The president of the ailing government-owned British Steel Corp. fought hard in secret negotiations last fall with fellow members of the European Economic Community and American steel makers to exempt unfinished steel slabs from quotas being placed on exports of European steel to the United States.
Less than a month later, sources close to the negotiations said yesterday, British Steel's Ian MacGregor began talks with U.S. Steel Corp. to sell steel slabs from Glasgow's Ravenscraig Works in America.
U.S. Steel, whose chairman, David Roderick, has been one of the loudest corporate voices favoring restrictions on imports of foreign steel, confirmed that negotiations are under way to buy British steel for sale in U.S. markets. But a spokesman for the giant steel company said no agreement has been reached.
Officials of the United Steel Workers union, meanwhile, said that part of the deal involves the sale by U.S. Steel of an interest in its huge Fairless Works plant in Philadelphia to British Steel for $100 million. That plant would be used to roll and finish steel slabs shipped from the Glasgow plant for sale in the United States.
President Lloyd McBride said the union "intends to resist the sale in every way that is at our disposal." Another steel union official, negotiating committee Chairman James N. McGeehan of Philadelphia, called the U.S. Steel deal "deceitful," because the USW accepted wage cuts in return for industry promises to modernize and join in a fight against imports.
Word of the possible British Steel-U.S. Steel deal has aroused anxiety throughout the steel country of Pennsylvania, where workers fear the British imports could mean the loss of as many as 2,000 more jobs in the already depressed industry.
And on Capitol Hill, a congressional source said, "It is hard to argue in favor of import relief when it's the industry that's importing."
Sen. John Heinz (R-Pa.) has requested a General Accounting Office investigation of the economic impact of two earlier purchases by U.S. Steel of foreign-made products--steel pipes from Italy and 16,000 tons of structural steel from South Korea by a subsidiary for the construction of a Seattle office building. U.S. Steel officials said they actually saved American jobs by buying the foreign steel, because they would have lost the contract if they had purchased domestic steel.
U.S. Steel officials appeared to be making the same argument in rebutting labor charges that buying British steel and selling a U.S. mill will cost jobs.
"If the proposed plan materialized," U.S. Steel Senior Vice President J. Bruce Johnson said in a statement, "Fairless employes particularly may view the arrangements as much more attractive than our other alternatives."
This was viewed by some here as an implied threat that there could be more layoffs if the deal falls through. Already, about 1,400 of the 8,000 workers at the 32-year-old Fairless Works, located on the Delaware River between Philadelphia and Trenton, N.J., are laid off. The plant can produce as much as 13 percent of U.S. Steel's total capacity of raw steel, flat-rolled steel, bars, wires, pipe and tin-plate products.
The deal, however, appears to steel analysts here as a good one for British Steel and U.S. Steel--both faced with massive losses. British Steel Chairman MacGregor, for instance, was barred from closing the huge Ravenscraig plant by British Prime Minister Margaret Thatcher because the move would have thrown too many people out of work. If the deal goes through, the semi-finished slabs can be sold on the U.S. market for final processing.
If British Steel buys into the Fairless Works, a source said, it will establish a presence in the United States, the only lucrative market left for steel in the world.
In turn, U.S. Steel, which lost $361 million last year, would gain a quick infusion of capital.