ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(77)688
Vol.1977/0218

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(77)688final.
Brussels,9December1977
RESTRUCTURING OFTHESTEELINDUSTRY :
METHODE ANDORGANIZATION
(Communication fromtheCommissiontotheCouncil)
CCK(77)688final.

RESTRUCTURING OFTHESTEELINDUSTRY:
METHODSANDORGANIZATION
Thecrisisinthesteelmarkethashighlighted twostructuralweaknesses :
1.Theexistenceofsurpluscapacitiesinmany"branchesofthesteelindustry.
Thesesurpluscapacitiesare"basicallyattributable totheundulyhigh
investments whichweremadeinthewakeoftheeconomicpeaksintheyears
1973and1974.
2.Thedeclineintheabilitiestocompetewithnon-membercountries,whether
theybeindustrialized countriesorevensomedevelopingcountries,in
whichmodernplantshavebeenputuponeconomically advantageous sites.
Thetaskoftherestructuring policyisthereforetwofold:toadaptcapacities
tothelong-termtrendindemandandtoimprovecompetitiveness byreducing
productioncosts.Theremustbeaparallelregionalconversionandworker
readaptation policytoensurethatinsodoingjoblossesinthesteelindustry
areoffsetbythecreationofnewjobsinthesteel-producing areas.
Article46oftheECSCTreatyassignstheCommissionthetaskofperiodically
layingdowngeneralobjectivesformodernization andlong-termplanningof
manufacture.Inaddition,Articles54and$6giveitthefinancialinstruments
withwhichtocarryoutrestructuring andconversionpolicy.
IntheSpringofthisyear,theCommissionbegantooutlinethelong-term
objectivesfortherestructuring oftheEuropeansteelindustry.Afterthe
programmeofworktothisendhadbeendiscussedwiththevariousinterested
partiesconcerned(governmentrepresentatives ,producers,workers,consumers
anddealers),thelong-termdevelopmentofsteelconsumptionintheCommunity
andtheforeseeablenetexportsweredeterminedintheinitialstage.The
futuremaximumfiguresforsteeldemandforecastinthiswaysetthelimits
ofcapacityforcrudesteeloutputandforthevariousrolledsteelproducts.
Theprovisional findingsoftheinvestigations arenowavailableandare
beingdiscussedwithallthoseconcerned.Thesefindingsshowthatthere
aresurpluscapacitiesforcrudesteeloftheorderof10-20milliontonnes.

Asfarasthevariousrolledsteelproductsareconcerned,surplus
capacitiesarepredominantly discerna"bleinthecaseofwirerod,
sectionsandhot-rolled widestrip.
TheCommissionhasalsoascertainedtheoptimum "breakdownofsteelmaking
processes "bymeansofastudyontheavailabilities ofscrap,sponge
ironandpigiron.
Thesestudiesprovideinitialguidanceontherestructuring to"becarried
out.Promthemarecalculatedindications astothelimitsonfutureplant
capacityandthebreakdownbyproductsonwhichtheCommissionisalready
basingitselfinitsopinionsunderArticle54ECSCanditsapproachin
dealingwithStateaidanddecidingwhethertoprovideaiditself.Since
thebeginningof1977ithasasarulegivenunfavourable opinionson
investmentprojectswhichwouldleadtocapacityexpansionnotmatched
byanequivalentcapacityreduction.
Inthesecondstage,theoptimumtechnicalandeconomicfactorswillbe
takenasabasisfordetermining thebestfortheindividualregions.These
optimumfactorsresultfromadvancesinsteelmaking techniquesorfromthe
profitability ofourmaincompetitors .Toquoteoneexample,theoptimum
sizeoftheblastfurnaceandotherplantcanbeascertained fromthestatus
ofplantengineering .Inthismannerthemosteconomically advantageous
typesofworkscanbeascertained .Acomparisonofthesetypesofworks
withsiteconditionsinindividualareas,suchastransportconditionsfor
thedeliveryofrawmaterialsanddispatchoffinishedproducts,pinpoints
theproductsbestsuitedtoagivensite,thesteelmakingprocessesand
themaximumcapacities.Itisobviousthatthesumofthecapacitiesand
thesteelmakingprocessesfortheindividualsitesmustnotexceedthe
capacitylimitssetfortheCommunity.
Inthethirdstageananswermustbefoundtothequestionastohowto
attainstructuresoftheindividualregionsdefinedintheearlierwork.

-3-
Toanswerthisquestion,aknowledgeofthemostimportanteconomicand.
technicaldataonworksintheCommunityisrequired.Onthebasisofthis
datatheCommission-withthecollaboration ofexperts,asnecessary–will
analysetheweakpointsandthepossibilities ofstructuralimprovement.In
thisconnectionthereareanumberofquestionstobeclarifiedbythe
undertakings ,theMemberStatesandtheCommission,suchas:
-whichplantsshouldbecloseddo™?
-whatspecialization isnecessary?
-whatcooperationshouldtherebebetweentheundertakings ?
-whatinvestment onmodernization isnecessary?
-howcanemploymentbemaintainedasfaraspossiblewithoutcompetitivity
sufferingasaresult?
-howwillinter-regional balancebeaffected?
Allthepartiesconcernedwillhelptoanswerthesequestions.Itis
obviousthatthesproblemscanonlybesolvediffruitfulcollaboration
isestablished betweentheCommission,thegovernments ,producersand
workers.
TheresultssoobtainedwillenabletheCommission ,incooperation withthe
MemberStatesandafterhearingtheECSCConsultative Committee,todetermine
therestructuring programmeand'seetoitthatthenecessaryreconversion and
readaptation policiesarealsoputinhand.Theprogrammewillhavea
Communitycharacter,soastoestablishacoherentsolutionforthe
Communityasawhole.
Atthesametime,theCommissionwillinvestigate therepercussions of
therestructuring onfutureemploymentinthesteelindustry.Theseestimates
serveasguidancefortheindustrialconversiontobecarriedoutinthe
individualregions,theaimbeingasfaraspossibletoachieveabalance
betweenredundancies ontheonehandandthecreationofnewjobsonthe
other.