WASHINGTON, D.C. – Today, Senator Jay Rockefeller (D-WV) called on President Bush to take the immediate and decisive action needed to save our crippled steel manufacturers from extinction. In his second such letter since President Bush took office in January, Rockefeller outlined a specific plan of action beginning with a Section 201 investigation by the International Trade Commission that would trigger protections for the embattled U.S. steel industry.

In his letter to the President, Rockefeller wrote, "Without your immediate call for a Section 201 investigation, I believe we will forever lose basic steelmaking capacity in the United States, directly threatening our national and economic security. Unless there is immediate relief, tens of thousands of jobs will be lost, hundreds of steel communities and millions of Americans will suffer, and our manufacturing economy will be severely damaged."

Rockefeller pointed to the rising number of steelmaker bankruptcies, combined with recent surges in steel imports, to illustrate that the crisis is quickly intensifying. Since his last letter to the President in January, five more companies have filed for chapter 11. Over two-thirds of America’s largest steel companies have filed for bankruptcy in the last three years. West Virginia’s two largest steel companies have been battered by the crisis, as Wheeling Pittsburgh Steel filed for bankruptcy last year and Weirton Steel reported a $75 million net loss in the first quarter of this year alone.

"Absent strong action by this Administration in initiating a case under Section 201, I fear the extinction of the American steel industry cannot be far away," Rockefeller warned.

In addition to a comprehensive Section 201 investigation by the ITC, Rockefeller again advocated an Emergency National Steel Summit to educate the American public about the importance of steel to our economic future, and a multilateral agreement with our trading partners to address foreign overcapacity.

"Only comprehensive action on all steel products can save our industry now, and only you, Mr. President, have the power to make it happen," Rockefeller wrote. "Our industry and its workers, the families and communities that are affected by this crisis, cannot continue to absorb job losses and plant shutdowns like these and survive."

A copy of Senator Rockefeller's letter to President Bush follows.

May 2, 2001

The Honorable George W. Bush
President of the United States
The White House
1600 Pennsylvania Avenue
Washington, DC 20500

Dear Mr. President:

More than two-thirds of our nation’s largest steelmakers have filed for bankruptcy in the past three years – five since January of this year. More major bankruptcies are imminent. Mr. President, without your immediate call for a Section 201 investigation, I believe we will forever lose basic steelmaking capacity in the United States, directly threatening our national and economic security. Unless there is immediate relief, tens of thousands of jobs will be lost, hundreds of steel communities and millions of Americans will suffer, and our manufacturing economy will be severely damaged. Unprecedented levels of imports have flooded our market and destabilized our industry since the Asian financial crisis in 1998 – as a result, our industry is on the brink of collapse. In your election campaign, you and the Vice President promised you would fight for the steel industry – I am writing to let you know that we are in a do-or-die situation. Failure to act now will be deadly.

I again urge you to initiate a Section 201 investigation on steel and I renew my call for an Emergency National Steel Summit. Section 201 is provided for under the Trade Act of 1974 and is consistent with our WTO obligations. Under U.S. law, I believe the International Trade Commission (ITC) must quickly find that our steel industry has been seriously and materially injured by imports and recommend quantitative restrictions. Once that is done, you will have the opportunity to provide desperately needed relief. In addition, while the 201 process is underway, an Emergency National Summit can educate the public about why steel remains a vital U.S. security and economic interest. Further, the Summit can address the underlying problem of foreign overcapacity that jeopardizes the future of our industry and review the options to address that core issue. I strongly believe a multilateral steel agreement with our trading partners is essential to maintaining domestic steel manufacturing in the long term.

