TO JUSTIFY its latest plant closings and layoffs, the U. S. Steel Corporation offers an anthology of explanations that are, at best, disingenuous. It seems to have become fashionable for business to attribute all of their troubles to the federal government. That's what Chrysler has done in its pursuit of federal aid. Now U. S. Steel has returned to the same refrain.
Throughout the world, the steel industry has overbuilt its productive capacity, and throughout the world, governments and companies are slowly and painfully closing plants. The industry, here and abroad, overestimated its future markets during the long boom that ended five years ago. Producers in the traditional steel-making countries have lost many of their export markets as developing countries have built their own steel mills. In the United States, the shifts to lighter, products -- for example, to smaller cars -- are cutting into the sales that steel-makers had expected. On top of all the long trends, a recession seems to be gathering momentum. U.S. Steel has reacted, resonably enough, like other steel companies in other countries, by shutting down some of its oldest and least efficient plants.
As an economy grows and changes, sometimes it is necessary to close mills and drop lines of production. That's a harsh process, hard on the people laid off and on their communities. To deflect their anger, the company in this case has chosen to blame the closings specifically on federal environmental regulation, high operating costs and imports.
It's true that environmental regulations have hit the steel industry disproportionately hard; that's because the steel industry has been a disproportionately heavy contributor to air and water pollution. But operating costs have soared in large part because the steel industry has granted wage increase over the past decade far larger than any other American industry except coal mining -- where large wage increases have also directly affected the cost of making steel. Repeatedly, the steel companies have granted high wage demands and then joined hands with the unions to come to Washington and cry for protection from the imports that undersell them. The imports have been the only effective check on a steady escalation of wages automatically passed on to the buyers of steel.
But imports have become a less effective check over the past two years because the Carter administration has given the domestic steel industry an unusual degree of protection against competition from abroad. It has, in effect, prohibited imports sold below certain prices. U.S. Steel shows a special kind of ill grace in blaming the layoffs on imports at a time when, because of this elaborate and exceptional government protection, imports have in fact been falling.
The American steel industry is a good deal stronger, more efficient and more advanced in its technology than you might think from its incessant whining. Change inevitably overtakes any industry, and change is not always a gentle or welcome process.The steelmakers are developing a bad habit of hunting for scapegoats in Washington to explain it all away.