The meter is running," says Bethlehem Steel Chairman Donald Trautlein, and so is the patience of the U.S. steel industry as it waits for the Reagan administration to stem shipments of low-priced European steel into the United States.
Bethlehem, along with other U.S. steel companies, is prepared to bring action against European steel producers under U.S. trade laws, Trautlein said in an interview last week, adding that he regards the issue to be open and shut. In most cases, the subsidies provided by European governments to reduce the prices of steel exports are so large that very little of the steel can be sold here legally, Trautlein asserted.
But the unfair trade charges, if upheld, would lead to a virtual ban on European steel imports--an action that could trigger severe retaliation against U.S. exporters and upset fundamental political ties between the United States and its European allies, according to the administration.
Trautlein said he understands the administration's concern. "We're Americans first. We're aware that steel trade isn't the administration's only problem." U.S. steel producers are likely to sit tight for awhile if the administration is making significant progress with the Europeans, he indicated.
But the low-cost steel imports are taking away sales that are needed to pay for billions of dollars in essential modernization by U.S. producers, he added. "The whole modernization program is jeopardized by these imports," said Trautlein, whose company will spend about $100 million next year out of a $750 million, multiyear investment program to improve its facilities.
What the industry needs is voluntary restraint by European steel exporters for three to five years, until the modernization is completed, he said. And the industry must now decide whether antidumping suits would help or hinder that goal, he added.
"I don't fault the administration," Trautlein said. "The question is whether the filing of suits wouldn't be helpful to them."
He conceded the administration did not think such legal action would be helpful at all. "The administration feels that a satisfactory resolution can be reached" without industry suits, he said.
But Trautlein indicated the industry no longer may be willing to trust the kind of agreement the government is apt to come up with.
He said previous administrations have won assurances from European steel-producing nations in the past only to have the agreements broken. Therefore, he said, "You have to look for something that gives you more than verbal assurances."
Trautlein said industry leaders met last Monday with Commerce Secretary Malcolm Baldrige to discuss the status of government negotiations with the Europeans, but he would not reveal any details of those talks.
In a separate interview, Baldrige said progress was being made, but gave no prediction of the outcome. U.S. steel executives don't fully appreciate the shock felt by European competitors this month when the Reagan administration itself brought dumping charges against foreign producers, he said. "We got their attention," he added, speaking of the Europeans. "Now we want some time to see if it will work. We have to see what assurances the European community will give us."
The current negotiations were forced on the administration in November when U.S. Steel served notice that the government's trigger-price mechanism no longer was working and that it would file antidumping suits against European steel producers Dec. 1. The TPM originally was established by the Carter administration to tighten enforcement against illegal steel imports and to ward off antidumping suits by the steel industry.
After a White House meeting with President Reagan and the chief executives of several major steel corporations earlier this month, U.S. Steel agreed to hold up its action while the administration tried to persuade the Europeans to limit shipments voluntarily.
At the same time, the administration has threatened to end the trigger-price program if any steel company goes ahead with its antidumping complaints. But Trautlein does not appear too concerned by the threat. "The TPM per se is not that important. The solution is in the enforcement of our trade laws," he said.
"I think we've shown a lot of patience," he said. "We've been in a position for well over a month to file antidumping and countervailing-duty suits." He said the company has prepared complaints against five products and six European nations. He would not name the products or the countries, but added, "I think you can figure out the countries if you look at the EEC European Economic Community ." As for the products, all he would say is "they're big-tonnage products, they're not nails."
He said that should Bethlehem decide to proceed with the complaint against the Europeans, the suits could be filed quickly. "They're ready; it would take us an hour to date-stamp them."
The tough talk from Trautlein comes as the U.S. steel industry is experiencing a terrible year--a depression, in Trautlein's words. He sees a continued drop in the first quarter of next year, with production some 15 percent below levels in the first quarter of 1981, and adds, "It could get worse than 15 percent if things don't get better by mid-January." Trautlein said unemployment in the industry already is nearly 25 percent, and "obviously we don't see much in the first quarter."
In an argument very similar to the one made by the U.S. auto industry before the administration negotiated a "voluntary" agreement with the Japanese limiting car imports for two years, Trautlein says the domestic steel industry needs import relief for three to five years to allow it to complete its modernization program. "I think that's the period we're talking about in terms of modernization," he said.
Bethlehem announced a $750 million modernization program last July--the day after Congress approved the Reagan administration's initial economic program--with approximately half the money being spent at the company's Sparrows Point facility in Baltimore.
Trautlein conceded that the U.S. steel industry is behind both the Japanese and the Europeans in the amount of continuous casting operations in place. But he said U.S. steel makers are pushing to catch up. "That kind of investment pays off pretty quick, even at today's prices," he said.