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Wednesday, 5 December, 2001, 12:46 GMT
US steel giants eye merger
Bethlehem steel factory
Bethlehem Steel became the 25th US steel company to file for bankruptcy
US Steel is considering merging with at least three other steel companies, including Bethlehem Steel and Wheeling-Pittsburgh Steel.

The companies believe consolidation is necessary to survive in what has been described as a dying industry, hit by high costs and cheap imports.

Hammering out the terms of a merger is likely to prove difficult, not least because it will require union agreement to job cuts and government help with health and pension costs.

In addition, the steel companies argue that tariffs on steel imports - under discussion by the trade commission on Friday - are essential for consolidation to succeed.

Trade pressure

The US International Trade Commission is to vote on Friday on recommendations to the Bush administration to help companies recover from damage caused by low-priced imports.

Earlier this year, Bethlehem Steel became the 25th US steel company to file for bankruptcy since the Asian financial crisis in 1998, which triggered a flood of cheap steel imports to the US.

Rising imports has raised pressure on the US International Trade Commission to vote for import tariffs.

US dumping ground?

President George W Bush ordered the commission in June to investigate the steel market, over concerns that some foreign firms were receiving unwarranted state aid, allowing them to undercut US steelmakers.

Bethlehem Steel factory
Consolidation is likely to lead to job losses
"We are asking for the enforcement of the current trade laws on the books...we think that tariffs would be the right remedy for this unfair importations of steel," Robert S. Miller, chairman and chief executive of Bethlehem Steel told the BBC's World Business Report.

He added: "The market conditions are truly terrible, especially in the aftermath of September 11. The United States is the one dumping ground in the world for all the world's excess steel capacity."

Mark Cockle, steel industry expert at the Commodities Research Unit believes that the "problems which they are claiming to suffer are self inflicted.

"Europe has seen this restructuring taking place over recent years. It is the Americans who have not got to grips with it yet," he told the BBC's World Business Report.

He highlighted fears that if American imposes tariffs, this cheaper steel could flood into Europe.

Healthcare help

Steel companies also want government help with healthcare costs.

"The American steel industry is now carrying about $965m a year in what are called legacy costs.

"These are costs to maintain the healthcare benefits of some 600,000 retirees, their spouses and surviving spouses and dependents," Marco Tubrowitch, assistant to the President of the United Steelworkers of America told the BBC's World Business Report.

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 ON THIS STORY
Mark Cockle, steel industry expert
"The problems from which they are claiming to suffer are self inflicted"
Marco Tubrowitch, United Steelworkers of America
"The American steel industry is now carrying about $965m a year in what are called legacy costs"
Robert S. Miller, Bethlehem Steel
"We are asking for the enforcement of the current trade laws on the books"
See also:

05 Jun 01 | Business
Bush seeks steel probe
30 Jan 01 | Business
Steel's battle against new materials
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