TO HEAR AMERICAN steel makers describe it, you might think that they were the sole victims of a rapaciously efficient foreign competition. It's more accurate to say that, worldwide, the steel industry has built too many new mills without closing enough of the obsolete and aging ones. The world has far too much production capacity and, not only in the United States, attempts to close old mills have turned into a perennial and excruciating political issue. The extreme case is in Britain. The steel strike now commencing there promises to be long, bitter and extremely consequential in its outcome.
Several years ago a parliamentary committee concluded that labor productivity in the British Steel Corporation was less than 40 percent of the average in nine comparable large steel producers abroad. It was less than one-third that of the leader, Inland Steel. The committee found that the reasons for the poor performance were old equipment and over-manning. British Steel accounts for five-sixths of the country's steel production, and the productivity level explains why, despite relatively low British wages, it requires huge subsidies to stay alive.
Two years ago it was losing more than $1 billion a year. Last year the losses came down to about $700 million, and they seem to have stuck there. Because British Steel is a nationalized company, its deficits are in effect the British government's. Similarly, its decisions on wages, layoffs and mill closings are also the government's. The immediate cause of this strike is the next wage increase. The corporation has offered 6 percent. That's not much in a country where consumer prices have been rising at a rate of about 20 percent a year. But the government resists pouring more money than ever into a losing venture.
That makes it a strike against Prime Minister Margaret Thatcher's Conservative government. It recalls the wave of strikes six years ago that brought down the last Conservative government -- and set off an enormous surge of wage-led inflation. Mrs. Thatcher has known from the beginning that this kind of strike would be, sooner or later, the central challenge to her authority and her tenure. The events of the coming weeks will show whether she is right in thinking that the experience of those six years has fundamentally altered British attitudes on industrial policy.
As a question of equity, it is a dilemma that afflicts all of the industrial societies: what about the jobs and the wages in the obsolete mills and declining industries that survive on political decisions? One alternative is to close the older plants. That's the Youngstown solution, but it's not easy in societies in which, increasingly, working people tend to regard maintenance of employment as something close to a civil right. The other choice, and the one that British Steel is now attempting, is to hold down wages where productivity is low. In both cases -- and not only in Britain -- the appeals process leads eventually to the voting booth.