*EPF115 09/17/01
Text: Senator Byrd Testimony on Steel Imports
(U.S. government needs to stop import increase, he says) (1870)

Without import relief the U.S. steel industry will not be able to supply many segments of the U.S. market, says the Chairman of Senate Appropriations Committee.

In a September 17 testimony before the U.S. International Trade Commission (ITC), Senator Robert Byrd said the industry faces a crisis, even though it has increased productivity by eliminating obsolete manufacturing facilities and modernizing other plants.

The West Virginia senator said imports have seriously injured the steel industry in his and other states by depressing prices of its products.

Byrd said U.S. national defense will be hurt and lives of hundreds of thousands of steel workers disrupted if the government doesn't act immediately to help the industry.

Senator Byrd's testimony is part of the ITC investigation of certain steel imports under Section 201 of the Trade Act of 1974. The U.S. Trade Representative (USTR) requested ITC to determine whether increases in imports of these products are a substantial cause of a serious injury, or a threat of such injury, to U.S industries manufacturing products similar to, or directly competitive with imported goods.

If the Commission finds this is, indeed, the case, it must recommend a remedy to the President. The President, in turn, decides what relief, if any, will be granted. Such relief may include a tariff increase, quantitative restrictions or agreements negotiated with other countries.

Substantial cause is a cause, which is important, and not less than any other cause. Serious injury is a significant overall impairment in the position of a domestic industry.

Following is the text of the testimony as prepared for delivery:

(begin text)

Testimony by United States Senator Robert C. Byrd
International Trade Commission Hearing
Section 201 Investigation of Steel
September 17, 2001

Mr. Chairman and other distinguished members of the Commission, I am here to testify in support of a domestic steel industry that has been and is being -- seriously injured -- by imports.

I will testify about (1) the causes and consequences of the global steel crisis and (2) the effect it is having in West Virginia.

As an initial matter, however, I wish to put this investigation into perspective.

Most Americans right now -- regardless of whether their loved ones were directly affected by last week's terrorist attack -- are recovering from the trauma of an outrageous assault on the American way of life.

Our steel industry is an essential component of that way of life. It employs almost 210,000 people in good, family-supportive jobs, with one million Americans dependent on the industry for health care benefits. It is a critical supplier to heavy steel-using companies that employ nearly 6 million Americans and represent over 15 percent of the nation's total output.

You are here to protect the interests of the men, women, and children -- as well as the communities across America -- that are dependent upon this industry.

Our steelworkers are proud people who demand nothing more than simple fairness.

This Section 201 case is meant to give them an opportunity to bounce back from the wounds that have been inflicted upon them by surges of imports.

Moreover, to the extent that you find it desirable to grant them some breathing space, your efforts will complement the Administration's program of engaging our trading partners in multilateral negotiations to attack the root causes of the problem -- global overcapacity and trade distorting practices by foreign governments.

The Crisis

The U.S. steel industry -- which was able to supply the ships, planes, and tanks that won World War II -- no longer has the capacity to supply all the needs of the U.S. market.

In fact, if current conditions continue, it will soon lose the capacity to supply much of the needs of our market, thereby creating great economic strain across America.

The industry faces this crisis through no fault of its own.

It is not guilty of a failure to reinvest and modernize. It is not guilty of a failure to close unproductive capacity. It is not guilty of inefficiency.

Indeed, since 1980, the industry has invested more than $60 billion [$60,000 million] in modernization, tripled labor productivity, and eliminated 60 million tons of obsolete capacity, far more than the European Union and Japan combined.

No, the only problem with the American steel industry is that it operates in a globalized market that has been distorted out of recognition by other countries' beggar-thy-neighbor industrial policies.

That is why, last year, I had inserted into the omnibus appropriations bill for Fiscal Year 2001 (P.L. 106-554) a resolution calling upon the President to request an immediate investigation of the steel industry under Section 201 of the Trade Act of 1974.

And that is why the President ultimately decided to request such an investigation.

We cannot adopt piecemeal solutions to the problems caused by globalized overcapacity -- if we refuse to grant relief to any category of semifinished or finished steel, the overcapacity will rush in to fill the void.

For this reason, Trade Representative Zoellick identified a broad range of steel products in his investigation request, including flat, long, pipe and tube, and stainless.

I am confident that you will find all of these products to be entitled to import relief.

Conditions in West Virginia

Turning to conditions in my home state, it is important to understand that steel production runs deep in the veins of West Virginia.

We have two of the top ten integrated steel mills in the country: Wheeling-Pittsburgh Steel and Weirton Steel.

We also have significant capabilities with respect to pipe and tube and specialty steel manufacturing.

