WEIRTON - In a town that measures its survival one tin can at atime, President Bush and his plan to protect the steel industry areworth about a penny.
A penny more for each of the billions of cans made from Weirtonsteel might be enough to keep blast-furnace electrician PhilDiMatteis from getting another layoff notice. It might keep customerscoming to Dewey Guida's BBQ rib restaurant, where $18.95 buys a fullrack with a side of potato skins smothered in cheese sauce. It mighteven help Weirton Steel Corp. Chief Executive John Walker pull off ararity in his beleaguered industry, a voluntary restructuring outsideof 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 isthe gritty incarnation of the political and economic upheaval thatprompted a Republican president who preaches trade liberalization topractice protectionism. It's a company town that feels betrayed byits traditional Democratic allies in Washington, a union strongholdthat feels victimized by what many see as a vicious form of predatorycommerce masquerading as free trade.
The past may be painful, the future dicey. But right now, withBush's tariffs of up to 30 percent beginning to take effect, it feelslike springtime in the Upper Ohio Valley. Every year, Americans buyabout 32 billion cans of green beans, sliced peaches, stewed tomatoesand other grocery staples. Every fourth can is made from tin platethat was cast, milled, plated and rolled at the sprawling WeirtonSteel plant that towers over everything else in town.
Industry experts say Bush's tariffs might cause steel prices torise 10 percent as foreign steelmakers abandon the U.S. market or tryto recover the import duties by charging more for their products. TheWhite House says the tariffs are intended to counteract 'dumping,'the practice of selling steel in the United States at below-marketrates.
The duties could push a can of Campbell's chicken noodle soup,which contains about 9 cents' worth of steel, from 79 cents to 80cents at the local supermarket. Weirton Steel's revenue, about $1billion last year, might go up $100 million.
Not everyone is ecstatic at the prospect. Bush's rescue plan willnot only inflate the cost of consumer products. Economists say thenumber of jobs saved in mill towns such as Weirton will be exceededby the number lost in industries that use steel to make autos,appliances and other durable goods. The tariffs could prompt othercountries to retaliate, and a trade war is the last thing the worldneeds as it tries to recover from recession.
But for Weirton and its 23,000 inhabitants, it's a chance to makea fresh start. For Bush, it's an opportunity to make further inroadsin a region that has long been allergic to Republicans.
'I'll tell you what this is about. We finally have a presidentwith the guts to enforce the law,' said Darrell Curtis, 48, who wentto work at the mill straight out of high school in 1972 and has beenthere ever since, except the year he was laid off in the early '80s.
In the United States, only about a dozen big companies still arecombining ore and coke in big blast furnaces to produce iron, the rawingredient of steel. These 'integrated steel' companies are agingbehemoths with high fixed costs, in large part because of thegenerous pension and health benefits they are obligated to pay tothousands of retirees.
Over the last four years, 31 American steel companies have enteredbankruptcy proceedings.
Weirton Steel was founded in 1909 by Ernest Weir, a youngentrepreneur who situated his startup in Holliday's Cove, an OhioRiver village wedged between Pennsylvania and Ohio in West Virginia'snarrow Northern Panhandle. The community returned the compliment,changing its name to Weirton.
For more than six decades, the city and the company thrived, theirfates so intertwined that even those townsfolk who have other jobssay 'we' and 'us' when talking about the company.
Mark Glyptis graduated from Weirton High School in 1969. Of the350 people in his class, at least 100 went straight to the mill,landing jobs that often paid better than the starting salariesreceived by college grads.
Today, Glyptis is president of the Independent Steelworkers Union,which represents workers at Weirton Steel and nowhere else. He has aseat on the board of directors, the result of a 1980s crisis resolvedwhen workers used an employee stock ownership plan to buy the companyand prevent it from being sold. About 25 percent of Weirton Steel'sstock still is held by past and present employees, and they have beenallowed to participate in the decision-making process. In recentyears, it hasn't been much fun.
Weirton's work force, which peaked in the early 1960s at 13,500,has withered away as the company cut back production, shut down someoperations and introduced labor-saving processes and technologies. Bythe end of this year, only 3,500 union members still will bereceiving paychecks.
Glyptis helped CEO Walker draw up the company's restructuringplan. He has had to sell his members on the need for more job cuts soWeirton Steel can hold its own against foreign steelmakers.
'We're not going to stop globalization, I think we're going tohave to concede that,' Glyptis said. 'As it becomes more difficult tocompete because of global economics, we're going to have to becomeeven more efficient. Machines, computers will ultimately take theplace of people. If we can maintain the number of employees that wehave now, I believe we will have been highly successful.'
The company's recent restructuring has been orchestrated byWalker, 44, who became Weirton Steel's president, CEO and chiefoperating officer two years ago. The company had not had a profitableyear since 1995 and was selling steel at prices below the cost ofproduction.
Faced with the same bleak circumstances, other integratedcompanies entered Chapter 11 bankruptcy. Walker chose a lessconventional strategy: He asked Weirton Steel's workers, suppliersand creditors to accept job cuts and debt markdowns that would helpthe company stay out of court and get back on its feet much faster.Most of them have signed off already.
Of all the integrated producers, Weirton Steel is the most heavilyconcentrated in high-end 'tin mill' products, the thin-gauge, platedsheet metal used to make food cans. Tin plate sells at higher prices,around $650 a ton, and under long-term contracts is less vulnerableto price fluctuations.
Under Bush's plan, all of Weirton's product lines will beprotected by the biggest tariff: 30 percent the first year, 24percent the second and 18 percent the third.
After three years, the levy would disappear. The government willcollect the tariff as steel enters the country; the effect on pricesdepends on how much of the import tax foreign steelmakers are willingto absorb and how much is passed on to buyers.
DiMatteis, the 25-year-old blast-furnace electrician, said he'snot sure what effect the tariff will have on prices, but he hopes itwill buy him a little security. In 1998, he was one of about 1,000employees laid off by Weirton Steel. He was called back within ayear, but his lack of seniority means he'll be among the firstcasualties if further cuts become necessary.
'I think the help from the president is hopefully enough of acrutch that the industry, at least Weirton anyway, can get somefinancial stability,' said DiMatteis, whose father, Tony, retired in1999 after 33 years.
'I'd like to hope that this mill could be here for another 30years to be able to provide for my family,' DiMatteis said. 'But itdoesn't have a history of being very stable.'
