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Feds seek steel tariffs
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December 7, 2001: 6:40 p.m. ET
Recommendation to Bush comes as No. 4 steelmaker LTV starts shutdown.
By Staff Writer Chris Isidore
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NEW YORK (CNN/Money) - The U.S. International Trade Commission recommended tariffs on steel imports of about 20 percent of their value to protect the beleaguered domestic steel industry.
The decision comes the same day that LTV Steel, the nation's fourth largest steelmaker, got an order from a bankruptcy court judge to start shutting down operations at its mills in the hopes of finding a buyer within the next two months. Earlier this week U.S. Steel Group, the nation's largest steelmaker, and No. 3 Bethlehem Steel, which like LTV has filed for bankruptcy protection, confirmed they are in discussions of a possible merger.
The USITC's recommendations are to be forwarded to President Bush for action later this month. Two of the commission members recommended tariffs on some products of up to 40 percent, although the recommendation of three members of the 20 percent tariffs is the commission's official recommendation.
Bush had signaled a greater willingness than his predecessors to consider such tariffs when he asked the ITC to look at the issue of tariffs earlier this year. Advocates of the tariffs called on the president to take action immediately to stop further bankruptcies.
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LTV Steel plant in East Chicago, Ind., where a shutdown process started Friday. | |
"Now its crucial for the Bush Administration to implement the strongest remedies possible -- even stronger on slabs than those recommended by the ITC -- to prevent further damage from a crisis that has already sent 26 companies into bankruptcy and wiped out 13 million tons of American steelmaking capacity," said a statement from Leo Gerard, president of the United Steelworkers union.
A trade group of steel customers said it was disappointed but not surprised by the recommendation, and urged the president to reject the call for tariffs, saying it would hurt an already struggling U.S. economy by raising costs for industries such as autos and appliances.
"A lot of people are going to suffer if the President imposes massive import restraints," said Jon Jenson, chairman of the Consuming Industries Trade Action Coalition. "Competitive steel imports are vital to the health of U.S. manufacturers."
LTV to seek buyer during shutdown
LTV, which operates steel mills in Cleveland, East Chicago, Ind., and Hennepin, Ill., started Friday to put those mills on what is known as "hot idle" status.
The move keeps some parts of those facilities, such as the towering blast furnaces that melt iron ore to begin the steelmaking process, in a state of partial operation that allows a relatively easy restart. If they were allowed to shut down completely and go cold, the cost of restarting the furnaces would likely stop them from operating ever again.
The company has about 4,200 hourly and less than 2,000 salaried employees left on staff, about half of the staff at the time it filed for bankruptcy court protection nearly 12 months ago. After the steelmaking and hot idle are completed Sunday night that number of employees will drop significantly, likely leaving only hundreds of employees on the job tending the facilities.
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Red-hot steel slabs come off a caster at LTV's Cleveland Works. | |
"If we can sell them in next two months, there should be no problem getting back in operation and getting people back to work," said LTV spokesman Mark Tomasch. As to the USITC's actions coming on the same day as the judge's orders, Tomasch said, "I don't know if it will be adequate or not. It may make the process of selling the facilities a little better. It obviously comes too late to be of any other value to us."
A union spokesman blasted LTV executives, saying that the company would be in better shape for a sale if they had not pushed for the current shutdown before the president could act.
"If management of LTV had behaved in more responsible fashion, they might have found themselves in position today to take advantage of the ruling, rather than leaving the workers and retirees at risk of being victimized," said the USW spokesman Marco Trbovich.
Company executives said they were left little choice but to push for a shutdown due to a drop in demand for LTV's product from nervous customers and lack of financing available from banks.
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"While the decision to shutdown steel operations was painful, the economic realities facing LTV made that decision unavoidable," said a statement from John D. Turner, the company's chief operating officer, who was left in charge after the resignation of CEO William H. Bricker a week ago.
Retiree healthcare costs dog industry
The union and unionized steelmakers such as Bethlehem are pushing for Congress to help defray $965 million in annual health care costs for the industry's retirees, an expense known as "legacy costs." Critics of the tariff proposal said that those costs, not imports, are the true threat to the industry today.
"Trade barriers do not address competitiveness problems," said Sen. Chuck Hagel, R-Neb., during recent hearings, citing the legacy cost problems. "Barriers do not create incentives to restructure, consolidate, reform, and innovate. (Tariffs will) increase the likelihood of a prolonged economic recession through inflationary prices." 
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