Much has been written about how low-cost imports have affected steelworkers in the United States. In the past two years, 29 steel companies have declared bankruptcy, with several of them going under and closing their doors. The most dramatic bankruptcy has been with LTV.
The source of the problem, according to the steel industry and the United Steelworkers of America (USWA), is the importing of steel below the cost of production from several European, Asian and South American countries. They also accuse those countries of subsidizing the steelmaking companies. But a good part of the problem facing the steelworkers in the United States has its roots in the fall of the former socialist countries in Europe a decade ago.
The USWA has made a point in this fight of how the steelworkers in Russia are working for food or vodka. There are several huge steel plants in the Russian part of the former Soviet Union. They say that the steelworkers have not been paid for years, so how can U.S. workers compete against those low costs?
U. S. Steel recently bought the once state-owned plant, VSZ, in the country of Slovakia, which was once part of socialist Czechoslovakia. There are reports that U. S. Steel is also looking to buy some steel plants in the Czech Republic.
The Slovakia mill is huge, with workers there reportedly earning around $2 per hour. This one plant will be 25 percent of U. S. Steel’s capacity. They have promised to spend $700 million over the next 10 years in the Slovakian plant.
Lakshmi N. Mittal built ISPAT International, a world steel conglomerate, through acquiring former state-owned steel mills around the world. ISPAT owns the Inland Steel mill in East Chicago, Indiana. It is right next to the LTV plant.
After the fall of the socialist countries in Europe, capitalism eventually took control of the steel mills and when they first began the idea of exporting cheaply to the United States voluntary restraints were negotiated on steel, but eventually those restraints ended.
What capital did in those former socialist countries was bankrupt them to the point where they no longer used steel to build up their countries. This can be seen in the production and consumption figures of those countries.
According to the International Iron and Steel Institute, in 1988 the former Soviet Union produced 163 million metric tons (mmt) of steel and consumed 164.7 mmt. In other words, they needed more than they could produce. By 1990 their consumption fell to 116.6 mmt compared to production of 154.4 mmt. Then by 1998 production fell to 74.4 mmt but consumption had plummeted to only 29.6 mmt.
In other words, the countries of the former Soviet Union had lost over half of their production of steel, but their consumption was now dramatically lowered to only 18 percent of what they were consuming in 1988.
The other former socialist countries in Europe didn’t fair well either. Over the 10 years, production fell by 18.2 mmt while consumption fell 31.2 mmt. Overall, by 1998 the former socialist countries were producing 57.1 mmt more than they were consuming. Recent figures suggest an increase in steel production from these countries, without much of a consumption change.
In comparing world figures, the former socialist countries produced 29.9 percent of the world’s 771 mmt of steel in 1990 and consumed 25.4 percent. In 2000 they produced 16.1 percent of the world’s 847 mmt of steel, but only consumed 9.4 percent.
By comparison the United States is consuming around 112 million tons of steel but only producing 85 million tons annually. However, if the current trend of steel plant closings continues, that production may fall to as low as 60 million tons.
Due to the chaos of capitalism these countries are producing far more steel than they are consuming and now their new capitalist bosses dump that steel in the under-capacity United States. By contrast China, which has greatly increased its production of steel, is consuming more than it is producing.
The question is how much longer will steelworkers and workers in general tolerate a continuing loss of industrial jobs. Industries like steel and auto should be run by the state for national interests. Private ownership of the steel industry has resulted in hardship here and around the world. It has to come to an end.