Commentary

Have You No Shame Sirs?

This article appeared in the Canadian National Post on October 2, 2001.

Opportunism and jingoism are unfortunate byproducts of war. For instance, there have been recent reports of gasoline priced at $5 per gallon and vandalism and violence against Islamic mosques and citizens of presumed Middle-Eastern origin. But there are less overt manifestations of this phenomenon.

Using September 11 as a segue, Jim Robinson, an assistant director of the United Steelworkers, said: “This should be a reminder to people that steel is a critical industry for the United States, both strategically and economically. Driving steel out of business economically has the same impact as physical bombings.” The same impact?! Robinson’s comment is despicable.

Paul Gipson, president of a local union representing workers at Bethlehem Steel, had the following insights: “We have become so lax. We have opened our borders to anyone. We have opened our industries to anyone in the world. What happened Tuesday is a threat to our nation. We are talking about our national defense. We are threatened on a daily basis by imported steel, which is a direct threat to our national security. Foreign countries have been working to cripple this country economically.” Mr. Gipson, have you no shame, sir?

Presumably, most people in the steel industry would strongly condemn such comments - comments that lump the industry’s own customers (who also buy imports) with mass murderers. But even the president of the United Steelworkers, Leo Gerard, is trying to capitalize on the tragedy, calling for “immediate and comprehensive relief to prevent America from being seriously compromised in its ability to satisfy the steel demand so critical for our national security … Wall Street has literally turned its back on the American steel industry. But in light of the tragic events of the past week, we do not believe that America can afford to turn its back on the reality that, unless this government gives immediate relief to our industry and its workers, it is likely that steel will soon become a commodity, like oil, whose price is controlled by governments abroad.”

This utter lack of logic and reliance on alarmist rhetoric underlies the steel industry’s long pursued campaign of distorting the facts. The industry blames low-priced imports for its woes, yet it accounts for roughly 25 percent of those imports itself. In the Section 201 investigation currently underway, the industry’s lawyers are seeking exemptions for the types of steel imported by the industry, while concurrently seeking quotas on the rest.

The industry refuses to admit that job and profit loss may be attributable to the emergence of more efficient, low-cost, domestic mini-mills. After all, foreign companies are easier targets. They have scant representation, minimal legal standing, and serve as a lightening rod for the xenophobic rhetoric on which the industry’s cause is based.

The industry blames worldwide overcapacity for its inability to cover costs, yet it is totally unwilling to shed the unproductive domestic capacity that contributes to that state of affairs. Rather, it seeks to preserve excess capacity by introducing unwarranted, indiscriminate trade barriers.

And now, preying on the public’s anxiety about war, the industry is playing the national security card. What they won’t tell you, however, is that the U.S. military accounted for less than 0.1 percent of industry deliveries in 2000. During the Vietnam War, steel deliveries to the military accounted for 1.9 percent of the total market. This confirms that U.S. steel capacity and production so exceed military demand that even massive production cutbacks have no security implications. There are no legitimate shortage concerns—only hypocrisy. The industry warns of shortages while seeking to curtail supply.

The facts are revealing of the role unions have played in the steel industry. Almost every U.S. mill in bankruptcy now is organized by the United Steelworkers union. No non-union steel companies have failed in the United States. Do the math. Over the years, unions made impossible wage and benefit demands on steel management, which capitulated under the rationale that the government would bail them out from their hollow promises. Now they come calling again, demanding their plight be ours.

What about Americans who make the machinery to remove thousands of tons of rubble? What about those who produce the construction materials to rebuild the World Trade Center and the Pentagon? And those who build the jets and trains and automobiles to keep business and life moving along? And Americans who manufacture the ships, bombers, and tanks to ensure our national security? Is now the time to make it harder for them to obtain the steel they need - from here or abroad?

It’s time—at long, long last—for the steel industry to abandon its delusion of grandeur and put the national interest above its own narrow special interests.

Daniel J. Ikenson is the associate director of the Center for Trade Policy Studies at the Cato Institute.