Big steel staggered through the 1970s, leaving abandoned plants and unemployed steelworkers in its wake. As the industry shrank, its well-being became increasingly dependent on federal support. This federal support came mainly in the form of protection from imports. The protection is provided by a device known as the trigger price mechanism, which also provides price supports for the steel corporations. Unemployment supplements (called trade adjustment assistance benefits) have had the effect of tying experienced workers to their employer during layoffs. Permanently laid-off steelworkers soon get lost in the fine print and are left to stare at the padlocks on plant gates.
These subsidies allow prices to rise and maintain a corporate structure that is busily diversifying. Big Steel is investing the income from steel production into "more profitable" industries, such as plastics and chemicals. Without capital development, ever higher productivity is being demanded form the remaining U.S. steelworkers who are using obsolete and antique equipment.
While the steel corporations accept these subsidies, which cost consumers billions of dollars, they oppose any government control of the industry. Steel executives point to the nationalized British steel industry as the worst possible solution to steel problems. The British Steel Corporation is running tremendous financial losses.
Yet, energetic steel industries in Japan and other countries are under considerable government control. These industries are doing remarkably well. The difference is that nationalization in Great Britain came too late, only after the industry was already dying. The British corporations had been receiving government support but had refused to develop the industry in the national interest.
When British steel was finally nationalized in 1967, it marked the completion of a process that began 50 years before. The industry had reached its zenith before World War I. By the late 1920s, it was evident that the industry would never again reach its previous heights.
Shortly thereafer, the British Labour Party and the trade unions began to agitate for nationalization of the industry. In 1931, the Iron and Steel Trades Confederation passed a resolution to "bring [the steel] industry within the control of a public utilities corporation."
The Labour Party program of 1945, "Let Us Face the Future," seconded the motion, saying Private monopoly has maintained high prices and kept inefficient high-cost plants in existence. Only if public ownership replaces private monopoly can the [steel] industry become efficient."
In response to the Labour Party program, the British Iron and Steel Federation formulated a five-year development plan in 1946. The plan proposed to make the existing plants more efficient and to construct three major integrated steel works. The proposal implied that the 13 large steel companies could work together and were in agreement.
Actually, the companies could not agree with each other. They fell into a pattern that sacrificed long-term industry needs for short-term corporate gains.
The corporations did make some capital investments in the mills during boom times, but drastically cut improvements during other times. This left the industry split into small, less efficient mills that could not compete with the large integrated plants being built in other countries. The British Iron and Steel Federation opposed consolidation of the numerous small mills into more integrated plants due to the fierce intercompany rivalry of its members. At the same time, the corporations continued to raise prices to keep profits up.
The steel industry in this country exhibits the same monopolistic characteristics and problems seen earlier in Britain. It has been investigated by the U.S. Department of Justice for price-fixing. Both presidents Truman and Kennedy had to take hold of the steel corporations to keep prices down. That was before the government decided to fix prices itself to keep them up. Since 1977, more than 40,000 steelworkers have permanently lost their jobs through plant closings. These corporations look out for their own interests, not those of the country or U.S. steelworkers.
Development of steel facilities has taken a form similar to Great Britain's through abandoning plants and increasing the exploitation of existing facilities. The few exceptions underline the need for government intervention. Bethlehem Steel recently constructed a new blast furnace and is building a coke oven at its Sparrows Point, Md., plant. This was mainly in response to threatened $1,000-a-day fines from the Maryland Water Resources Board, due to the massive pollution from older facilities. In comparison with the needs of the industry, this amount of capital improvement is a small drop in a very large bucket.
The British steel industry was not nationalized until after it had been seriously disabled. This is not yet true here. In spite of continuing diversification, the industry remains vital. But if the present process is allowed to continue, the industry will decline into permanent dependence.