Low wages keep Steel Barons in Business
The American publication Time carried the following item in its January 22nd issue: 6é RITAIN’S Labour Govern-
ment is determined to nationalize the country’s steel industry—or die trying. The formal debate over nationalization has barely begun, but the intensity of the argument outside Parliament foretells a fight that could topple Labour. “Last week, while Labourites shaped the nationalization bill that they hope to bring before the House of Commons next month, Sir Julian Pode, president of the British Iron and Steel Foundation, charged that a takeover “cannot fail to harm” the industry. Nationalization would mean “disaster for the country,” warned B. Chetwyn Talbot, chairman. of the South Durham Steel and Iron Co. Ltd. And Alan James Peech, chairman of United Steel Companies, Britain’s biggest _ steel company, moved on to the next big question: What compensation should the government pay if steel is nationalized? If Labour bases its offer on recent stock prices of the firms, said Peech, it will be guilty of “unfair expropriation.” “Second Time Around. Whatever price Labour finally fixes—provided it can get the nationalization bill passed—will likely owe as much to politics as to a realistic appraisal of Britain’s steel industry. Britain has the world’s fifth-largest steel industry, after the U.S., Russia, West Germany and Japan. The industry’s 260 companies, employing more than 300,000 workers, last year poured a record 26 million tons of steel, 88% of capacity but only 6% of global steel output. In 1951, most of the companies were nationalized by Labour—and two years later were returned to private hands by the Conservatives. This time Labour is generally expected to seize only the ten or twelve largest firms that account for some 80% of industry capacity. “Labour argues that the industry is a camouflaged monopoly that has grown inefficient behind the cover of
government-sponsored price control.
As Labour sees it, the industry needs
the swift reorganization that only the
State can provide. While Tories and
Liberals concede the truth of many
Labour complaints, they contend that
nationalization is not only ‘irrelevent’
to remedying them, but would also
damage the whole economy by put-
ting the nation’s most important in-
dustry. under a_ change-resistant
bureaucracy.
“Belated Burst. There is little
argument about one thing: British
steel, like most of British industry, is
not all it should be. In a belated
burst of modernization, many British
steel companies have caught up
technologically with the rest of
Western Europe in the last five years,
and Britain’s low wages (an average
of $41.80 a week in steel) enitble
them to price some steel lower than
Common Market steel. But steel pro-
ductivity in Britain is lower than in
the Common Market and only half
of productivity in the U.S. During
a strike last year, analysts found that
the 17,500-man force at the Steel Co.
of Wales cou'd be cut 7,000 with-
out reducing output. Last week
both the company and labour leaders
agreed that the mill must cut its man-
power.
“Because of the plethora of
workers and the presence of too many
old, small mills, British steel suffers
from chronically soggy profits. With
Britain’s high-grade domestic deposits
of iron ore exhausted, the industry
must import more and more ore. Yet
import quotas rule out fueling
British mills with U.S. coal, which is
cheaper than British coal. The gov-
ernment sometimes assigns expansion
by regions (so much to Scotland and
so much to Wales) to increase jobs
instead of efficiency. British steel
managed to export only 18% of its
production last year, despite the
nation’s need for more exports.” (My
emphasis.)
Alec Acheson
— = Page 136 March 24.1955 —_ THE we | VIETNAM : Defeat looms for US terrorists