[Congressional Record Volume 147, Number 34 (Wednesday, March 14, 2001)]
[Extensions of Remarks]
[Page E362]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             REVIVING STEEL

                                 ______
                                 

                        HON. DENNIS J. KUCINICH

                                of ohio

                    in the house of representatives

                       Wednesday, March 14, 2001

  Mr. KUCINICH. Mr. Speaker, I submit into the Record the following 
editorial from the March 11th edition of the Cleveland Plain Dealer. I 
believe this piece speaks to the urgent need for action to aid the 
American steel industry, and I encourage my colleagues to read it.

                 [From the Plain Dealer, Mar. 11, 2001]

                             Reviving Steel

       Why is America's steel industry in such a sorry state?
       Poor management, inefficient work rules, runaway imports, 
     outrageous energy costs, low prices, expensive obligations to 
     retirees, skeptical landers and rapidly changing technology 
     have all played a role. But the collective impact is 
     undeniable: In little more than three years, 16 firms, 
     including Cleveland LTV Corp., have sought bankruptcy 
     protection. Since last spring, profits at even the best-run 
     firms have largely melted into pools of red ink; LTV lost 
     $351 million in the last quarter alone. The mini-mills that 
     once seemed to be steel's new wave now look almost as 
     vulnerable as the dinosaurs in this historically cyclical 
     industry.
       Since steel is an economic and military necessity, America 
     needs a healthy industry. And in our system, that's largely 
     the responsibility of individual steelmakers. They have to be 
     intelligently managed, flexible, able to see technological 
     change before it overwhelms them. Companies that can't or 
     won't change will fail. And yet, it's not unreasonable for 
     government to help such a vital enterprise negotiate a market 
     shaped by forces that bear little resemblance to economic 
     theory.
       The Bush administration is said to be studying how best to 
     assist steel. And a bipartisan group in the House of 
     Representatives has offered a set of proposals, many of them 
     rooted in ideas put forward by industry leaders and the 
     United Steel Workers of America. While specifics of the 
     legislation, whose co-sponsors include Cleveland-area 
     Democrats Dennis J. Kucinich, Stephanie Tubbs Jones and 
     Sherrod Brown, may be a bit dubious, they do pinpoint areas 
     that need attention: foreign competition, ``legacy costs,'' 
     consolidation and capital.
       Ask most steelmakers and their allies to identify the 
     industry's No. 1 problem and chances are they'll finger the 
     glut of low-priced foreign steel that flooded this country 
     last year. But the import crush is not some foreign plot. A 
     strong U.S. dollar, while good for the overall economy, makes 
     imports relatively cheaper and more desirable to cost-
     conscious steel users. Even in the best of times, American 
     steel makers cannot meet domestic demand. Industry officials 
     concede that about a quarter of the steel used in this 
     country will always come from abroad, much of it slab that's 
     then finished by American steel firms.
       Still, American steel firms need some respite from bargain-
     basement competition. The question is how to give it to them, 
     especially since the world Trade Organization has rejected 
     America's anti-dumping laws. Perhaps the administration at 
     least could give American producers the ``anti-surge'' 
     warnings that NAFTA partners Mexico and Canada provide their 
     steelmakers by constantly monitoring imports.
       U.S. steelmakers proudly point to billions invested in 
     modernization since the late 1970s. America today makes as 
     much steel with a third as many workers. But shrinking the 
     work force meant early retirement for thousands of 
     empoloyees; LTV's integrated steel operations, for example, 
     support 12,000 active workers and 72,000 retirees. Many 
     established steel firms thus face enormous ``legacy costs,'' 
     mostly for retiree health care, that add an estimated $15 to 
     $20 to the price of each ton. It's a burden not shared by 
     domestic upstarts or by foreign competitors whose governments 
     pay for health care.
       The House bill proposes a surcharge on every ton of steel 
     sold in the United States to help cover retiree health costs. 
     A similar program operates in the coal industry. Spreading 
     the burden of legacy costs might speed the consolidation that 
     many think the steel industry desperately needs. Treasury 
     Secretary Paul O'Neill, who led a troubled aluminum industry 
     back to profitability while at Alcoa, has signaled that any 
     long-range fix for steel probably will require some global 
     reduction in capacity that pushes up prices. Retrenchment may 
     cost some American firms, but their workers and retirees 
     should not be punished in the process.
       Finally, steel may be on the verge of technological quantum 
     leaps. But they won't be cheap, and already many banks are 
     understandably leery of investing in such a dicey industry. 
     Even a federal program that currently guarantees 85 percent 
     of a loan has attracted so few takers that the Bush budget 
     suggests cancelling it. Some suggest that governments or 
     pension funds could step in as financiers. But before heading 
     down that risky road, let's see whether help on import 
     competition and legacy costs encourages private lenders to 
     take another look at steel.

     

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