Word: steels
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Dates: during 1980-1989
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...avoid annihilation, Big Steel had to slash its costs. "Our labor alone put us out of the ball game," says USX Chairman David Roderick. In 1980 the U.S. industry's workers made $17.46 an hour, vs. $9.63 for their Japanese counterparts. Big Steel embarked on a wholesale payroll-cutting campaign in which 60% of the industry's 428,000 workers lost their jobs. Those who remained gave generous pay concessions. Last year U.S. steelworkers earned $22.63 an hour -- equal to $15.48 in 1980 dollars -- vs. $18.52 in Japan...
...make more steel per worker, the industry carried out a long-overdue modernization drive. As recently as 1974, one-quarter of all steel in the U.S. was still being produced by old-fashioned open-hearth furnaces, which take eight hours to turn molten iron into steel, compared with 45 minutes for the more efficient oxygen-fired furnaces. Since 1982, American steel companies have poured $9 billion into upgrading their mills. Open hearths now produce only 5% of domestic steel...
Stoking the smokestack revival even further, in 1984 the Reagan Administration negotiated voluntary restraint agreements, which limited imports to about 20% of the 100 million tons sold annually in the U.S. The justification was that the worldwide steel glut had forced many foreign governments to subsidize their mills, allowing them to charge artificially low prices in the U.S. In exchange for the VRAs, U.S. steelmakers agreed not to bring trade suits against overseas competitors and promised to plow excess cash into modernizing...
President Bush promised during the election campaign to extend the VRAs when they expire next fall, but steel buyers like Caterpillar complain that prolonging the VRAs will boost costs. According to industry analyst Peter Marcus of PaineWebber, steel prices have risen 6% since early 1988, to $509 a $ ton, although after adjustment for inflation, they remain $40 less than five years ago. Critics are also concerned that a new set of VRAs will bring back Big Steel's complacency...
...major factor in U.S. steel's improving fortunes has been the decline of the dollar, which has made imports more expensive. But foreign competitors have trimmed costs and boosted efficiency with almost the same zeal as the U.S. mills. The resurgent Japanese steel industry has cut its work force 18% in the past three years, to 228,000. Europe's steel industry, subsidized to the tune of $57 billion since 1975, is now largely self-sufficient owing to higher productivity. Because of such moves, says Walter Williams, chairman of Bethlehem Steel, "we'll never be able to go back...