TEN
Mill & Mine: The Cf&I in the Twentieth Century
Book by H. Lee Scamehorn; University of Nebraska Press, 1992. 247pgs.
CF&I and the Steel Crisis of the 1980s
Pueblo's destiny seemed to be tied to the steelworks. For a hun- dred years, the metallurgical operations on the south side of the Arkansas River had fueled the city's growth, defined its char- acter, stimulated a wide range of service and manufacturing enterprises, and afforded residents opportunities for employ- ment. Inevitably, that role was taken for granted, as local steel- making survived frequent depressions, wars, floods, and labor strife. In the 1970s, the steelworks overcame the challenges of surging imports, cost-efficient domestic rivals, and recurring re- cessions. Presumably, it would always be there to provide for the community's needs.
Steel's collapse in the 1980s, and with it a dramatic curtail- ment of local operations, was a shock to Pueblo residents. The crisis revealed that an industry, no matter how viable it might be in a national setting, could be highly vulnerable when forced to compete in a global economy. The Pueblo corporation was no longer capable of sustaining a major portion of the region's prosperity.
For CF&I Steel, as for other integrated steel producers, the long boom that had begun during World War II finally came to an end in 1981 and 1982. Local officials attributed the crisis to competition from imports and the cumulative adverse effects of the recessions that had characterized the seventies and con- tinued into the eighties. 1As seen from Colorado, that explana- tion may have been adequate; but from the larger perspective of the American steel industry, it was less than satisfactory.
The Steel Crisis: The Economics and Politics of a Declining Industry
Book by William Scheuerman; Praeger Publishers, 1986. 221pgs.
6
Recovery, Relapse,
and Retrenchment:
The Trigger Price Mechanism
In 1974, with sales of $2.5 billion generating a hefty pretax return of 11.1%, Inland drafted its mighty $2 billionexpansion plan. . . . But earn- ings have continued to sag from their heady 1974 level, and this has hob- bled Inland's ability to finance any more expansion. . . .
Business Week, September 9, 1977
We will keep on going downhill. We're not going to put any money into the steel business until this thing changes around.
Harry Holiday, President of Armco Steel, 1977
It is a peculiarity of our banking system . . . that the time a business man needs money is the time he cannot get it.
Upton Sinclair
By the mid- 1970s changing conditions both at home and abroad brought new hope to U.S. steelmakers. Indeed, 1974 had been a ban- ner year for steel. Profits set postwar records and increases in global steel demand foreshadowed future steel shortages. Industry represen- tatives gave a sigh of relief, for they no longer saw imported steel as the primary long-term threat to the future of domestic steel produc- tion. Although steel executives and industry analysts held that in- creases in global demand would eventually alleviate the import issue, they could point to the Trade Act of 1974 as a hedge against the pos- sible reemergence of steel imports. Despite their concern over the law's failure to mandate quotas and, failing that, to provide Treasury with precise criteria for action, corporate officials generally viewed the new
steel industry
steel industry, the business of processing iron ore into steel, which in its simplest form is an iron-carbon alloy, and in some cases, turning that metal into partially finished products or recycling scrap metal into steel. The steel industry grew out of the need for stronger and more easily produced metals. Technological advances in steelmaking during the last half of the 19th cent. played a key role in creating modern economies dependent on rails, automobiles, girders, bridges, and a variety of other steel products.
Iron working can be traced as far back as 3,500 B.C. in Armenia. The Bessemer process, created independently by Henry Bessemer in England and William Kelly in the United States during the 1850s, allowed the mass production of low-cost steel; the open-hearth process, first introduced in the United States in 1888, made it easier to use domestic iron ores. By the 1880s, the growing demand for steel rails made the United States the world's largest producer. The open-hearth process dominated the steel industry between 1910 and 1960, when it converted to the basic-oxygen process, which produces steel faster, and the electric-arc furnace process, which makes it easier to produce alloys such as stainless steel and to recycle scrap steel.
After World War II, the U.S. steel industry faced increased competition from Japanese and European producers, who rebuilt and modernized their industries. Later, many Third World countries, such as Brazil, built their own steel industries, and large U.S. steelmakers faced increased competition from smaller, nonunion mills (“mini-mills”) that recycle scrap steel. The U.S. produced about half of the world's steel in 1945; in 1999 it was the second largest producer, with 12% of the world market, behind China and ahead of Japan and Russia.
Since the 1970s, growing competition and the increasing availability of alternative materials, such as plastic, slowed steel industry growth; employment in the U.S. steel industry dropped from 2.5 million in 1974 to to less than a million in 1998. Global production stood at 773 million tons in 1997, down from 786 million tons in 1988. U.S. steel production has remained constant since the 1970s at about 100 million tons, but 50% of that total is now produced by mini-mill companies. An increase in U.S. demand during the 1990s was largely met by imports, which now account for from about a fifth to a quarter of all steel used annually in the United States. The old-line U.S. steelmakers, losing market share and with higher wage, health, and retirement costs, experienced a string of bankruptcies beginning in the late 1990s, leading to industry and union pressure for protective tariffs, which were imposed by President George W. Bush in 2002 on most steel from non-NAFTA industrialized nations. Later reduced, the tariffs were found in 2003 to be illegal under World Trade Organization rules, and President Bush reversed the tariffs.
See W. Hogan, The Economic History of Iron and Steel in the United States (4 vol., 1971); R. Hudson, The International Steel Industry (1989); C. Moore, Steelmaking (1991); R. S. Ahlbrandt, R. J. Fruehan, and F. Gairratani, The Renaissance of American Steel (1996).