USX Seeks Foreign Steel to Keep Bay Area Mill Running

At the same time that its top steel executive has been complaining about the ineffectiveness of the Reagan Administration’s quotas on imported steel, USX Corp. has been quietly looking for ways to skirt the quotas and import more steel to keep its California joint-venture mill running during its nationwide labor dispute.

USX’s joint venture with Pohang Iron & Steel Co. of South Korea is scouring the world for steel to keep its Pittsburg, Calif., finishing mill running during the nationwide walkout by the United Steelworkers against USX. That labor dispute has not closed the Bay Area mill, but it has shut down USX’s Geneva, Utah, steel mill, which previously supplied semifinished steel to the Northern California plant.

The Pittsburg mill, which employs about 1,100 workers, has been running on semifinished steel from the Utah mill that had been stored up before the strike began on Aug. 1, but company officials concede that they are starting to run out.

As a result, the joint venture is scrambling to find domestic or foreign suppliers that can meet its needs. On Thursday, USX failed in an attempt to ship steel out of its strikebound Fairless, Pa., works outside Philadelphia to supply the Pittsburg plant. Strikers outside the plant blocked nearby rail tracks to halt the shipment, a company spokesman acknowledged.

A spokesman for USS-POSCO, the California joint venture, said Thursday that the firm is studying whether it can obtain a waiver from the quotas that limit steel imports so that it can buy steel from countries that have already reached their limits for allowable imports under the quota system.

While the company spokesman refused to say which nations it has approached, a spokesman for the steelworkers said the union has learned that Japanese steel producers have rebuffed the joint venture’s request because Japan has used up its quota allotment.

The company has since talked to the Koreans, the union spokesman said.

The joint venture’s efforts to line up a foreign steel supplier have come just as Thomas C. Graham, president of USX’s steel unit, has been calling for tougher enforcement of the quota program by the Reagan Administration.

Graham, in his role as chairman of the domestic steel industry’s trade association, said in a statement Tuesday that “the stakes for the domestic industry are far too high to have a single ton of imports pass through our ports of entry that isn’t strictly within the limits of the President’s steel program.”

The statement noted that imports have accounted for about 23% of the steel market this year despite the restrictions in the quota program designed to limit the importers’ market share to 18.5%. Graham said there is a “need for unremitting pressure on the steel import issue” to make sure that importers reduce their shipments to the United States and bring their share within the federal government’s limits.

But despite Graham’s complaints, the quotas may not be quite so porous when it comes to supplying USS-POSCO. Nicholas Tolerico, the Commerce Department official in charge of monitoring compliance with the steel quota program, said the joint venture could obtain a waiver only if the government agrees that there is a shortage of domestically produced steel of the type needed for the Pittsburg operation. The Pittsburg mill produces steel products for the canning, appliance and construction industries and uses a relatively common type of semifinished steel in its finishing processes.

Still, a top government official familiar with the quota program said the joint venture has opened talks with Canadian steel producers in an effort to sidestep the quota program altogether. Despite continuing U.S. pressure on Canada to keep a lid on its steel exports, Canada is one of the few major steel producers that is not covered by the Reagan Administration’s quota program and could supply the joint venture without violating any formal agreements with the United States.

But even if the joint venture is unable to circumvent the quotas this year, it is still just a matter of time before it starts using imported steel at Pittsburg. The joint venture already plans to make Pohang its primary supplier of semifinished steel beginning in 1989, when the five-year quota program expires. USX then plans to shut down the Geneva mill, eliminating as many as 2,400 jobs.