How did the steel industry improve America?

But over the last 60 years, the industry has suffered a steady decline, becoming less competitive and far less central to the US economy.

Immediately after the war, the global demand for steel was more voracious than ever. Mills owned by foreign competitors had been devastated by the bombings. Cities in Europe and Asia needed to rebuild, and American cities were growing rapidly as well. Demand for new cars was great, and the Interstate Highway was under construction.

America's steel mills were producing steel at a furious pace, making more than half the world's steel in the late 1940s, and about 40% of the world's steel throughout the 1950s.

In the 10 years starting in 1948, American steel mills averaged nearly 700,000 workers. Today only 83,000 people still work in the nation's steel mills.

Manufacturing changes

Part of that decline is due to much more efficient processes. The basic oxygen furnaces and continuous casters now in use can make steel using a fraction of the work, energy and manpower required by open hearth furnaces the industry used during its heyday.

Additionally, much of the steel produced today comes from recycled scrap, as opposed to using the more expensive and complex process of turning iron ore into steel. In fact, the biggest steelmaker in the United States, Nucor (NUE), uses recycled scrap. It started with a single minimill in 1969.

"Nucor did more to kill traditional American steel production than the Chinese ever did," said Stephen Mihm, a University of Georgia history professor who specializes in the history of business.

But Nucor wasn't the only problem. Foreign competitors in Europe and Japan were much faster to adopt more efficient technologies after World War II, giving them an edge. Making matters worse, Mihm said, the United States was reluctant to change its ways, giving the mills overseas an even bigger advantage.

"Neither labor nor management were thrilled about the idea of spending the capital to switch to basic oxygen furnaces," He said. "But labor wasn't the one making the capital investment decisions. It's ultimately management that dropped the ball."

Rise of foreign steelmakers

But others say that US efforts to help Europe and Japan rebuild after the war gave foreign competitors a big advantage by helping to lower the cost of capital those steelmakers needed to rebuild.

"We basically gifted steel industries to Germany and Japan," said Scott Paul, president of the Alliance for American Manufacturing, a public interest group supported by both the Steelworkers union and leading manufacturers. "Blaming the American steel industry, I'm not so sure that's fair."

Then came the industrialization of China, which led to a boom in the steel industry there unlike anything since the industrial revolution.

China's steel production went from a third of the output of American mills in 1981 to match US production only 12 years later. It's posted an 800% increase in production since then.

Today China's steel industry produces roughly half the steel in the world, according to World Steel, a global industry trade group. American mills produce less than one tenth the volume of China.

And while much of that production is used by Chinese auto plants and construction, there is no question that there are massive amounts of Chinese steel exports driving down prices around the globe.

"China has a lot of zombie steel mills turning out steel that no one needs," said Paul. "It's unbelievable how market distorting it is. In a labor intensive industry like steel, that means closing mills and layoffs."

A different economy

At the same time that foreign steelmakers became more competitive, the US economy shifted away from manufacturing goods, and became centered around providing services.

America remains the largest consumer of steel. As with the origins of steel use, the industries who utilize most American steel today include construction and transportation. In short, we’re still building and connecting American cities with American steel. However, 14% of the world’s steel is used by the machinery and metal products manufacturing industry. That includes manufacturing businesses like Marlin Steel, who uses only American made steel to produce its stainless steel products.

How Does American Made Steel Impact the Manufacturing Supply Chain?

Even with little more than a rudimentary understanding of supply chain dynamics, common sense dictates that when the raw materials and supplies are closer to the manufacturer, the supply chain is more reliable, more consistent, and more cost effective. This is true with American steel. In fact, the recent issues in the Suez Canal demonstrate how one incident can impact multiple supply chains.

While the steel industry is facing other challenges, the steel supply chain was further impacted by the imposition of tariffs resulting in a higher demand for domestic steel as imported steel was more costly. Because the U.S. imports so much steel, and doesn’t produce nearly as much as it needs, the cost of domestic steel also went up. The response to all of the challenges from the steel industry involved mergers and acquisitions to open other markets and extend reach with efforts on not slowing production.

However, as noted above, the supply chain in the US is much shorter. It’s much easier to move goods from one place to another without having to coordinate logistics, particularly in a world struggling to contain a pandemic. In fact, many businesses and industries who’d been relying on cheap Chinese steel were suddenly short supplies with no information on when shipping would resume. Businesses, like Marlin who utilize American steel, saw some delays, but overseas imports are still suffering delays and issues. For that reason, working with American steel manufacturers, from a supply chain standpoint is good, smart business.

Why is American Made Steel Superior? 

As hinted above, one of the biggest threats facing American steel is the influx of cheap products. While we can tout the benefits of supply chain theory that illustrate the logic in terms of supply reliability, there are additional benefits to choosing American steel.

1. Quality

Simply put, American steel is higher quality. In fact, as far back as 2008 government leaders and those involved in the steel industry were warning that Chinese steel was inferior and posed a safety risk. Then, less than 10 years later, the U.K. issued the same warning, claiming that Chinese steel was a risk to construction projects and safety. The primary cause was the addition of boron and chromium to qualify as an alloy and receive tax rebates. However, the addition of these elements means that the quality of the steel is compromised and needs to be handled differently.

Further, American steel is subjected to rigorous safety tests not required in other countries, especially for steel used in the manufacturing and construction industries. In terms of safety and reliability, American steel is superior.

2. Better Environmentally

One of the advantages of utilizing scrap to manufacture steel as the U.S. steel industry often does is that it produces significantly less CO2 than iron ore production. Further, because it is manufactured in the U.S., the mills that produce and the companies that manufacture steel products are bound by U.S. environmental regulations. Because they are beholden to the U.S. government and the EPA, their environmental impact is less.

Further, the American steel industry continues to pursue methods for decreasing its environmental impact, particularly looking at emissions and ways to support sustainable building and growth.

3. The American Economy

The history of the steel industry is, truly, the history of the American economy, of American industry, success, growth, and pride in American made products. As skyscrapers rose from our cities and cars rolled off the assembly line, the American economy boomed. Even today, even with challenges and a decrease in production, American steel is a huge part of the American economy.

In fact, the steel industry accounts for $520 billion in economic output, and was responsible in 2017 for nearly 2 million jobs totaling $130 billion in wages and benefits and $56 billion in taxes for both federal and state governments. An investment in American made steel and steel products is an investment in the American economy.

Why Marlin Chooses American Steel

It’s really pretty simple. Marlin prides itself on providing the very best product available, and when what you need isn’t available? We make it. By following a fairly rigorous design and testing process we demonstrate our commitment to providing strong and reliable custom wire products to meet the needs of our customers. American steel provides us with the quality and reliability we demand and our customers deserve.

Further, Marlin Steel provides products for the industries that keep America moving and growing, from transportation to telecommunications, from medicine to food production. In much the same way as American steel built our automotive and aerospace industries, American steel should keep these industries growing and building by providing the best to those industries and the industries that support them.

Finally, Marlin values safety, and the American steel industry’s focus on creating a culture of safety is a shared value. When the values of sustainability, safety, reliability, and quality are shared, it’s easy to understand why Marlin would choose American steel.

If you’re ready to talk to our team about how our products can help your business processes work efficiently and effectively, get in touch with our team today.

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