At the time of my last letter, as you first took your oath of office, there were 14 steelmakers in bankruptcy, and another import surge was predicted for the first quarter. Since that time, as I have noted, five more U.S. steelmakers have filed for Chapter 11. An analyst with Morgan Stanley Dean Witter recently predicted that companies accounting for almost half of U.S. steelmaking capacity could be in bankruptcy by the end of 2001. The two largest steelmakers in West Virginia – Wheeling Pittsburgh Steel, our nation’s sixth largest integrated steel producer, and Weirton Steel, our seventh largest, remain in dire straits. Wheeling Pitt filed for bankruptcy last year. On April 26, Weirton reported a first quarter net loss of more than $75 million. To illustrate how bad the situation is, Weirton’s entire net loss in 2000 amounted to $85 million. No industry can continue to sustain these massive losses and survive.

While I am gravely concerned about the future of West Virginia’s steel manufacturers, Weirton and Wheeling Pitt are not alone in this crisis. Some of the largest steel producers, including U.S. Steel and Nucor all reported substantial first quarter losses as well. LTV and Bethlehem are also in serious trouble. The crisis has hit all U.S. steel companies, large and small, carbon and stainless, integrated producers and minimills.

The surge of imports that the experts had predicted for this quarter hit U.S. shores in March. Imports in March rose 30% from February, including a 48% jump in imports of semi-finished steel and a whopping 301% increase in imports of wire rod. Given these numbers and the past two years of record imports, you can see why even industry leaders like Weirton fared so poorly this quarter.

It is impossible for the price of steel to rebound under such an onslaught. If prices begin to rise, foreign producers will raise production to even higher levels and drive prices back down. Our companies cannot invest in and upgrade their facilities when they cannot be sure when the next wave of imports will hit. And the banks have flatly refused their requests for loans that would enable them to get back on their feet.

Your Presidential leadership is required to stop the downward spiral of our steel industry. Recently, the Commerce Department preliminarily imposed anti-dumping and countervailing duties on imports of hot-rolled steel from several countries. While I applaud these decisions as a step in the right direction, it is clear that piecemeal trade cases on certain products from certain countries simply will not resolve the current import crisis by themselves. Foreign producers will shift production to merchandise (and in the long-term, countries) that are not under order to circumvent penalties assessed on their unfair trading practices.

As I have continually advocated to your Cabinet, the only immediate relief for the steel crisis is for you to initiate action under Section 201. If you initiate a Section 201 case with the ITC, a united American steel industry will support you. When the ITC evaluates the overwhelming evidence and finds, as they surely will, that this flood of imports is causing serious injury to the domestic steel industry, then you will have the authority to order relief. The price stability afforded by effective remedies under Section 201 would give the industry breathing room to plan for the future and to make the type of investments in plant and equipment necessary to survive in the long run.

Only comprehensive action on all steel products can save our industry now, and only you, Mr. President, have the power to make it happen. Our industry and its workers, the families and communities that are affected by this crisis, cannot continue to absorb job losses and plant shutdowns like these and survive. Our nation’s basic manufacturing capacity and its national security are on the line. A substantial portion of the economy of my State, West Virginia, as well as the economies of Pennsylvania, Ohio, Indiana, Illinois, Arkansas, Kentucky, Minnesota, and other steel producing states are in jeopardy unless you act now.

You must send a signal to our trading partners that the U.S. steel market cannot and will not be the market of first and last resort. This destructive cycle can only be stopped by a Section 201 coupled with an Administration-led multilateral steel negotiation. Only a multilateral steel agreement can successfully address the root problem of foreign overcapacity and ensure that the cycle of constant crises ends.

Imports drove prices down and they have remained there. They have resulted in serious injury to the American steel industry. Absent strong action by this Administration in initiating a case under Section 201, I fear the extinction of the American steel industry cannot be far away.

I urge you not to wait another day. I commit to work with you in any way I can, but I know you have the prime responsibility and ability to act. There is virtually nothing I wouldn’t do to save our steel industry – but I have to rely on your willingness to work with me and my fellow Steel Caucus Senators if we have any hope of success. I eagerly await your response. 

 Sincerely,

John D. Rockefeller IV