A West Virginia steel town faces its day of reckoning

Every fourth can is made from tin plate that was processed in Weirton

April 01, 2002|By Warren Veith | Warren Veith,SPECIAL TO THE SUN

WEIRTON, W.Va. - In a town that measures its survival one tin can at a time, President Bush and his plan to protect the steel industry are worth about a penny.

A penny more for each of the billions of cans made from Weirton steel might be enough to keep blast-furnace electrician Phil DiMatteis from getting another layoff notice. It might keep customers coming to Dewey Guida's BBQ rib restaurant, where $18.95 buys a full rack with a side of potato skins smothered in cheese sauce. It might even help Weirton Steel Corp. Chief Executive John Walker pull off a rarity in his beleaguered industry, a voluntary restructuring outside of Bankruptcy Court.

"Our hope is to be one of the last ones standing," Walker said.

With its soot-stained buildings and smoky-gray skies, Weirton is the gritty incarnation of the political and economic upheaval that prompted a Republican president who preaches trade liberalization to practice protectionism. It's a company town that feels betrayed by its traditional Democratic allies in Washington, a union stronghold that feels victimized by what many see as a vicious form of predatory commerce masquerading as free trade.

The past may be painful, the future dicey. But right now, with Bush's tariffs of up to 30 percent beginning to take effect, it feels like springtime in the Upper Ohio Valley. Every year, Americans buy about 32 billion cans of green beans, sliced peaches, stewed tomatoes and other grocery staples. Every fourth can is made from tin plate that was cast, milled, plated and rolled at the sprawling Weirton Steel plant that towers over everything else in town.

Industry experts say Bush's tariffs might cause steel prices to rise 10 percent as foreign steel makers abandon the U.S. market or try to recover the import duties by charging more for their products. The White House says the tariffs are intended to counteract "dumping," the practice of selling steel in the United States at below-market rates.

The duties could push a can of Campbell's chicken noodle soup, which contains about 9 cents' worth of steel, from 79 cents to 80 cents at the local supermarket. Weirton Steel's revenue, about $1 billion last year, might go up $100 million.

Not everyone ecstatic

Not everyone is ecstatic at the prospect. Bush's rescue plan will not only inflate the cost of consumer products. Economists say the number of jobs saved in mill towns such as Weirton will be exceeded by the number lost in industries that use steel to make autos, appliances and other durable goods. The tariffs could prompt other countries to retaliate, and a trade war is the last thing the world needs as it tries to recover from recession.

But for Weirton and its 23,000 inhabitants, it's a chance to make a fresh start. For Bush, it's an opportunity to make further inroads in a region that has long been allergic to Republicans.

"I'll tell you what this is about. We finally have a president with the guts to enforce the law," said Darrell Curtis, 48, who went to work at the mill straight out of high school in 1972 and has been there ever since, except the year he was laid off in the early '80s.

`Integrated steel'

In the United States, only about a dozen big companies still are combining ore and coke in big blast furnaces to produce iron, the raw ingredient of steel. These "integrated steel" companies are aging behemoths with high fixed costs, in large part because of the generous pension and health benefits they are obligated to pay to thousands of retirees.

The integrateds have been hit by a series of shock waves. They lost business to foreign steel makers who enjoyed low labor costs and extensive government support. Their home turf was invaded by newer, more efficient mini-mills that used electric-hearth furnaces to turn scrap metal into finished steel. The Asian financial crisis pushed prices to 20-year lows as foreign steel makers flooded the United States with surpluses made even cheaper by collapsing currencies.

Over the last four years, 31 American steel companies have entered bankruptcy proceedings, including seven integrateds: Bethlehem, Geneva, Gulf States, LTV, National, Republic Technologies, and Wheeling-Pittsburgh. Entire plants have been shuttered, and industry employment has fallen to fewer than 150,000 from a peak of 521,000 in the early '70s.

Weirton Steel was founded in 1909 by Ernest Weir, a young entrepreneur who situated his startup in Holliday's Cove, an Ohio River village wedged between Pennsylvania and Ohio in West Virginia's narrow northern panhandle. The community returned the compliment, changing its name to Weirton.

When company thrived

For more than six decades, the city and the company thrived, their fates so intertwined that even those townsfolk who have other jobs say "we" and "us" when talking about the company.

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