now, after a nearly 15-year stint selling auto parts, Mr. 
     Moore is back on the job, one of 400 production workers hired 
     here last year, the first new arrivals since 1979. More are 
     expected to be hired soon.
       ``The work here is dirtier, hotter, more dangerous and 
     strenuous'' than the sales job, Mr. Moore said during a brief 
     break. But, at $24 an hour in base pay and benefits, it is 
     also ``much better than what I was doing,'' he added.
       The return of Mr. Moore and his colleagues--and others like 
     them at steel plants around the country--marks the return as 
     well of an industry that was nearly given up for dead in the 
     United States a decade or so ago.
       Slimmer now and better run, American steelmakers are taking 
     back more and more pieces of their domestic business from 
     competitors in Japan and other countries. And at levels not 
     seen for half a century, they are going abroad with a 
     vengeance, more than holding their own on foreign turf in 
     terms of quality and price, even with the added expense of 
     shipping.
       Last year, they shipped 7.1 million tons of steel slabs, 
     sheets and structural beams to foreign countries, nearly 
     doubling the 3.8 million tons exported in 1994. It was the 
     best export performance since 1940, according to the American 
     Iron and Steel Institute, the principal industry trade group. 
     And orders are booming this year.
       As explanation of why he expects to stay on this time 
     around, Mr. Moore pointed to the fact that the tinplating 
     line he works on had sold its full 1996 production capacity 
     by mid-March. Last year, Bethlehem exported 500,000 tons of 
     steel from the plant here, along the Chesapeake Bay about 12 
     miles southeast of Baltimore. That is up from just 50,000 
     tons the year before. All in all, the performance last year 
     and the strong orders so far this year ``confirm that the 
     U.S. steel industry has become competitive on a world 
     basis,'' said Peter F. Marcus, a metals analyst at Paine 
     Webber.
       To be sure, the United States still imports more steel than 
     it exports, at least partly because so many outmoded mills 
     have been closed that the domestic industry cannot fully 
     supply the market. Imports totaled 24.4 million tons last 
     year. And the bulk of the hiring here and at other plants is 
     to replace retiring workers, not to add to the payroll.

[[Page S4257]]

