Tuesday, October 17, 2006

Steel tariff debate escalates

A heated dispute over the future of U.S. manufacturing hits a federal trade panel today, which will hear arguments from steel companies and automakers on whether tariffs on certain types of steel widely used in cars and trucks should be removed.

The debate pits six large automakers against the three largest U.S. steel companies, each using a form of economic jujitsu to make its case.

In dueling news conferences Monday, the automakers said the tariffs protect an increasingly healthy U.S. steel industry that has steadily raised prices, while steelmakers said their recovery would be swamped by foreign competition should the tariffs end.

The automakers -- General Motors Corp., Ford Motor Co., DaimlerChrysler AG, Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. -- and their suppliers have won the backing of several members of Congress. Ten senators sent a letter to the U.S. International Trade Commission on Monday saying the tariffs were "outdated."

 Link to Steel tariff debate escalates


This dispute has been going on for some time now and "squaring the circle", between the conflicting demands of the steelmakers, the steel workers and the Auto Industry poses many problems. The Steel Workers are naturally looking to protect their industry and the jobs of their workers. Whilst the survival of the US Steel Industry is an interest shared naturally with the US Steel makers themselves, reducing the cost of production, which includes control of labour costs is the only way that the the domestic steel makers can meet the international competition. Whilst the labour organisations and steelmakers may agree on the use of tariffs to protect them against "unfair" competition, the big steel users naturally feel penalised if they are having to pay more for their steel than their overseas competitors.

There is perhaps an inevitability that US Steelmakers will need to forge more links with overseas Steelmakers, as is happening in Europe now to ensure their survival. Perhaps as Europe turns to Asia and Estern Europe to find low cost steelmaking capicity, we may see the US producers look to South America to form similar lnks. We have witnessed the merger (takeover?) of Mittal and Arcelor, and will soon be likely to see the merger of Corus with Tata . Theire is little doubt too, that Severstahl are looking to expand Westwards.

The US is facing the same problems as Europe, and one thing is for sure, doing nothing is not an option.



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