Weirton Steel Cutting 500 Jobs

MORGANTOWN, W.Va. -- A plan to restructure Weirton Steel Corp. and avoid bankruptcy includes the elimination of 550 jobs, or 13.8 percent of its overall work force.

Some details of the reorganization, including the slashing of seven vice president positions and revisions to executive benefits, were released Friday as the Independent Steelworkers Union finished ratifying a new contract by mail-in vote.

The union faces the elimination of 372 hourly positions, plus 78 clerical and technical employees. Another 100 management jobs would be eliminated. The company employs about 4,000 people overall.

"Personnel decisions such as these are extremely difficult," Weirton Steel president and CEO John Walker said. "This reduction is more than a statistic. It's about men and women who are parents, relatives, friends and neighbors."

The remaining executives will give up perks such as company cars and club memberships.

"We have decided this is an appropriate way to significantly contribute to our reorganization," Walker said.

In March, the company cut 70 management jobs, trimming its administrative ranks to about 630.

Like other domestic steel makers, Weirton Steel has been battered by foreign competition since 1998, losing some $293.1 million, or $7.05 per share, so far this year.

Its stock was pulled from the New York Stock Exchange at the end of trading Wednesday, closing at 18 cents per share.

The recovery plan that Weirton Steel had submitted to the NYSE was not enough to keep its stock listing.

On Friday, Walker said that recovery will include "shedding practices that don't fit within our long-term plans."

"We'll be a leaner and more flexible company with improved efficiency, and we'll be much more focused on producing and marketing tinplate, our core business," he said.

Weirton Steel is the second-largest U.S. producer of tin products, which account for nearly 40 percent of its revenues.

The contract the union is voting on will replace one that was approved in June. The new pact expires in March 2004 and includes an across-the-board wage increase for the remaining workers, some of whom will take on more duties.

One of the greatest lies put out by management over the years is the cost of labor in mass produced products is the major cost. There was an interesting number released by GM about the new Caddie factory. They plant turns out 2 Caddies per week per employee. That is the same number Henry Ford said was true in 1918. That is take the number of employees, mulitply by 2 and that his the number of cars they make a week. What it means is that if each Caddie employee makes 2,000 dollars a week a 40,000 dollar caddie has 1,000 dollars of labor cost in it. Put another way if all the Caddie plant workers worked for free, a Caddie would cost 39,000 instead of 40,000.

If all other costs were the same there would never be a reason to make things overseas. The cost of shipping a heavy item over the ocean costs more than the labor to make it here, even if the labor overseas is free. Labor is never free. Even slaves have to be fed and housed. What makes overseas manufacturing better than here is the cost of govenment(taxes), and the cost of government regulation. For many products it would be cheaper to make it overseas even if the wages there were twice what they are here. It never gets said but it is true.

Those that seek to limit foreign trade fail to understand that no nation in the history of the world has ever been prosperous with out foreign trade. Japan went from a nuked and conventional bombed out wreck at the end of World War II to an high standard of living by doing lots of foreign trade.

Brittian went from the world's superpower when its trading ships ruled the waves to a poor country when it protected its workers from imports.

The Greeks made their city states prosperous with trade over 2,000 years ago. When they fell the Romans did the same. That was 2,000 years ago. The Spanish, Dutch and the English became very prosperous with world trade.

Germany with all its education and culture failed to become rich in the 19th century because it did not trade like Brittian. When nations like Spain stopped dominating world trade they ceased to be prosperous.

Those that believe in limiting trade are really saying we can not make it trading. Labor buys the excuse that it is their wages that limit our ability to compete. That is just not true. For nearly a hundred years mass production has moved labor from a major to a minor cost in manufacturing products. Automation has reduced labor costs even more. Labor is not our problem... Government is.

Fools who believe Pat Buchanan when he claims wages are the reason we can't compete with foreign producers have really been taken for a ride. Like most people who have spent a lifetime in jouralism, he has not a clue about what it costs to make something.

When it takes 7 seconds labor to cast an engine block or 10 seconds labor to make enough steel for one car, labor costs are not the problem.

