United States Steel Corp. chairman Edgar B. Speer today said his company will file a formal complaint with the U.S. government later this month charging that foreign steel makers are dumping their products in the United States.
Speaking to reporters here, Speer said he expects a "number of companies" to join U.S. Steel in the complaint, the latest in a series of attempts by American producers to erect barriers against low-cost steel from abroad.
His statement came after a news conference called to denounce as "erroneous and damaging" a recent study of the steel industry by Merrill Lynch, Pierce, Fenner & Smith that asserts Japanese producers can make steel much more cheaply than American producers.
When a product is dumped - violation of U.S. trade laws - it is sold at a price lower than it is sold for in the producer's home market. If the government finds that a product is being sold at less than fair market value and that this dumping hurts the industry, it must impose tariffs on the product in question.
Steel makers have been seeking import curbs for years and have escalated their pressure in recent months as domestic production and profitability has lagged and imports have surged.
Speer said that, while the final decisions have not yet been made, the dumping charges would involve a wide variety of steel product lines and many foreign steel makers, presumably Japan and members of the European Economic Community.
U.S. steel makers have been arguing for years that they can make steel for the American market at lower cost than any other producers - including the admittedly more efficient Japanese. U.S. makers argue that foreign producers undercut American prices, only because their steel industries are major domestic employers and foreign steel companies, intimately bound up with their government, would rather lose money than lay off workers.
Steel makers say that even though Japan is a more efficient producer, alter ther costs of shipping steel to the United States are added in Japanese import costs are aove American prices, but Japanese producers cut their prices below American prices to sell here.
Speer, who also heads the industry trade association, the American Iron and Steel Institute, held a press corference today to denounce as "erroneous and damaging" a study of the steel industry that asserts that the Japanese have a major cost advantage over American steel makers.
If that study, by the giant brokerage firm of Merrill Lynch, is correct, it would shoot an enormous hole in the domestic industry's argument that American steel manufacturers are superior pooducers for American users. If, as the Merrill Lynch study contends, Japanese firms can produce steel at a cost nearly 30 per cent below that of the American manufacturer, then the Japanese could ship their products to the Unite States and still profitably undersell American producers
Speer told reporters that "the cost advantage developed by Merrill Lynch is not only incorrect, but has resulted in erroneous concousions being reached by uninformed observers concerning the domestic steel industry's cost competitiveness with the Japanese relative to steel consumed in the domestic market."
The Merrill Lynch study - done by vice president Charles D. Bradford contends that the Japanese industry has large, efficient plants that are so technologically superior to most U.S. plants - which are older and smaller - that even though Japan must import nearly all her raw material, her steel makers still have lower raw materials costs per ton of steel produced than do U.S. companies.
Coupled with that, Japanese mills are more productive than U.S. mills, meaning that it takes fewer hours of work to produce a ton of steel in Japan than in the United States.
Speer told reporters that a special analysis of the Merrill Lynch study by steel industry analysts has turned up "invalid assumptions, misused public information" and errors in methodology. The Merrill Lynch study finds that Japan can produce steel $83.65 a ton cheaper than the United State.But Speer said the American Iron and Steel Institute analysts, using Merrill Lynch's methods, found the Japanese advantage to be $20 a ton.
One of the steel industry's own studies, commissioned last spring, also found that Japan could produce steel at significantly less expense than the United States.
But that study, by the consulting firm of Putnam, Hayes & Bartlett, concluded that Japanese producers still would have to sell below cost in the U.S. market (adding in shipping costs and other charges) to undercut American prices by the $40 to $50 a ton that is normal.
Both the steel industry study and the Merrill Lynch study do not conclude that European steel producers are less efficient than American makers.
Steel industry executives acknowledged that the last-minute, elaborate press conference - Telexed inviations were sent late last week - could seem like overkill.
The Merrill Lynch report is not tthe first - nor is it likely to the last - major Wall Street analysis that has found the steel industry inefficient and a bad investment.
But, officials said, the industry is concerned that the report is being given much credence by government analysts who are investigating a recent series of steel price increases as well as evaluating various steel industry request for protection against imports.