Wheeling-Pittsburgh Steel

Wheeling-Pittsburgh Steel is the nation's ninth largest integrated steelmaker. It employs 4,300 employees and has an annual payroll of more than $200 million. The company is headquartered in Wheeling, West Virginia, and has facilities in Follansbee and Beech Bottom, West Virginia, as well as Allenport, Pennsylvania and Steubenville, Mingo Junction, Yorkville, and Martins Ferry, Ohio.

Since the beginning of 1998, the steel import crisis has caused pricing for Wheeling-Pitt's hot-rolled, cold-rolled, and coated steel products to decline by up to $100 per ton.

Depressed pricing is expected to result in $650 million in lost profits between 1998 and the end of 2001.

The company was forced to file Chapter 11 bankruptcy protection on November 16, 2000.

Since that time, management ranks have been reduced by 19 percent, between 300 and 500 wage employees have been temporarily laid off, and capital expenditures have been reduced to about $4 million annually, compared with average annual capital expenditures of $85 million.

Weirton Steel

Weirton Steel is the eighth largest domestic integrated steelmaker. Weirton produces hot-rolled, cold-rolled galvanized, and tin-plate steel. Its health, together with that of Wheeling-Pitt, is absolutely key to the economic vitality of the northern panhandle of West Virginia.

Today, as I appear before the Commission, I am gravely concerned about Weirton's future and the future of its more than 4000 employees.

Just recently, the company and its union, the Independent Steelworkers Union, reached agreement on a drastic restructuring in an effort to avoid bankruptcy.

At the end of August, the company and the union agreed to a multi-step plan that is designed to position the company for future years. Unfortunately, 500 more union and management jobs are to be cut.

These job losses are directly related to imports and would not have had to occur if the company could operate near its capacity levels with fair returns on capital investment.

While the future of Weirton -- like that of so many other U.S. producers -- remains uncertain, I can attest to the will and determination of the people of the Ohio Valley. They will make every effort to ensure that there is a future for the company, the workers and the community.

Special Metals Corporation

The Huntington, West Virginia, facility of Special Metals Corporation employs 1,200 people. The company is primarily a producer of nickel alloys, but also produces "high-end" stainless steel products in cut plate, bar wire rod, wire, and pipe and tube form at its Huntington facility. These stainless steel products are sold for high performance end-uses primarily in heating and corrosion-resistance applications.

The nickel alloys produced in Huntington are used to manufacture vital components of our national defense, including aircraft engines and nuclear reactors for navy submarines. In fact, jet travel would be impossible without the Huntington plant, where many of the alloys used in today's jet engines were developed.

The Huntington plant is experiencing severe difficulties as a result of imports of high-end stainless and nickel alloys.

Because of the increased quantities and low prices of such imports, Special Metals cannot run its Huntington facility at optimal capacity utilization or generate the level of profits necessary to continue its tradition of research and development, especially with regard to its signature alloy products.

Pipe and Tube

At one time, West Virginia was home to numerous other steel related firms, but, as the record of these hearings will clearly reflect, the growing level of imports has forced many of these plants to close.

The steel pipe and tube industry is by far one of the largest customer bases for U.S. steel producers today. In fact, pipe and tube producers account for nearly one-third of all hot-rolled steel made in the United States.

Parkersburg, West Virginia, boasts of a large diameter pipe facility operated by Northwest Pipe Company. The plant, which opened in 1974 and employs 159 employees, makes pipe that is marketed to many areas in the East and Southeast for use in the transmission of water.

Another of West Virginia's pipe and tube producers, Excaliber Tube, closed its Benwood facility in May of this year. The Benwood facility had an annual capacity of 100,000 tons per year and made a variety of pipe and tube products. The closure resulted in the loss of 40 jobs.

As you can see, the steel crisis has had a sharply negative impact on the economy of West Virginia, an impact that is felt throughout the state.

Indeed, West Virginia's crisis is America's crisis, as communities across this great struggle to survive in the face of this unprecedented onslaught.

We simply must stand up for our steel industry in its time of need, as it has stood up for its -- both in times of war and times of peace.

Conclusion

In conclusion, the steel industry in my state and every other state in this country needs help. It needs the government to intercede to stop these incessant import surges.

As a young man during World War II, I worked as a welder on liberty ships. I know what it means to be a steelworker -- the love of family and country, the commitment to the future.

A failure to act now on steel imports will hurt our national defense and cause an irreversible disruption to the lives of hundreds of thousands of patriotic and hardworking American citizens.

I therefore ask you to render an affirmative determination.

Thank you. I am honored to have had the opportunity to testify here today.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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