West German steelmen, at least, can live with US pricing twist
West Germany's efficient steel industry is relieved by the lesser evil of an American trigger price and alarmed by the danger of what it sees as a greater evil of European Community (EC) resort to compulsory production controls.
The American steel import trigger price -- re-established in September at a level of 12 percent above the level at which it was suspended in March -- is of course unpleasant for potiential exporters to the United States. West German free-trade advocates would prefer the "aging" American steel companies to modernize themselves, as European and especially German companies have done, rather than retreat to protectionism.
But this isn't going to happen, they figure. so, all things considered, it's better to sell something than not sell anything; during the six-month uncertanty of the US steel antidumping suit, European exporters could not accept orders and risk incurring prohibitive antidumping fines.
Initial reactions from the Ruhr giants to withdrawal of the US antidumping suit and reinstatement of trigger prices therefore seem to be more favorable than not.
The West German reactions to the EC's first attempt since its founding to declare a "manifest crisis" under Article 58 of the agreement creating the community and clap a compulsory producttion controls on member nations' steel companies is anything but favorable, however. The Association of German Industries has called the attempt the first step toward a comprehensive "dirigisme" -- a French term for heavy state guidance of industry. And Thyssen chairman Dieter Spethmann has pleaded with his fellow European steelmakers to try to end the current slump and price war by voluntary cooperation instead.
Mr. Spethmann's last-minute plea was unconvincing to the Frenchg, BRitish, and other producers who blamed the German (and Italian) steelmen for the breakdown of the voluntary restraints that prevailed in Europe in the last four years.
however, last Friday the West Germany steelmakers agrred to continue the voluntary curbs until next June 30.
This could help the West German government resist the mandatory controls in negotiations with the European Community.
The West German industry hopes that if necessary the pro-free-trade West German government would veto controls under the old formula used by former French President Charles de Gaulle of invoking "vital interests." But the Bonn government, committed as it is to European cooperation and the French-German partnership, is reluctant to take such a step against the EC majority.
When Klockner, a West German company steel company, broke up the earlier voluntary agreements by in effect pulling out of the semiofficial cartel in early summer over what it said were unfair norms, one result was a price war during an economic downturn that plunged steel prices 15 percent or more. In 1980, European-wide steel losses are expected to reach $3 billion to $5 billion, to the alarm of all European producers.
For the West German steel industry as a whole, the solution of compulsory EC quotas seems to be an unfair penalizing of the most efficient -- i.e., German -- producers.
In the past decade all the West German giants -- Thyssen, Krupp, Mannesmann, and Klockner -- moved away from crude to specialty steels and diversified downstream to engineering and plant construction as they faced up to the competition of cheap steel from Japan and the developing nations.
The West Germans are now the largest and most modern steelmakers in Europe, with the highest productivity and the least government subsidies. They could probably withstand the fierce competition of a recession and even a price war better than their neighbors. They think that others should emulate their success instead of hobbling them artificialty.