Industrial America: The American Steel Industry to the early 1970s

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Industrial America: The American Steel Industry to the early 1970s

Introduction

        The steel industry has been profoundly important to the development of USA by its value of output, input to the American manufacturing industries and in terms of the extent of its employment in the past. It’s been important because of its political clout of its corporations and finally it’s been important for strategic reasons.

Background to the American Steel Industry

The industry dates from mid 19th century when it grew out of the iron industry. There was huge demand for steel following the end of the Civil War and the building of the great trans-continental railway. The industry centred in Pittsburgh where the classic locational determinants of the steel industry were operative in the late 19th century. Rich deposits of iron-ore, juxtaposed to metallurgical coking coal, limestone as a flux for smelting, plentiful supply of water, plentiful migrant and immigrant labour, proximity to the markets of the American Manufacturing Belt, ease of transport to those markets and finally entrepreneurial ability and capital for e.g. Carnegie. At the end of the 19th century, many of the American manufacturing of steel was produced by small firms of a total output of 10million tons.

The US Steel Industry 1900-1940

        Output increased significantly during this time period from 10million tons to approximately 70million tons. By the early 1920s, the US produced 3/5 of global output. Production was reduced in the Great Depression before recovering in the later 1930s. In the early part of the 20th century, the steel industry experienced some important changes:-

Raw Materials: Technological advances in the production of coke allowed poorer quality coals to be used thus reducing to some extent the strong locational pull of the Connellsville coking coals of the Appalachians. Appalachian deposits of iron ore become very much depleted and development of ore deposits to the West of Lake Superior was accelerated. The Mesabi Range ores has been worked by Rockefeller since 1892. Open-cast production kept costs low, as did the great and advances in ore-carriers which transported the ores east wards through the Great Lakes. Technological advance allowed lower grade taconite ores to be beneficiated and so enabled them to bear the transport costs to the steel mills further east.

Demand for Steel: This continued to rise in aggregate throughout much of the first half of the 20th century. The nature of the demand altered however. Much less steel was now needed for rails, but structural steel became increasingly important as did rods, wire, tubes and pipes; steel was needed for tinplate and also very significant amounts were demanded by the transport industries.

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Organisation of the industry: At the turn of the century, there was much horizontal integration and merger activity reflecting, amongst other things, a desire to reduce competition and to increase the scale of enterprises. Some companies became involved in vertical integration, being particularly anxious to secure their supplies of coking coal and iron ore (the US relied very heavily on indigenous ores at this time). The steel industry was clearly in need of restructuring by the early 20th century having grown in the main out of its predecessor, the iron industry. In 1901, the US Steel Corporation was established. This huge ...

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