BY DAVE FEAGIN

SALT LAKE CITY, Utah - Geneva Steel announced in October that it lost $7.2 million in the year ending September 30. Sales of the steel coil, plate, and slab that Geneva makes rose 7 percent to $712.7 million in the same period. In the third quarter, Geneva Steel set a record for steel production yet lost almost $4 million.

United Steelworkers of America (USWA) local 2701 organizes workers at Geneva and currently has around 2,200 members.

Geneva Steel, located in Orem, Utah is the only integrated steel mill west of the Mississippi River. (An integrated steel mill involves the total steelmaking process in one facility, from the iron ore to the finished steel product.) USX used to own the mill until it locked out its workers for almost two years in the mid-80s and then sold it to Joe Cannon, a local capitalist. Cannon promised the union members that if they made deep concessions so that he could modernize the plant, he would be able to save their jobs and would share the prosperity that would come a little later. Workers now have a lower hourly rate than when USX locked them out in 1986.

Like other steel producers in the United States, Geneva Steel spent millions in modernization of its facilities in order to increase productivity and lower the cost of producing a ton of steel. Some fifteen years ago the steel barons in this country cried "unfair foreign competition is ruining the U.S. steel industry" and demanded the U.S. government do something about it. None of that is heard today. With the modernizations and the cut in wages, the cost of production of steel in the United States is lower than in many other countries.

Price competition is the name of the game today. Deflationary pressures coming from increased competition, is responsible for Geneva's record steel production while losing money at the same time. Two decades ago, the six major integrated steelmakers controlled two-thirds of the industry. Today, amid dozens of steelmakers (especially minimills, which remill scrap steel), the Big Six control a third of the market.

The July 18 Wall Street Journal ran an article by Erle Norton on this topic under the headline "Metal Fatigue: U.S. Steelmakers Run Mills Close to Capacity But Still Earn Little." Norton writes, "Yet despite strong demand and slowing imports, some major steelmakers are earning just a few measly bucks a ton." Norton interviewed Paul Wilhelm, president of USX Corp. U.S. Steel Group, the nations biggest steelmaker, who stated, "We get shortsighted and cut the prices too easily."

It is not "shortsightedness" that is responsible for the low prices of steel today and therefore the low profits margins for the steel barons. After they have done all their modernization, computerization and down-sizing possible, the steel companies are at each others throats in cutting prices in order to sell the steel. They are simultaneously forced to go after workers throats by slashing wages and benefits in order to compete. Declining profit rates
Profits rates are declining and have been for nearly 25 years. The world capitalist economy has entered a depression, even though we are presently experiencing the end of an upturn in the capitalist business cycle in the U.S.

The Wall Street Journal article adds, "And by steelmakers inability to make much money is raising questions about what will happen when demand dries up, as it inevitable will in such a cyclical business." The article describes the steel industry "in its third consecutive year of booming production and theoretically in a position to rake in enormous profits. But profitless prosperity may be about as good as it gets."

You can see the nervousness and anxiety of the capitalist class in this article. The capitalist fear a deflationary collapse like the one that marked the opening years of the Great Depression of the 1930s.

They face a problem of overproduction. Under capitalism, overproduction is not measured in relation to social needs, but what can be sold at a price high enough to realize a competitive profit.

U.S. Steel's Wilhelm told the Journal what it will take to bolster profits will be to "strike labor agreements that reflect today's markets." This is their diplomatic language for deep concessions by the steelworkers union.

November 30 was the last day for some 75 production workers at Geneva as the company laid them off due to falling orders. USWA local 2701's newsletter in November reported that orders in November were approximately half of what they were for October and they decline from there for succeeding months.

Some 30 miles north of Orem on the west side of Salt Lake City lies Kennecott Utah Copper, whose workers are also organized primarily by the United Steelworkers of America. A six-year concession contract was recently negotiated there. The copper industry faces the same deflationary pressures for the same reasons. The price of copper on the world market dropped from about $1.20 a pound at the beginning of the year to around 90 cents a pound in September.

Kennecott earned $93 million for the first half of 1996 - about one-third of the $271 million reported during the same period last year.

Like in the steel industry, copper barons have modernized their facilities with expensive equipment to decrease the cost of producing a pound of copper. Last year Kennecott finished its $880 million "state of the art" smelter here. (After being more than a year on line, there are still major problems running the smelter.)

Up to the mid 80s, Kennecott employed 7,500 workers before they shut down production, built a new concentrator and waited for copper prices to rise. After two years of shut-down, only a few thousand workers were called back.

Kennecott used to brag about its Bingham Canyon open pit copper mine here being the largest in the world. Chile now has a larger one and other copper mines have opened in Chile and other countries, leading to increased competition for market share and a fall in prices.

An analyst for the London-based Brandeis Brokers Ltd. told Bloomberg News Service that copper production will exceed demand by a record 240,000 tons in 1997. The 1996 surplus is estimated at 100,000 tons.

"1998 will be a very grim year indeed for copper prices," said Merrill Lynch's Monthly Base and Precious Metals Report in September. It predicts prices as low as 70 to 75 cents a pound by 1998.

Intensified competition spurred by declining profit margins is driving the employers in all industries to deepen their assaults on our wages, benefits, and working conditions. By clearly explaining this and pointing to the struggles of fighters like the striking steelworkers at Wheeling-Pitt, socialist solutions will get a larger hearing among USWA members and all working people.  
 
 
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