The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Steel industry:
Hiding behind imports to push up profits

Mar 18, 2002

On March 5, President Bush announced that he was putting tariffs on imported steel products: 30% on some products and 15% on others. These tariffs are to last three years. They will affect mainly the steel makers of Europe, Japan, South Korea and Brazil, while Mexico, Canada and some poorer countries are exempt.

Bush undoubtedly had political reasons for his actions. He’s looking to the 2002 Congressional elections with Republicans in trouble. The states of West Virginia, Ohio and Pennsylvania, where many steel workers live, were close in the past election.

But Bush also was serving the interests of the steel barons. These tariffs on steel imports will let U.S. steel companies raise their own prices perhaps as much as 10%. And this will improve the profits of the steel companies. Like many other Rust Belt industries, the profit rate of steel companies in recent years has not been as high as it has been for companies like Enron, which produced nothing but only bought and sold. Nor has the rate of profit in steel kept up with the amounts to be made in financial speculation.

The steel companies blame their lack of profits on the imports of steel. However, this argument rings hollow. After all, imported steel was 31.5% of the U.S. supply in 1998 and steel company profits were the highest in many years. Today steel imports are 20.1% of supply, and profits are down. The reason for the drop in steel sales and lower profits is not imports, but the recession, the typical regular downturn of a capitalist economy. But the steel companies are using this downturn to argue that they are in terrible shape.

It’s not a surprise that Bush spouts the companies’ line. Nor, unfortunately, is it a surprise to hear union leaders do the same thing. Right before Bush’s action on February 28 United Steel Workers leaders called on USW members to rally in Washington to demand that President Bush put 40% tariffs on imported steel. USW rallies were also held in steel centers such as East Chicago and Gary, Indiana and Baltimore, Maryland, with slogans like, “Fight to Save the American Steel Industry.”

For decades, the Steelworkers Union lobbied together with the steel companies against imports. By 1999, the number of production workers in steel had fallen to one third of what it had been in 1969. At the same time the amount of steel produced went up slightly. What caused these lost jobs? Imports? Maybe a few. But most were lost to the tremendous increase in productivity. From 1973 to 1994 the companies took profits they made by reducing the wage bill and put them into basic oxygen furnaces and continuous casters, closed mold yards, some primary rolling mills and many open hearth furnaces. Most importantly, they greatly intensified the work that each steel worker does in an hour. Productivity rose by 3.8% a year. Today a steel worker produces three times what he produced in 1969. This rise in productivity could have been used to lower the hours that steel workers labored in one of the most difficult industries to work in. But instead all the gain went to the stockholders, while the companies drastically cut the jobs of steel workers.

The increase in the profits of the steel companies that may come from the increased tariffs on imported steel will not go toward saving jobs. But the diversion which union leaders have made around this issue will once more be used to prevent workers from making the only fight which could save jobs – that is, to take the benefit of increased productivity to lessen the hours that each worker puts in. This would mean that many more steel workers could be employed. Why shouldn’t the workers receive the fruits of all they produced over the decades, which could go to better their lives?

That means treating the steel barons as the enemies of the workers, instead of their allies who are supposed to have common interests with the workers.