A Battle Fought in the Factories

New York Times: A Battle Fought in the Factories

WEIFANG, China, Dec. 8 — When the aging state-owned Weifang East Steel Pipe factory here in China’s northern coastal plains fell into insolvency a few years ago, unpaid workers at first responded by blocking the factory gates and marching angrily on a nearby municipal building.

Then, inspired by the spirit of capitalism consuming modern China, more than 50 employees borrowed from banks against their homes to buy the company, install new equipment and produce higher quality steel pipe, much of it for export. The newly privatized factory soon was proudly humming again.

But today it is in a new crisis, and this time the workers’ anger is aimed at the United States, which is set to impose punishing new tariffs on Chinese steel pipe imports early next year, at the behest of struggling American steel makers.

Hundreds of plant workers have been idled, and more layoffs are in the offing. “We have followed market principles and been faithful to our American customers,” said Wu Jingsheng, the Weifang plant’s gruff general manager. “Our workers don’t know why they are being treated this way.”

……..

American producers charge that though the Weifang factory is now private, it benefits from past subsidies for land, utilities and other costs, and current subsidies for raw steel. The administration says that China is using subsidies to engulf the world with a “harmful glut” of steel.

“We’re extremely concerned that the Chinese steel industry is not market driven but driven by subsidization,” said David M. Spooner, assistant secretary of Commerce for import administration.

……..

“Essentially, we believe we are competing against the Chinese government, not the private sector,” said Armand Lauzon, chief executive officer of the John Maneely Company, a pipe manufacturer based in Collingswood, N.J., which says it closed 5 of its 16 plants in recent years because of foreign competition. The Chinese are resentful because this is the fourth time that the Bush administration has tried to go after their steel industry. A charge that China was dumping steel below cost in 2001 was rescinded, another action in 2002 was blocked by the W.T.O. and a third was withdrawn in 2004 after the American automobile industry said it wanted to use less expensive imported steel.