The Carter administration's newly hatched "industrial policy" will take a second small step forward next week when a committee of government, union and company leaders reports its diagnosis of another sick U.S. industry -- steel.
Like the statement on the auto industry's plight issued by President Carter two weeks ago in Detroit, the report on steel will be far from a blueprint for recovery.
The committee -- representing the federal government, the United Steelworkers Union and the American Iron and Steel Institute and major producers -- has agreed that the industry must modernize rapidly to protect itself against steel imports. Some analysts against steel imports. tSome analysts fear that without a successful modernization program, the United States could in time become as dependent on foreign steel as it is foreign oil.
But the modernization goals cannot be met without nearly $2 billion a year in additional financing that would have to come chiefly from the government in the form of tax relief or from consumers in the form of higher prices, committee members said.
The task of pinpointing a tax incentive program for the steel industry is too big a political and economic apple for the committee to swallow, when it meets again tomorrow. Committee members hope to be able to give the Carter administration a range of options for a new industrial tax policy, including faster depreciation plans for investments in new steel machinery, and refundable tax credits for steel companies that suffer substantial losses this year, some committee members said.
What the steel committee has accomplished so far is to cut through much of the thick scar tissue left by a long, bitter debate over who is to blame for the industry's decline. For years, the industry denounced government environmental and safety regulations while its critics complained about lucrative stockholder dividends paid not -- in bad and good years -- at the expense of investments in modern steelmaking equipment.
The steel committee has shelved that debate for the most part. What is emerging is a "no fault" analysis of the industry's future needs.
The ability to produce even this limited agreement among the three factions in the tripartite steel committee is an achievement, according to committee members. A year ago, they say, there was not even a consensus over the industry's inability to finance its own modernization program.
"If we can work successfully here," said Labor Secretary S. Ray Marshall, at the committee's June 18 meeting, "our activity will serve as a prototype for other management, labor and government cooperative efforts" aimed at specific problem industries.
The work of the steel committee has become a model of what the Carter administration is now calling an "industrial policy." Just a few months ago, Carter's economic advisers were at odds over whether the idea was even worth studying, says Assistant Commerce Secretary Jerry J. Jasinowski. "It was a symbol in search of substance." The sudden depression in the auto and steel industries has proved a powerful argument for seeking industry strategies, said Jasinowski.
Steelworkers president Lloyd McBride echoed Marshall. "Our union firmly believes that the time has come for an end to the stopgap, crisis-oriented, emergency response approach to the basic problems confronting the steel industry, its workers and communities," he said at the June meeting.
"We believe that this country desperately needs a steel sector industrial policy which is both fair and effective," he said.
Such a policy, he emphasized, will have to include carefully spelled out tradeoffs.
If the steel workers are willing now to support the industry's appeal for tax relief and higher profits, they want in exchange some guarantees that the companies will not take the money and run, abandoning the old steel towns in the industrial north in favor of Sun Belt sites, union officials say. They believe they are getting those commitments.
A common government-company-union position on trade has proved more difficult to achieve, committee members said.
Until this spring, the Carter administration has been partially shielding U.S. steel companies against foreign competition through its trigger price mechanism, which set minimum entry prices for steel imports.
The trigger price plan was dropped, however, when U.S. Steel Corporation accused European steel firms of unfair trade practices in a complaint filed last March.
Now, committee members are trying to devise a compromise import policy that will provide some limits on lower-cost foreign steel shipments without adding too much to inflation.
President Carter is said to have promised European leaders at last month's economic summit conference that he would try to resolve the dangling import policy question, according to committee members.
"We understand the president made a commitment to get into the steel problem," says Richard Schubert, vice chairman of Bethlehem Steel Corp. "It's possible to see a restructured trigger price mechanism that is strengthened, with better protection against import surges. Whether it will emerge in sufficient detail next week remains to be seen. Those details are very important," he said.
Tradeoffs on environmental and safety issues have proved to be the hardest of all to find, committee members said.
Company and union representatives have agreed that regulations that do not have a direct impact on the environment or on workers' health and safety could be postponed for several years to ease the industry's financial bind.
But the Environmental Protection Agency says there are not many regulations in that category affecting steel.
"The fact is, there are differences in approach by government, industry and labor, and this is as it should be, because many of these problems generate legitimate differences," says Commerce Secretary Philip M. Klutznick, who heads the steel committee with Labor Secretary Marshall. m
The problems confronting the steel industry "afford us an opportunity to understand more clearly the extent and the limits of the government's responsibilities in developing an industrial policy," he said in an interview. "In the process, we should come out with a great respect for the problems each of us face," he said.