The Challengers

Four months ago, when Roger Blough tried to raise prices, he argued that the U.S. steel industry needed the money to modernize its mills in order to defend its markets from foreign competition.

Blough's case seemed to be weakened by the fact that sales of foreign steel in the U.S. last year amounted to only 3,200,000 tons--or 4.7% of U.S. consumption. But if U.S. steelmakers still reign supreme in their home territory, the Western Europeans are building up as real rivals in the worldwide market.

Forced Draft. Since 1956 the total steel-producing capacity of the six Common Market nations plus Britain has jumped from 86 million tons a year to 105.5 million. The eleven-year-old European Coal and Steel Community, forerunner of the Common Market, spurred much of the increase when it threw the once highly protected Continental steelmakers into direct competition with one another, and thereby forced them to modernize. And Europe's increasing prosperity has inevitably increased its need for steel.

Western European steelmen are designing new mills that by 1965 will increase their potential output to 148 million tons v. an estimated 160 million tons for the U.S.

The outlook by nations:

P:Italy hopes to jump from 10 million to 15 million tons a year by 1965--more than enough to meet domestic demand.

P: France's Usinor steel company is building Europe's largest steel mill near Dunkirk. This, and modernization of other mills, will give France a capacity of 27 million tons by 1965, of which 25% will be produced in the latest oxygen-type furnaces.

P: West Germany, which already produces nearly half of the Common Market's steel, plans to boost its capacity to 47 million tons within three years--an increase of almost 10%.

P: The Benelux countries, which exported 85% of their 14 million-ton production last year, will soon be pouring another 1,700,000 tons a year in a still unfinished plant located near the port of Antwerp.

P: Britain plans to increase her capacity from 27 million tons to 38 million tons by 1965. Leading the way is Europe's most automated steel mill--the nationalized Richard Thomas & Baldwins Ltd. works in Wales.

Status Symbol. To a man. European steelmakers deny any ambition to invade the U.S. market in greater strength. All their expansion, they insist, is intended to meet local demand. Even so. they will still be competition for U.S. mills. More and more. European companies are concentrating on increasing their output of high-quality steel for specialized uses.

U.S. steel exports to Europe (an average 283,000 tons a year since 1955) have largely consisted of high-quality steel.

Western European steelmen have already cut deeply into U.S. sales in other world markets. Since 1957, U.S. exports of tinplate have been slashed from 721,000 tons to 422,000 tons last year. Right in the U.S.'s backyard, a German consortium recently walked off with the $10.8 million contract to supply steel for the mile-long Balboa Bridge in Panama. Since every emerging nation wants its own steel mill as a status symbol, the competition for foreign markets is bound to get increasingly bitter. The Europeans, and the burgeoning Japanese steelmakers, can be expected to underbid their higher-cost U.S. rivals more and more.

Fire Sale. Because it is legally difficult to lay off workers in the welfare states of Western Europe, European steelmen do not follow the U.S. practice of cutting production to keep prices up whenever demand slips; instead, the Europeans go right on pouring--and slash prices. By 1965, according to the best current estimates. Western Europe's steel capacity is likely to outrun its consumption by as much as 18 million tons. If that happens, some U.S. steelmen glumly anticipate a transatlantic invasion of European steel salesmen with open order books--and cut-rate prices.

This file is automatically generated by a robot program, so reader's discretion is required.