Home | Business News | Browse by Publication | M | Metal Center News

Steel industry's navigating its own bumpy Route 66: like the Nation's Highway, steel industry evolution is bypassing some companies, leaving ghost towns where steel towns once thrived.

Article Excerpt
ROUTE 66, known nostalgically as Main Street America, has off been romanticized in story, song, TV and film. The nation's Mother Road was even the subject of a steel market lecture.

Economist Glenn Kidd, who recently retired from a long career at U.S. Steel, drew an apt analogy using the evolution of the nation's interstate highways and the displacement of communities along old Route 66, comparing it to the evolution of the U.S. steel industry, which is similarly bypassing some players and leaving ghost towns where steel towns once thrived.

Bringing some historical context to the subject of steel industry consolidation, Kidd explained how in the middle of the last century construction of the interstate highway system transformed a patchwork of local and regional roads, which wound from community to community, into straight, multi-lane strips of concrete that expedited travel by eliminating stops and bypassing the commercial areas that had grown up along Route 66 and other thoroughfares.

"Route 66 went through every town. Entrepreneurs along the way made a living by providing travelers with food, shelter, gasoline and auto repairs. Main Street America became prosperous. It was a successful business model. But Eisenhower's interstate highway system shook the Route 66 business model to its roots," Kidd said.

Like the Route 66 model before the advent of the interstates, the steel industry business model of the past century was also highly successful. "We were very good at what we did," Kidd said, noting that America's steel industry contributed mightily to winning WWII. "The U.S. industry was the lowest cost producer of steel in the world for half of the 20th century."

For at least a decade following the war, the U.S. industry had relatively little competition from the countries in Europe and the Far East that were devastated by the war. U.S. steelmakers got complacent, Kidd said. "The American business model is based on competition. Without competition, you get fat and lazy, and you lose some of your edge"

Hit by bitter labor disputes in the late 1950s, which were disruptive to society, steel executives gave in to government pressure and made generous concessions to steelworkers. "They made promises to the union that they really could not keep."

A few years later, the Kennedy administration was seeking to spark the economy with tax cuts. Concerned about inflation, the government exerted pressure...

View this article FREE - Now for a Limited Time, try Goliath Business News
Free for 3 Days!