The federal has stopped turning a deaf ear to complaints of the steel industry.
And the industry, used to shouting simply to be heard, is now quietly, reassessing its relationship with the government. Steel makers are trying to determine whether the administration is indeed a new-found ally in the industry's fight against what it considers "unfair" foreign competition, or whether President Carter merely is trying to buy off heavy union, congressional and industry pressure until the lastest crisis passes.
But the administration believes - or at least convinced itself - that steel makers have more of a cese against foreign competition than once thought and that the government, by failing to enforce trade laws, has been remiss in its duties.
It certainly is an usually state of affairs for two regular sparring partners suddenly to find themselves in the same corner.
Neither side feels quite comfortable. Steel executives say they are encouraged by the sudden shift in government attitudes - which seems to date to an Oct. 13 White House conference on steel and the subsequent work of an interagency task force on the steel industry. They have made some ttntative offers of cooperation with the government's plan. But the steel officers warn that the government must come up with a meaning program, not a palliative.
For its part, the administration still ais devising a new economic ethic to justify its change in attitude.
The special Carter administration task force, putting the finishing toushes on a plan to help the hard-hit steel industry, implicity acknowledges that American steel makers have been the victim of dumping practices by foreign companies (who sell their steel in the United States below cost), something steel makers have been alleging for years . That acknowledgement is a major change in executive posture.
The central part of the task force's program is way of dealing quickly and forcefully with those dumping abuses.
One leading administration economist explains the change in heart: "MOst of us in 10 months ago as ardent free-traders. But now we can see that many free-trade rules are being broken. Not just in steel, but all over the place." Free trade is fine, he said, if everyone palys by the rules.
For about 30 yearsthe federal government has been a regular, often severe, critic of the steel industry.
Although Washington sometimes has been sympathetic to problems generated by heavy layoffs in the industry - whether or not they were caused by imports - government economists and most others who bothered to study the situation were convinced that the industry was a victim of its own moribund management, that it sat back on its hauches and allowed foreigners to take an ever-increasing share of the United States market, the biggest in the world.
Companies were unable to compete with each other. let alone with the more efficient foreign producers such as the japanese.While Japan and Europe built new, big and efficient steel mills, American manufacturers stayed in their cramped> high cost facilities. Washington believed that steel makers and steel workers alike merely were interested in boosting wages and profits and keeping out foreign steel companies who promised American consimers tha same quality steel at lower prices.
When the American steel-producing community cried "foul," economists and others reminded tham that had they bothered to take advantage of technological advances in steel making and built new plants, they would be able to compete with foreign companies.
Even before the advent of foreign competition which first began to rear up in 1959 during a massive, 118-day strike of the industry, steel and government have crossed sword. In the early 1950s, President Truman tried to anationalize the industry in 1952 to avert a strike during the Korean war and prevent a price increase the industry claimed it was entitled to. The takeover move was voided by the Supreme Court within two months.
President Kennedy and U.S. Steel Corp. had a mighty confrontation in 1962 after the steel giant raised prices, something he felt the industry had pledged not to do in return for government help in assuring a moderate union settlement.
President Nixon and President Ford also had their confrontatio with steel makers. Indeed, steel companies cite government interference with steel pricing as a primary reasons why the industry has not been able to generate the level of profits it needs to modernize and expand its production facilities.
Even so, the steel makers have argued, their critics are all wet when they contend that the United States industry is backward. Inland Steel Co. chairman Frederick G. Jaicks noted in a recent interview that, over the last several years, Japan has bought 77 new technologies from the United States while the United States has brought only 10 from Japan.
Furthermore, although most U.S. executives now are willing to admit that Japanese firms can make steel cheaper than U.S. companies (mainly because of lower wages, but also because of bigger and newer mills), they note the difference is not so great that japan can ship the steel to the United States and still sell it much cheaper here. Europe, on the other hand, has bigger production costs than the United States.
The only way Europe can sell more cheaper here is to price its steel at a big loss, while Japan also must lose money on every ton it sells to be able to undercut U.S. producers by $40 to $60 a ton. Steel industry officials contend that Europe and Japan keep their steel mills going at any cost in order to hold layoffs to a minimum. If effects, foreign government subsidizes their steel industries to sell in the United States at a loss exporting their unemployment to the U.S.
And suddenly the government agrees. For years the Treasury Department, the bastion of free trade in both Democratic and Republican administrations, had fought industry attempts to cut off foreign competition.
Now, a top Treasury officials admits, the "American steel industry has been the victims of widespread dumping."
In a meeting with steel executives last mointh, President Carter said that previous administrations had not properly prosecuted anti-dumping cases against foreign steel companies, which he called a "derogation of duty."
Many government economists have felt, however, that foreign steel was to serve as an important check on domestic steel prices and therefore as a buffer against inflation. Many worry that the steel industry plan now being drafted - it should go to the President Monday or Tuesday - Not only will reduce that buffer but in effect set minimum, government-sanctioned prices for steel.
The heart of the government plan is a set of reference prices one for each major steel product, that is based on the cost of the most efficient foreign steel producer ot that item.If a product comes in below that price the government triggers a fast anti-dumping proceeding that determines within several months whether a foreign company is selling its product below cost and levies fines to correct the dumping.
The government never used to take the initiative before - and the process often took a year or more.
Drafters of the plan argue that the old procedure was useless because even if dumping was discovered, the abuse had been stopped by the time the fines could be levied. Furthermore, once a finding of dumping is made imports tend to dry up totally.
At present, according to an architect of the administration's plan. during periods of heavy excess capacity (as now) imports tend to come in with "deep price cuts," seriously disrupting domestic production. Then, after the imports have poured in for up to a year (and, in many cases, established long-term contracts to supply American users,) a finding of dumping is made and imports dry up.
The tentative administration plan would =stabilize" steel production here and abroad, one Carter administration official argues. It would insure that there is no massive disruption of U.S. productiin by a sudden surge of imports and that there is no subsequent disruption of imports when normal anti-dumping procedures kick in after 6,9 or 12 months.
The Carter plan also sounds like it could have been drafted by Judge Elbert H. Gary, the founder of U.S. Steel Corp.
It was the judge's contention - later foiund to be an antitrust violation - that steel companies should realize that price competition was destructive. During periods of declining deman, Gary-s solution was not to cut but to hold the line. Gary preferred to try to even out the swings in production so that the capacity of the industry was better utilized at all times of the business cycle.