       Still, in one basic category, hot rolled sheet steel, the 
     United States has been a net exporter since last June. And 
     overall employment in the industry--now thought to be around 
     170,000--has begun to increase as the first few of nearly a 
     dozen new mills scheduled to open by the end of the decade 
     have started production. Taken together, the numbers show 
     just how far American steelmakers have come in changing their 
     old ways, analysts and industry executives say.
       Those ways were marked by a full plate of inefficiencies: 
     overstaffing, outmoded production processes and poor quality 
     control. Foreign steelmakers, led by the Japanese and the 
     Europeans, saw their chance and moved in. But there were 
     domestic threats to the steel giants as well, from so-called 
     mini-mills, upstart operators that turned out low-cost steel 
     from scrap rather than from raw materials. And some foreign 
     companies bought plants in the United States and began to 
     revamp them.
       Eventually, the big American steelmakers got serious about 
     survival. They slashed payrolls, shuttered the most 
     antiquated of their hulking mills and spent billions on new 
     technology and equipment.
       With costs down and quality up, the industry has been 
     positioned of late to take advantage of currency swings that 
     have made American products cheaper abroad. Besides making 
     American steel itself more attractive to foreign markets, the 
     relative weakness of the dollar has helped many domestically 
     made products, from cars to appliances, that contain steel. 
     And that, in turn, has given the American steelmakers a 
     chance to retake at least some of their home ground.
       Noting that the Chrysler Corporation is exporting steel to 
     Europe to make Jeeps there and that cars containing American 
     steel are being exported in larger numbers than they used to 
     be, Michelle Applebaum, an analyst with Salomon Brothers, 
     said: ``The Rust Bowl in the United States has become 
     competitive again. The steel market is the primary 
     beneficiary of the new competitive heartland in the United 
     States and is stronger than it has been in decades.''
       The evidence of the shift is striking in sheet steel, the 
     biggest category and a major component of cars, building 
     materials and appliances. At the beginning of 1995, Ms. 
     Applebaum said, imports accounted for a net market share 
     (subtracting exports) of 17 percent. But by the end of the 
     year that figure was down to 5 percent. ``That means that a 
     full 12 percent share was given back to the U.S. market,'' 
     she said, equaling twice the output of one large steelmaker, 
     Inland Steel Industries.
       One measure of efficiency is the amount of labor it takes 
     to produce a given quantity of steel. According to Mr. 
     Marcus, the average integrated mill in the United States 
     requires 4.42 hours of labor to produce a metric ton, or 
     2,200 pounds, of steel. That compares with 4.49 hours in 
     Japan, 4.69 in Germany and 4.71 in Britain. Twenty years ago, 
     when far more labor was required, Japan was the leader, at 
     11.36 hours, followed by the United States, at 12.49.
       Steel executives say exports provide a long-term 
     opportunity, though shipments are likely to vary from year to 
     year, depending on domestic demand. Because it costs about 
     $50 a ton to ship steel overseas, the profit margin is less 
     than in a domestic sale. But because blast furnaces must be 
     run continuously, disgorging ton after ton of molten pig 
     iron, manufacturers like having an alternative market if 
     demand fails at home.
       ``Right now, the domestic market is more attractive, so our 
     exports will probably be less this year than in 1995,'' said 
     Paul Wilhelm, president of the U.S. Steel Group of the USX 
     Corporation. U.S. Steel exported 1.5 million of the 11.4 
     million tons of steel it made last year. But the company is a 
     permanent player in the export business, with long-term 
     overseas accounts, Mr. Wilhelm said.
       John J. Connelly, the president of U.S. Steel International 
     Inc., added, ``we see this as an ongoing 4 to 5 percent of 
     our business through thick and thin.''
       And while the cheap dollar helps keep that market open, 
     industry experts say, there are other factors.
       ``Currency has an effect, but in the end if you are low-
     cost, high-quality and meet customer expectations, you will 
     get business,'' said Curtis H. Barnette, Bethlehem Steel's 
     chairman.
       This newfound efficiency and quality will have increasing 
     importance in coming years as the new mills begin opening in 
     this country. If products from the new mills can push out 
     imports rather than cannibalize older mills, as has been the 
     case in the past, jobs at places like Sparrows Point look 
     like a better long-term bet.
       All the start-ups are patterned on mini-mills, which have 
     small, highly efficient work forces. The Nucor Corporation, 
     the mini-mill leader, can make steel at some of its mills 
     with less than half an hour of labor a ton.
       But the mini-mills may no longer enjoy the big advantage 
     over traditional mills that they had in the past, some 
     experts say. In part, that is because the traditional mills 
     have become so much more efficient.
       Another reason has to do with the production process of 
     most mini-mills: They have to live with the impurities in the 
     recycled materials they use, and the price of high-quality 
     scrap has been rising. Integrated mills, because they work 
     from raw materials, can better tune the chemistry of their 
     products.
       Because the price of scrap is likely to keep rising as new 
     mini-mills add to demand, many companies are investing in 
     ways to separate iron from ore that do not involve blast 
     furnaces, which are costly to build and operate. Nucor, for 
     example, is converting ore into iron carbide, a form of the 
     metal that can be added to scrap.
       As the mini-mills lose some of their edge, the slimmed-down 
     integrated mills should be able to hold their own better on 
     the domestic front, analysts predict.
       At Sparrows Point, the changes have been profound. In the 
     1950's and 60's, it was more like an independent empire than 
     a factory. The mill employed about 30,000 people and there 
     was a company town, complete with company-owned housing, 
     stores and schools. There was even a police force and a semi-
     professional football team.
       In the late 60's, the company decided to end this 
     paternalistic system and to gradually close down the town. 
     New mill buildings swallowed the remains of the town, and the 
     workers who stayed on the payroll moved to Baltimore and the 
     surrounding area.
       ``There was a high school where the blast furnace is now,'' 
     said Duane Dunham, the president of Bethlehem's Sparrows 
     Point division.
       Over the last decade, Bethlehem poured in $1.6 billion for 
     improvements. Everything in the mill is automated and run by 
     computer, allowing only a few people to control the movement 
     of vast amounts of material by watching wall-sized displays. 
     Today the plant employs just 3,250 people and can make 3.5 
     million tons of steel a year, about one-third of its capacity 
     in the old days.
       The attitude of the employees and their union, the United 
     Steelworkers of America, has changed as well. At the tin 
     plate plant to which Mr. Moore is assigned, for instance, the 
     rigid union work rules of the past have become flexible.
       ``We are all cross-trained, so we can fill in for people 
     who are not here,'' said Brenda Matthews, one of the new 
     workers, adding that little distinction was made between men 
     and women. ``Women do the same jobs as men,'' she said, with 
     one exception: Only the men load the heavy bars of tin needed 
     in the electroplating process.
       Even some of the veterans are whistling a new tune. James 
     Henson has been at Sparrows Point for 25 years, mostly as an 
     operator of a tractor that moves coils of sheet steel prior 
     to shipment.
       ``In the old days, we had people chasing coils all over the 
     place,'' he said, waving at a warehouse that is easily as 
     long as three football fields. ``Now it is all on computer 
     and we are shipping to our customers on a just-in-time basis. 
     Every tractor operator has a computer and every coil is 
     logged in. It's better this way.''

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