The Soviet Union has moved in on America's ferroalloys industry, which produces materials strategically vital to defense production, industry officials warned the White House yesterday.
Industry representatives said a shipment of 5,365 tons of ferrosilicon from the Soviet Union had arrived in New Orleans in June and there were reports another shipment was on the way.
Although ferrosilicon has no strategic value, they said the Soviet shipment threatens the future of the industry since it is the only alloy where domestic makers still dominate the market. The same Soviet furnaces used to make ferrosilicon can be used to produce the variety of different alloys used in American industry.
But imports during the first half of this year have grown to capture 83 percent of the American consumption of ferrochromium and 89 percent of the comsumption of ferromanganese--both vital for national defense. Imports made up 58 percent of all the ferroalloys used in this country in the first six months of 1983.
"The effect of the Soviet imports will be a further weakening of the domestic ferroalloy industry," said George A. Watson, president of the Ferroalloys Association, the trade group that represents that 16 American companies in the business.
He said the Soviet ferrosilicon was valued at 16.3 cents a pound--about half the cost of the American product--and was destined for steel mills in this country that are pinching pennies in every way they can. The industry representatives said their foundries are among the most modern in the world and blamed the price difference on heavy Soviet subsidization of its industry.
Moreover, Watson said the imported Soviet ferrosilicon was made specially for the United States since it is of a type used only in the country and not in the Soviet Union, Japan, or the European Community. He said this indicates Moscow is attempting to take a major share of U.S. sales, probably in an effort to get dollars.
"It could also be a planned effort to further weaken the domestic industry and thus impair our industrial and military strength," Watson said.
While the Reagan administration has taken a hard line toward the export of high technology products with potential military application to the Soviet Union, it has not acted as strongly on a petition filed two years ago by the ferroalloys industry seeking protection from imports on the basis of its national security importance.
The administration has ordered stockpiling of ferrochromium and ferromanganese. "However, this program is modest and will not preserve significant furnace capacity," Watson said.
Instead, the industry wants the government to set a "break-point duty" for imports of all ferroalloys. Under this system, the government sets a high tariff on all ferroalloys that entered the country below a specific price, which is set on the basis of the cost of producing a ferroalloy in an efficient American plant plus a reasonable profit for the company.
Watson said the ferroalloys industry currently operates at 34 percent of capacity, down from 79 percent in 1979. Its employment has dropped from 8,000 workers in 1979 to 2,200 this year, scattered among 22 plants in 12 states. Sales in the first half of this year dropped to $294 million, from $862 million in the same period of 1979.
Industry losses for the first half of this year totaled $42 million. Last year they amounted to $105 million.