The Flames Dim for American Steel

In the last two weeks, a Pittsburgh-based coalition of trade unionists and clergy has captured national attention by organizing a consumer boycott of Mellon National Bank to protest the bank's overseas lending practices.

Their campaign - culminating in the early June withdrawal of over $40 million from the bank - has put Mellon in the uncomfortable position of defending its foreclosure on a local manufacturer of equipment for the steel industry, Mesta Machine Company, while loaning millions of dollars to Sumitomo Heavy Industries, a Japanese competitor of Mesta. It has forced industry analysts and policy makers to take a hard look at the relationship between banks and the inability of the steel industry to compete effectively with foreign producers.

The dramatic protest in Pittsburgh has also focused attention on the contrast between the Reagan Administration's "economic recovery" and the stark realities of life in the industrial heartland.

For the steel companies and the banks and investment houses that back them up, the 199 plant closures over the last eight years have strengthened the industry. But for workers and their communities, the layoffs have brought devastation. "It's like we're in the middle of a holocaust, an industrial holocaust," says Mike Stout, head grievanceman at a United Steelworkers of America (USWA) local in Homestead, Pennsylvania. "The companies are using these layoffs as a systematic attempt to cut the work force, and squeeze more work out of fewer people, and massively eliminate jobs that had been on the books for years. I would say the situation is starting to resemble the pre-1930s situation in the mills where you had no say, you had absolutely no rights, and no union representation."

The layoffs and the crackdown on wages and work rules have generated unprecedented resistance within the USWA. For years the union managed to maintain its higher-than-average wage rates through a no-strike clause and general cooperation with management around the issue of imports. But the continuing devastation of areas like the Monongahela Valley around Pittsburgh have made many workers and local union officials bitterly angry with the companies - and unhappy with the leadership of the union's president, Lloyd McBride.

Nothing has brought out these differences more than a plan by U.S. Steel Corporation to import slabs of raw steel from a British Steel Corporation plant in Scotland and close the slab division of the firm's Fairless works near Philadelphia. This move, which will cost 1,800 jobs in the U.S., and 2,000 in Scotland when part of that plant is closed, led the USWA to take out full page advertisements in major newspapers expressing their opposition to the proposal. "If a deal struck by the U.S. Steel Corporation and the government-owned British Steel Corporation goes through as planned," the ad read, "it could be the beginning of the end of America's steel independence... We will employ every legal means at our disposal to block this dangerous precedent."

But the USWA leadership has not endorsed a proposal by a group of local union presidents to block the imports through a "major confrontation" at the delivery site in Trenton, New Jersey. Instead, President Lloyd McBride is asking President Reagan to intervene in U.S. Steel's decision and for congressional action against the company.

If the Pittsburgh City Council's unanimous endorsement of the campaign against Mellon Bank is any indication, a large demonstration in Trenton would probably generate considerable public sympathy. Such an action would also prove embarrassing to U.S. Steel, which has been at the forefront of the industry's fight for protection from imports for the last ten years. It would also force the union leadership to face the issue of the industry's global network - which can no longer be defended as being in the interest of workers.

The situations in Pittsburgh and Fairless illustrate what corporate-led "reindustrialization" means in a global framework. In this issue of Multinational Monitor we explore this framework by looking at the international nature of corporate and bank policies in the steel industry - relationships usually ignored in the debate over imports, protectionism, and industrial policy.

In our lead article, freelance writer Veta Christy reports from Pittsburgh on the Mellon Bank campaign. Next we take a look at how the U.S. steel industry is restructuring itself. This is followed by a short analysis of the history and structure of the Japanese steel industry, and how the U.S. government and American banks have helped strengthen this industry. In our fourth article, contributor Phil Hill describes how changes in the global economy have affected the West German steel industry. And in our interview, we talk to Mike Stout, head grievanceman in USWA Local 1397 in Homestead, Pennsylvania, about U.S. Steel Corporation, the campaign against Mellon Bank, and the labor movement.