SALT LAKE CITY, UTAH -- As recently as 1985, U.S. copper producers were being beaten to death in world competition by lower-cost production from the Third World. The price of copper was about 65 cents a pound, and experts were ready to pull the plug on an industry whose life-signs were rapidly fading.

The massive Bingham Canyon mine, 25 miles southwest of here, was shut down and its work force dispersed. The more fortunate workers found jobs -- often in lower-paying, service industry occupations. The less fortunate coped with problems that afflict the unemployed, including divorce and depression.

Today, three years later, the producer price of copper is about $1.40 a pound. Mines -- including the 2.5 mile-wide pit at Bingham Canyon -- are being reopened, and the U.S. copper industry is again competitive worldwide, even at prices as low as 65 cents a pound.

In an era when concerns about the competitiveness of U.S. industry are high, U.S. copper producers have survived, staging a near-miraculous comeback. Copper may not be king, as it once was in the West, but neither is it a corpse.

Once the subject of premature obituaries ("In a very real sense the industry is dying," wrote Business Week about the mining industry, including copper, in December 1984), the U.S. copper industry not only is alive but has a future. Still, securing that future wasn't easy.

It took a work force that was willing or forced to take drastic paycuts, and major changes in work rules that sharply reduced employment. And it took a management that was willing -- once industry efforts to obtain trade protections failed -- to reexamine the way it did business, to risk investment in modernization and new technology, and to shut down marginal operations. Together, those changes produced an industry that can make money at copper prices that once produced hemorrhages.

"We paid dearly to come back to work, but we had to do it. Changes had to be made," said Ralph Christensen, president of the United Steelworkers of America Local 392, the largest union at Kennecott-Utah Copper. "I think we did the right thing, but a lot of people think we sold out to Kennecott," he said.

Kennecott-Utah Copper, which operates the mine at Bingham, was a part of Kennecott when Kennecott was owned by Standard Oil. In 1987 British Petroleum acquired Standard Oil and Kennecott-Utah Copper became a division of BP Minerals America. Operations at Bingham Canyon shut down March 31, 1985, throwing about 2,200 employees out of work. Later that year, the company announced plans for a $400 million modernization of the facilities.

In June 1986, the workers at Bingham Canyon ratified a contract radically different from the contracts that preceded it, both in the flexibility it granted management in staffing operations and in the concessions made by workers. On average, workers in the Kennecott-Utah Copper division lost about 25 percent of their compensation -- giving up benefits including sick leave and cost-of-living increases and settling for lower wages and hefty worker contributions to health insurance.

Even at that, they fared better than some of the industry's workers. At Phelps Dodge Co. in Arizona, a long, bitter strike that predated negotiations at Bingham Canyon had ended with union members, who had fought concessions, being permanently replaced.

In return for the major concessions at Bingham Canyon, Kennecott-Utah Copper management agreed to reopen its facilities, even in advance of the modernization that will be completed this year. In retrospect that decision was fortunate, allowing the company to take advantage of today's copper prices.

At the same time the copper industry in the United States was reinventing itself and producers were getting their costs under control, a major change was occurring in basic supply and demand that produced higher prices.

"The domestic industry has gone through a major shakeout. Their production costs have come down dramatically," said Daniel L. Edelstein, a commodities specialist with the U.S. Bureau of Mines. "Where their costs were over 90 cents a pound, they're now under 65 cents average cost," he said.

In fact, Kennecott-Utah Copper will be able to produce copper for well under 50 cents a pound, according to G. Frank Joklik, president of BP Minerals America. "We certainly welcome the increase in metal prices, but we would have had quite a turnaround anyway," said Joklik.

The runup in costs resulted from a simple equation, according to mining industry officials and analysts. Healthy demand for copper coupled with reduced U.S. production resulted in a draw-down of inventories, and a real shortage. Although there have been published reports suggesting that manipulation in the copper futures market may have contributed to the increase in cost, industry analysts and others say the prices reflect reality.

During the early 1980s, copper and other metals suffered price declines as the nation suffered through a recession. During that period, foreign competitors such as state-owned facilities in Zambia, Zaire and Chile continued to produce, anxious to earn then-healthy dollars through copper exports.

The U.S. copper industry was older than some of its competitors worldwide and was also at a disadvantage competing with government-owned producers who were heavily subsidized, U.S. industry officials argued. Domestic mining officials sought, and failed, to get tariff protection -- a failure that may have contributed to the industry's eventual resurgence.

Inventories built up, exerting continuing pressure on prices, and copper production began shutting down. "North America closed about one million tons of capacity and brought back about half of that," while demand was growing, said copper industry analyst Peter Ingersoll of Shearson Lehman Bros. "Combined inventories on commodities exchanges have fallen from nearly 900,000 tons at the beginning of 1984 to probably less than 60,000 tons," he said. "Everybody else is out of inventory."

Another factor contributed to the pressure on prices. "As inventories were being drawn down, companies were adopting just-in-time inventory procedures that were so popular," said Kenneth J. Barr, president and chief executive of Cypress Minerals Co. "So customers were adopting just-in-time, assuming they could get copper." Many manufacturers have eliminated the inventories of raw materials they previously stockpiled, ordering materials "just in time" as a way of eliminating the cost of storage.

