After passing through fire, U.S. steel industry forges ahead

The Economy

March 18, 1996|By Jay Hancock

SIXTEEN YEARS ago, out of high school, Greg Rose tried to get a job at Bethlehem Steel's Sparrows Point mill.

His timing was off. Crumpled by foreign competition, Sparrows Point was in the painful, decade-long process of shrinking from more than 17,000 workers to fewer than 6,000. Not a lot of hiring happened meanwhile.

Mr. Rose landed good jobs making tank-simulation hardware for the Defense Department. But he always had the mill in mind. His father works there. So did his brother.

Last year, he nailed it. He trouble-shoots computers and other hardware on the mill's tin-plate line. It's a job that can pay $30,000 a year or more.

Sparrows Point signed on about 400 new workers last year. That hasn't happened since the 1970s. For Mr. Rose, for the other 400, for the steel business, for American manufacturers, times have improved.

"I graduated in 1978. I went down there to try to get in the first time out of school," Mr. Rose said. "I've been trying ever since, and this is the first real opportunity to open up down there."

The United States still has a huge trade deficit with the world, and its factories are commonly seen as dinosaurs. A closer look at the figures and resurgent industries like steel call that view into question.

Fact is, we're selling more to the world now than we have in years.

A decade ago, U.S. exports accounted for 11.4 percent of world merchandise trade, said Gordon Richards, an economist with the National Association of Manufact- urers. Now they're almost up to 13 percent.

"That's a large increase we're talking about," Mr. Richards said. "All the hand-wringing we've had about America not being competitive any more is just nonsense."

The price has been high: billions spent on plant up- grades, hundreds of thousands of workers made redundant by technology improvements. And we still buy too many imports. But many economists believe that U.S. industry has experienced most of its pain and will perform well in the next decade.

Who would have believed, in 1982, that U.S. steelmakers would be No. 2 in the world in 1995?

Recession ended for most of the economy in 1982. Not steel. Japan, China and Germany were stealing steel's customers. Hope for the industry's renewal corroded along with silent blasters, casters and rollers. Fourteen years later, the United States is racing China to pass Japan as No. 1 steelmaker. Fresh from the crucible, the U.S. steel trade is shiny, sinewy, modern and efficient.

Since the reality of global competition hit them in the early 1980s, Bethlehem Steel managers have spent a whopping $1.6 billion to upgrade the plant. They installed a new caster. They upgraded the blast furnace. They modernized mills.

Now Sparrows Point is one of the most efficient steel factories in the world. In 1980, the plant took 9.3 person-hours to produce a ton of steel. Now it only needs 3.5.

By contrast, Japanese mills require 4.9 person-hours per ton, according to Peter F. Marcus, managing director at PaineWebber Inc. in New York. South Korea's need 6.1; Germany's, 5.2; Britain's, 5.1; Mexico's, 11.8.

The result: Sparrows Point and other U.S. mills, which have also modernized, have been able to charge cheaper prices and grab business from rivals.

American steel factories, known mainly for putting the rust in the Rust Belt, sold 12.5 percent of the world's steel last year, according to the International Iron and Steel Institute. That's up from about 11.3 percent a decade ago.

France, Germany and Japan have all lost market share in that period.

Of course, Sparrows Point's payroll is a sliver of what it was once. The mill employs only 5,500 fewer than a third of its 1980 work force. It's not creating any new jobs, either. The 400 hires last year made up for attrition.

But the plant will hire another 400 this year. A generation of workers is retiring, and the personnel office is busier than it has been for a long time. The idea of Beth Steel as a great job opportunity for an enterprising young person doesn't seem as odd as it once did.

"I think it's a whole new ballgame the way they've got it going there now," Mr. Rose said. "Everybody seems to be very upbeat, very gung-ho. You can work at least eight hours overtime a week down there.

"I'm really impressed with the place. It's a vast amount of technology out there. It's incredible. I've learned more in one year there than I could in a lifetime anywhere else."

Pub Date: 3/18/96

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