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U.S. arms for steel price war
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July 30, 1998: 10:32 a.m. ET
Bethlehem Steel CEO says a dumping suit against Japan is 'quite possible'
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NEW YORK (CNNfn) - Steel prices are at an all time low, due in part to the Asian economic crisis. Asian steel manufacturers can't sell to Asian companies, so they're selling in the U.S. -- at prices so cheap, American companies can't match them.
Hank Barnette, chairman and CEO of Bethlehem Steel (BS), joined "Before Hours" Thursday morning to discuss what effect these low prices are having on his company, and what he plans to do about it.
Here is a partial transcript.
DEBORAH MARCHINI, CNNfn ANCHOR, BEFORE HOURS: I'd like to start by asking you about the impact of the GM (GM) strike -- no impact on your second quarter?
HANK BARNETTE, CHAIRMAN & CEO, BETHLEHEM STEEL: It had a very limited impact in the second quarter. By the end of June, most of our shipments to GM had been curtailed, except our shipments to Saturn. We had planned for the normal two-week vacation outage in July, so we'll also have only a limited effect on the third quarter.
MARCHINI: All right. The strike may be over, but it seems to have contributed to a trend which is softening steel prices. How much are steel prices down and why?
BARNETTE: It's very difficult to attribute all the causes to this, but certainly this rather substantial increase in unfairly traded imports is having a depressing effect on steel pricing, and looking at percentages -- we could be looking at several percentages depending on the comparative period -- whether it's quarter to quarter or year to year.
MARCHINI: It's been years since I've heard the head of a steel company complain about so-called "unfairly priced imports." Where are they coming from?
BARNETTE: Well, they're coming principally from the Asian countries, but there have been meteoric increases in imports from Japan, from South Korea, from Russia -- and the conditions in those economies have simply slowed the demand for steel in those economies. They have been unable to export from their home countries into other Asian countries. So, in many respects, the United States has become the dumping ground for unfairly traded steel product in this marketplace.
MARCHINI: Well, the product will go where the market is. The U.S. dollar is stronger, which would tend to make steel from Asia relatively cheaper. What's unfair about any of that?
BARNETTE: Because the pricing in the United States' market is substantially lower than it is in the home market, and the prices here are simply less than the cost to produce it in the home market. By any international standard, that's dumping and it's contrary to law.
MARCHINI: The law gives you remedies. You could file a case against Japanese exporters. Will you?
BARNETTE: Yes. That's under active consideration on a much broader scale than that. That's a remedy that we prefer never to have to resort to because it's timely, it's expensive. But, under all the circumstances, it's quite possible.
MARCHINI: It's said, sometimes, if you can't beat them, join them. Instead of suing some of these exporters, why not buy them? Steel makers in Asia are pretty cheap right now, given the strength in the dollar and the weakness in the local economies.
BARNETTE: This is a market choice for Bethlehem Steel. Our customers in this market, the quality of our product, the low cost of our production facilities here -- we're a premiere producer in this -- the best market -- and we simply want to trade here. We do export in the international market, but if trade is really fair and world markets are open, our company and the United Sates and the steel industry, generally, is going to do very, very well.
MARCHINI: There's a lot of concern closer to home about softness in the U.S. economy, possibly economic shrinkage in the second quarter. As the head of a big industrial corporation, how much is the economy slowing down from where you sit, and what's happening to your wage and benefit costs?
BARNETTE: The measurements in our economy, I think, because of the leadership of our Congress and our president, when you think about it, trying to put it into any historical context -- is just exceptional, and that continues to be the case. We think that growth will continue, but at a slower pace. We have very low inflation, low interest rates, high consumer demand, very low unemployment -- and these are characteristics of a very sound economy and we believe that growth will continue, but simply at a slightly slower pace.
MARCHINI: What about inflationary pressures coming from higher wages, especially at a time when you can't raise product prices?
BARNETTE: We do not see the inflationary pressures at this time. 
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Bethlehem Steel
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