Steel importers said today that the United States' steel quota program was preferable to the expense and uncertainty of trade lawsuits, and they proposed modifying it since the Bush administration seemed intent on renewing it. ``The current Voluntary Restraint Agreements on imported steel have, over the past four years, brought about market shortages and price increases, reduced net manufacturing employment ... and diminished the potential for the export of steel-intensive products,'' the importers said. But modifications were endorsed by the American Institute for Imported Steel, the Texas Association of Steel Importers and the West Coast Metal Importers Assocation. The institute says any renewed quota plan should be flexible enough to avoid the shortages steel users experienced for certain products under the current plan. They say the more flexible program could also lessen the sometimes sharp price hikes on some products. Meanwhile, steel-consuming manufacturers who complain about tight supplies and sharp price increases go further by saying American steel producers are looking a little too prosperous to be demanding an extension of trade protection. Those steel users are raising their voices in opposition to a renewal of the five-year Voluntary Restraint Agreements, or import quotas, due to expire in September. ``Our guys would kill to be making the profit on sales that they're making right now,'' said Greg Estell, spokesman for the 1,000 member companies of the Precision Metal Forming Association. The Cleveland-based association employs about 80,000 of the estimated 350,000 American workers who bend, stamp and cut steel into parts for cars, appliances and a variety of industrial and consumer equipment. That niche of the steel-using industries alone surpasses the approximately 170,000 employees of the nation's 300 steelmaking companies. ``We're not in the same situation here in 1988 that we were in 1984,'' Estell said about the steel industry. The numbers back him up. The 25 steel producers who represent 80 percent of the nation's raw steel production earned around $1 billion in 1987, the first full year of recovery after a gruesome recession. They more than doubled that figure, to nearly $2.5 billion, in the first nine months of this year, according to the American Iron and Steel Institute. ``The steel industry has returned to substantial profitability and can look forward to another good year in 1989,'' said Inland Steel Industries Inc. Chairman Frank W. Luerssen. That is what's bothering steel users like Caterpillar Inc., Deere & Co., who see steelmakers raising prices in line with tighter supplies while at the same time lobbying President-elect George Bush to extend the import quotas for another five years. Steel users say the quota program should be scrapped and a fair steel trade system negotiated either country-by-country or worldwide through the mechanisms of the General Agreements on Tariffs and Trade. Steelmakers say GATT does not work, and that the VRAs have proved themselves as the best solution to the predatory pricing that foreign producers employ because of excess world capacity. Caterpillar trade specialist William Lane suggested the steelmakers want to have their cake and eat it too. ``They're saying they need protection because of surplus world capacity, but the reason prices are increasing is tight world supply,'' he said. Estell said the metal forming association has tracked price increases of up to 40 percent for hot-rolled steel and 12 to 13 percent for cold-rolled. The users say the VRAs are at least partially to blame for higher prices because the import quotas reduce the supply in relation to demand. Steel producers say the VRAs have nothing to do with prices. The users also complain that delivery times were stretched and some mills were allocating shipments early this year because of tight supplies. In contrast to the tarnished reputation of American steelmakers when recession hit with vengeance after 1981, ``the U.S. steel industry is considered the low-cost producer in the world,'' Lane said. ``We would certainly agree with that. They've done a remarkable job of reducing costs and improving quality.'' ``They say they are world-class competitors, and we tend to agree, and if that's so then they should act like world competitors,'' said Estell. For the nation's steel forgers, higher prices are less troublesome than short supplies. They want their prime raw material, special quality bars and billets removed from the VRA program because ``forgers can't get what they need domestically ... and VRAs prevent them from getting it from offshore,'' the Forging Industry Association said. ``It is unfair for the U.S. government to support one segment of the U.S. economy to the detriment of other segments,'' the Cleveland-based group said. The American steelmakers say they deserve another round of quota protection because they have not fully recovered from losing $12 billion during a 5-year recession. ``It will take much more than a few quarters of profitability to offset the financial damage of the 1982-86 recession years,'' Washington-based AISI said. The U.S. producers also claim their prices in general have not risen drastically. Average steel prices rose about 3 percent from 1980 to 1987, while average prices of construction equipment rose 6 percent and the price of agricultural machinery rose about 20 percent, AISI said. By the second quarter of this year, prices were around 7 percent higher than they were in the fourth quarter of last year and roughly 2 percent higher than when the VRAs were instituted in late 1984. The AISI calls that ``hardly a spectacular increase, given the rate of inflation in the 1981-87 period and the tight supply-demand situation worldwide that existed in the first half of this year.''