The problems is the cost of government and government regulation. If we reduce the cost of government and reduce the government regulation we can have more customers wanting to buy what we make and more jobs than people to work them. We would be offered better wages than we can imagine.

Pat and Willie have the same silly pitch. They say the way to make more money is to only sell to ourselves. That is the same as saying that the way to make money is to only buy from ourselves. Cause when you only do business with yourself, you are both buyer and seller. There is no way for a nation to make money when it only buys and sells to itself. Take a dollar out of your right pocket and put it in your left. According to Pat Buchanan you have just become a dollar richer. You are you know. Before you didn' have that dollar in your left pocket... You must be a dollar richer? Aren't you?

Although your point about factory labor and government costs is well taken, it doesn't tell the entire story.

You are arguing that a country is a closed system and that prosperity comes from overseas trade. This sounds essentially like the Marxist Zero-Sum theories of economics whereby my wealth inherently entails your beggarment, and the wealthy Western countries "owe" their prosperity to impoverishing the Third World.

But wealth is not from transactions, a false view encouraged by viewing the economy as equivalent to the GDP and the increase of consumption as entailing an increase in wealth (thus increasing defense spending makes us "wealthier" by this view, although it is little more than wasting capital and labor and essentially flushing their finished product down the drain). Nor is wealth an increase in money, since a country could simply inflate its way to wealth by running the printing presses were this so. Wealth is from the use of labor to transform resources and knowledge into fixed capital.

In other words, wealth is investment and an increase in fixed investments means an increase in wealth.

The role of Protectionism in this is to encourage inestment by capitalists in the home market so as to provide opportunities for gainful employment and an increase of investment at home, thus increasing the wealth and happiness of the Nation. The men who developed the American System, such as Hamilton and Webster said as much.

Viewed thusly, Protectionism is not opposed to trade. Trade is vitally important to secure things that country does not have, to exchange excess product in one field for tht which is scarce in another.

What Protectionism does aim at is the provision of gainful opportunities for the development of the Nation, the temporal goal of politics.

This can be seen quite simply in the modern American economy. The elimination of Protectionism has meant the mass transference of labor and capital from industrial occupations to service ones, especially retail sales and government. Are we really a "wealthier" country because we have 10 times the number of shoe stores that we might possibly need (just go look at your local mall and count them up), but we don't produce any shoes? Couldn't those excess shoe retailers be more gainfully employed for us as a nation making shoes? A shoe factory is essentially a mint - the more it is run, the more money it can get for its owners. A shoe store is just a middleman taking a cut of the final sale.

The argument of Free Trade is that we can ultimately be prosperous by not producing anything but simply by buying things back and forth from each other and importing our needs using either our stockpiled cash or by convincing foreigners to leave their cash with us by buying fixed assets. There is a limit to such nonesense.

Germany with all its education and culture failed to become rich in the 19th century because it did not trade like Britain.

This is a howler. Obviously Germany was extremely wealthy by 1900 since she produced more than Britain. Germany was also deeply involved in world trade, selling products abroad to be able to buy food and raw materials. In fact, Germany's new found wealth was a major cause of friction with Britain, a formerly friendly country. Britain's vendetta against Germany began once she woke up in 1890 and realized that the pastoral land of universities and poets had suddenly become the industrial dynamo of the Ruhr and Silesia, whose productive populace was gradually displacing British products from their markets around the world. "Germany is getting to strong, and we shall have to smash her."

Britain was able to have a semblance of a free trade system because of her colonies, which provided her access to all the raw materials she lacked herself, unlike Germany. This is what was meant by saying Britain had derived "all her wealth" from the colonies. America is similarly skating by today on the natural wealth of this continent.

Japan went from a nuked and conventional bombed out wreck at the end of World War II to an high standard of living by doing lots of foreign trade.

Are you and I on the same planet? Japan is a higly protectionist country, just as America, Germany, and Britain were leading up to their modern development. The development of Japan was driven by bringing in lots of overseas capital in the form of trade balance surplus earnings.

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