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Steel wants a fair fight
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March 12, 1999: 10:28 a.m. ET
House bill that would slap quotas on foreign steel also sparks controversy
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NEW YORK (CNNfn) - In the battle against imports, the American steel industry is looking for the right weapons.
Some call for quotas to reduce massive shipments of cheap overseas steel from Russia, Japan and other countries that flooded America market. Others say quotas would run afoul of the World Trade Organization, and say that America's steel industry doesn't need quotas to survive.
On Wednesday, the House Ways and Means Committee sent a bill to the full House that would impose limits on steel imports. President Clinton is expected to veto the bill over fears about protectionism.
"Congress knows it's dead in the water," said Kenneth Hoffman, an analyst at Prudential Securities. "They're basically saying, 'We know it's illegal, we don't care, we're going to put it on your desk and then you have to talk to the workers.'"
Scott Morrison, an analyst at Donaldson Lufkin & Jenrette, noted that while steel is an important industry in many states, it is still a small piece of the American economy.
"My guess is that it's going to have a tough time in the Senate," he said. "I think it will be tough for the Administration, with (Treasury Secretary) Robert Rubin and (Federal Reserve Chairman) Alan Greenspan making fairly strong comments about protectionist barriers."
The United Steelworkers of America has cited statistics that say the level of steel imports from certain Asian countries still range from 96- to 705-percent higher than before the steel-import crisis started in mid-1997.
"We recognize the financial problems of Asia, Russia and now Brazil," said Gary Hubbard, a United Steelworkers spokesman, "but even if you argue from the side of the free market, we did that in the '80s and 350,000 steel worker production jobs were eliminated."
Hubbard said the United Steelworkers side-stepped the Clinton administration and took its case to Congress.
"We crossed the Rubicon," Hubbard said. "It's easy to do nothing. We're going down the hard road, but it's the right road and Congress seems very supportive."
Thomas Danjczek, a spokesman for the Steel Manufacturers Association, said his organization has not taken a stand on quotas.
"We're perceived to be a protectionist industry," he said. "I don't think that's true. We're willing to compete. We just need to stop the outrageous dumping."
What next?
When discussing the future of the American steel industry, the first question to ask is: Does it have one?
"It's on the road back," Morrison of DLJ said. "I think there are probably some companies that won't be around for the long term, but certainly the industry has a future."
"I think the majority of companies have done a fine job of modernizing," Hoffman of Prudential said. "It took a lot of pain. These guys are just taking it on the chin."
Hoffman said America's steel industry has improved so much that it has become the envy of many other countries. He said at some point the American steel mills could become the targets of European takeover bids.
"At the end of the day, U.S. steel companies are going to be gobbled up in a globalization effort," he said.
Morrison disagreed, saying the talk of European takeovers has been going on for a while. Hubbard of the United Steelworkers had another view.
"That makes a strong case for our government to take the kind of action we are directing," he said.
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