USX-U.S. Steel Corp., the nation's largest steelmaking company, has begun merger talks with Bethlehem Steel--the third largest. Among the others said to be discussing this consolidation move are Wheeling-Pittsburgh, Weirton, LTV, and Ispat's Inland Steel.

On December 7 the International Trade Commission, a U.S. agency, recommended that U.S. president George Bush impose tariffs on imported steel of between 20 percent and 40 percent. Such a move, commented Pascal Lamy, European Union trade commissioner, would virtually close the U.S. steel market to the rest of the world and would lead to retaliatory moves. Top suppliers to the United States include countries in the European Union, Canada, south Korea, Japan, Mexico, Turkey, Brazil, China, Russia, Taiwan, South Africa, Argentina, and Ukraine.

An across-the-board 40 percent tariff favored by the steel bosses would increase industry revenues by $2.2 billion, according to a recent study. The U.S. steel industry lost $1.4 billion in the first half of 2001.

Within the capitalist market there is currently a 10 percent to 20 percent worldwide "overcapacity" in steel production, that is, the level of production over and above what can be sold at a profit. This has led to a plummeting of prices the steel trusts can demand on the world market. U.S. companies represent about 12 percent of global steel production--now around 850 million tons a year. Steel prices have been hovering at a 20-year low.

The steelmakers involved in the consolidation discussions are all integrated companies that make steel from coke and iron ore. It would not involve the dozens of newer "mini-mills"--companies like Nucor that take slabs of semifinished steel and turn them into finished products.

The steel bosses have cut employment in U.S. mills in the United States from nearly 600,000 in 1960 to 142,000 today. This massive downsizing has been aimed first and foremost at reducing the steel bosses' costs and seeking to boost their profit margins. Another tactic has been to refuse to fully fund pension and health plans for workers who have decades of service at the mills. There are currently some 560,000 steelworkers who are entitled to health benefits and pensions for the rest of their lives under the United Steelworkers of America (USWA) contracts.

As part of the consolidation these major integrated steel companies say they cannot return to profitability if they are held to these contractual pension and health-care benefits. They are demanding the federal government fork over $13 billion to the newly created mega-steel company to cover these costs. Bethlehem Steel, for example, has $2 billion in unfunded pension liabilities plus $3 billion in health benefit claims by the 74,000 workers who retired from the company.  
 
Companies to demand new concessions
The steel giants involved in the merger talks are also pressing the USWA to renegotiate their labor contracts. "The industry will seek significant concessions from the unions in the consolidation plan in a move to keep labor costs down," noted a recent Financial Times article.

The leadership of the USWA, which has been in the forefront of drumming up support for the steel bosses' anti-import campaign, has also announced its backing for these consolidation moves. "If it is possible, we would like to have every integrated steel company to join into one company," stated USWA spokesman Marco Trobovich. However, "we are not going to allow the industry to be consolidated on the backs of the people who have already paid a price."

Since 1998, 26 steel companies have declared bankruptcy, with decisions on what to do with their assets and future production to be decided in the courts. This includes Bethlehem Steel which filed for Chapter 11 bankruptcy protection in October.

LTV, the fourth largest U.S. steel company that accounted for 5 percent of the nation's steel production, filed for bankruptcy protection last December. The company is now seeking permission to shut down its entire steelmaking operation and sell off its plants. The company had employed some 18,000 workers and provided pension payments to 70,000 retirees. A ruling by the judge is expected December 19.

The Wall Street Journal in a December 6 editorial titled "Political Steel," hailed the consolidation moves while railing against any new kind of government subsidy for the steel industry. They pointed to the steps that were taken by current Treasury Secretary Paul O'Neill in relation to the aluminum industry when he was chairman of Alcoa.

O'Neill "was a key organizer of a plan to reduce worldwide capacity and prop up slumping prices," noted the Journal. Alluding to the plant closures, job cuts, and other attacks on the social wage of those working in the aluminum industry, the editors concluded, "The means weren't pretty, but it worked. It wouldn't be the worst thing if Washington could now do something similar for steel."  
 
 
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