Copyright 2001 The Deseret News Publishing Co. 

The Deseret News (Salt Lake City)

December 7, 2001

Business leader believes U.S. steel isn't competitive

By Brice Wallace Deseret News business writer

Workers affected by the recent Geneva Steel plant shutdown may not like what Richard McCormickhas to say about their industry.

Speaking Thursday at the 22nd annual International Business Seminar at Utah State University in Logan, McCormick said steel produced in the United States is not competitively priced with steel from foreign countries.

And McCormick, president of the Paris-based International Chamber of Commerce, suggested large steelmaking operations need to make sweeping changes. 

"I think it's one of those industries where we have to get more competitive or we have to figure out something else for those folks to do," he said, adding that having customers paying artificially high prices "is not good for us, either."

McCormick said there are people "who are quick to call low prices 'dumping,' " although he noted that they exist not just in the steel industry.

The steel industry is undergoing a "huge transformation," with effects in Utah and certainly Pennsylvania, he said, but he added that there are "companies that have 10,000 employees that are supporting 86,000 retirees with their pensions."

The industry needs to explore its options, he said.

"In the long run, we have to find those areas where we have a competitive edge, and it may not be in the raw, large steelmaking capabilities," McCormick said.

"We are not going to compete in bending metal, making something with heavy steel. We're going to do something on a very finished steel, something on very exotic grades of steel or something on very specialized kinds of steel and all that stuff. We're probably not going to do real well with just I-beams."

Asked whether the industry should be protected to some degree by the government, McCormick spoke of opening doors to international trade.

"Rather than subsidize the industry, I would say let's work with people in that industry and figure out how could they do something else. That's my solution, as opposed to propping up something that isn't competitive," he said.

Eliminating the most obvious trade barriers -- not just those in the steel industry -- would provide a $12 million per year boost to the U.S. economy, according to the U.S. International Trade Commission.

But McCormick acknowledged that the ripple effects would be significant.

"Yes, some of those changes would cost something in the short run. They would affect people's lives. They would affect jobs in some cases, and I will be the first to say there ought to be recognition of that. We have to deal with it straight-up," he said.

"There ought be a safety net. There ought to be a way to deal with that. I think we ought to be able to migrate some of the less-skilled jobs to the poorer countries -- that's effectively what's happening -- in return for the development of the more specialized and high-paying work here."

But opening the doors of trade ultimately will benefit everyone, McCormick said.

"It's a way, I think, to help others. It's another way, I think, to help ourselves."