U.S. copper producers have also benefited to some degree from the fall in the dollar, according to analysts. That benefit has been mitigated, however, by the fact that many other producers trade in dollar-denominated currencies.

U.S. copper producers had taken some steps to become more competitive before disaster hit their industry, but the recession and the industry's failure to recover when the economy did forced more serious action.

"They finally got off the golf course and tried to figure out what they could do to improve the situation," said William G. Siedenburg, an analyst with Smith Barney, Harris Upham & Co.

"It's the most interesting and exciting and almost unbelievable thing to happen in the mining industry in Arizona" during more than 30 years, said Rep. Morris K. Udall (D-Ariz.), chairman of the House Interior and Insular Affairs Committee. Arizona produces more than two-thirds of the copper produced in the United States. Employment in the industry there fell from 38,000 to 15,000 during the copper depression "and they closed down every major mine in southern Arizona," Udall said.

Copper industry executives warned that the low prices represented something different from the usual cycles of the industry and sought protection from imports. The failure to obtain that relief may have aided the industry in the long-run, said Udall, who sponsored a bill in 1985 to provide a five-year "recovery window" for the industry by using tariffs to persuade foreign producers to limit production.

"Free enterprise left alone, and supply and demand left alone, will do amazing things," said Udall. "Everybody was compelled to look at reality, to look at their hole card."

"I think the copper industry perhaps had a wrong-sided benefit. The serious depression in copper industry prices in the early 1980s, as well as the changes in the world market both in terms of supply and demand, really forced the industry to its knees," said Michael Hora, senior vice president of A.T. Kerney, a manufacturing consulting firm. As a result, "the companies really had to confront the fundamental issue of how they run their business."

"Nothing concentrates the mind like a hanging," said Thomas D. Kaufmann, a specialist in mineral industry economics at the Colorado School of Mines. The industry switched its focus from making copper to making money, he said, getting rid of low-grade, inefficient operations and applying new technology. "In intensifying more efficient operations and dropping off inefficient ones, they made some very dramatic changes," he said, reducing the variable costs of production by as much as 20 percent to 30 percent.

"I think they'll be in a much better situation to compete than they were," he said. "The capacity-to-demand ratio will be a little better."

"There is one big lesson, which is, if we had given the copper industry the tariff protection it wanted, they probably would have not put their house in order," Kaufmann said. "The other is, don't underestimate the ingenuity of the American entrepreneur."

"One of the lessons is, don't give up when you don't have a competitive situation, because you might bring back an industry that is on its last legs," Udall said.

Kennecott-Utah Copper, which employed about 7,000 workers in 1980 and 4,000 in 1984, is operating today with about 2,300 workers. Once the modernization is complete, fewer than 2,000 workers will be needed. The managerial work force has been cut back, too, from about 800 in 1980 to about 400 today.

"Historically this was a very fat industry, which didn't spend enough on modernization. We just hired more workers," said J. Burgess Winter, vice president and general manager of Kennecott-Utah Copper.

Both union members and management concede that not much attention was paid to cost control in prosperous times. "When things were good, they threw it at us, and we took it," said Christensen. "We both created the mess, and I think and pray to God that we've both learned from it."

"We made lots and lots of profit when demand was there," said William R. Strickland, manager of Kennecott-Utah Copper's refinery. "As an industry, things kind of got out of hand. ... We never stopped to think about how, someday, we were going to have to be competing with the world.

Now that a measure of prosperity has returned to the industry, the workers who gave back pay and benefits are anxious to win back some of what they gave up. "It's very funny. They told us how much they were losing, but they won't tell us how much they're making," said Wayne Holland, sub-district director for the USW.

Kennecott-Utah Copper's president, Joklik, said the division should be solidly in the black in 1988, but emphasized that the company, in addition to paying for the modernization, has to make up losses of about $600 million incurred since 1981.

"I'll probably never see most of this coming back," said Paul Buckner, an electrician who was a member of the skeleton crew that remained employed during the shutdown. "It will probably come back, but it will take 20 years to get back to where we were," said Buckner, who is 55 and who believes the union should have held out against the concessions.

"I didn't like the pay cuts," said Terry Thomas, a 37-year-old machinery operator. "I want to keep everything I've got and get more -- but, in the world, you've got to compete."

The mine at Bingham Canyon has about 30 more good years left, producing copper and other metals, including gold, platinum and molybdenum. The price of copper will not stay at its present high, and the supply imbalance that has been so good for the industry will shift again. When supply becomes more plentiful and prices drop, the U.S. industry may find itself again the swing producer and may be forced to reduce capacity, according to analysts. But the industry is better positioned than it has been.

At Bingham Canyon, there is a sense of assurance about what lies ahead. "We'll be the lowest price producer in the U.S. and the last to close," said Joklik.

"We can be competitive with Chile and Zambia and Zaire," said Christensen. "In one respect that thrills me to death because it means my people have jobs."