Rep. Cardin Says Congress Must Act Before Adjournment to Save U.S. Steel Industry

Wednesday December 19, 2001

WASHINGTON – At a Capitol Hill press conference, Rep. Benjamin L. Cardin said today that if Congress adjourns without providing relief for U.S. steel manufacturers that the "industry will dramatically be altered and that our nation runs the risk of seeing the U.S. steel industry all but disappear."

    Rep. Cardin, who represents many of the steelworkers who are employed at Bethlehem Steel Corp.'s Sparrows Point,

MD facility, urged Congress to act quickly to deal with the legacy costs and the tremendous losses that plague the industry. Given the poor economic health of the American steel industry, which has seen 26 bankruptcies and 27,000 jobs lost in recent years, "bold action to address legacy costs and provide steel companies with increased access to capital is imperative," he said.

    "The burden of legacy costs is a result of governmental policies of the 1980s and early 1990s. As part of our trade policy, the United States signed Voluntary Restraint Agreements (VRAs) reducing the amount of steel produced. The end result was a decrease in U.S. capacity, substantially increasing the number of retired steelworkers whose pension and health care costs had to be picked up by the U.S. steel industry."

These legacy costs, the Congressman stressed, are a huge factor in the recent decision

of Bethlehem Steel to file for Chapter 11 protections. Currently, Bethlehem Steel annually pays approximately $600 million for pensions and $200 million for health care and life insurance for its 75,000 retirees. At Bethlehem Steel, total retiree benefits are approximately 20% of the cost of sales. It is important to protect the retirees and help the U.S. steel companies deal with their costs.

    Congress should also adopt legislation that would authorize the Secretary of the Treasury to redeem Net Operating Losses (NOLs) of steel companies. This change in the tax code would provide cash-strapped steel companies with a critical supply of capital. The aggregate amount of payments would be capped at $5 billion, and only companies that use the payments to preserve or augment their workforce would be eligible.

    The International Trade Commission (ITC) recently ruled that the U.S. steel industry had been seriously "injured" by the flood of foreign imports and recommended a range of tariffs and quotas on steel imports. The ITC's recommendations have been forwarded to the President, but are not binding. The President is expected to announce his decision by mid-February.

    "Unfortunately, the U.S. steel industry cannot wait for the President's decision. Congress needs to act immediately to ensure the very survival of this very important industry. As the leading world power, it would be reckless and dangerous to allow ourselves to become dependent on foreign steel manufacturers."