Friday, November 14, 2008

Steel Anchor

It's like back to the future. The weakest part of the American economy may again be heavy industry. Despite a phenomenal run in recent years, the global steel industry has dropped faster than it ever did in the past. I would venture a guess that steel demand has collapsed faster than it did in the 1980's. Some of that drawdown has finally hit home. News out of 677 layoffs at US Steel, 500 in the US and not all of that in Pittsburgh, but for some it will bring back memories. I suspect the 500 will be split between ET, Gary and the few other US Steel locations in the US. Probably under a hundred here. There was a time that would not have even made the news.

Actually the numbers are remarkable. The 677 workers are described as 3% of the companies North American workers. So US Steel in North America employs 15-20k workers. What was it 30 years ago? 100K? 150K? more? US Steel has fewer workers across the entire US today than it once employed just at the Homestead steelworks alone.

But imagine what things would be like here if steel was still the predominant industry and it literally shut down as it has globally in just the last few months. It would soon be far worse than 1982. At the end of 1982, US Steel had nearly 50 thousand workers on layoff, roughly the same size as its entire global (not just US) workforce these days.

I really can't quite get my head around what it means that there is so much talk of bailing out the auto industry these days yet there was virtually no attempt to save steel back then.


Blogger Don said...

Good post. I don't have the statistics to back my humble opinion is that back then we had more faith in the market's self-correction mechanism and today we do not.

Friday, November 14, 2008 12:14:00 PM  
Anonymous Anonymous said...

Ideology has got to be a big reason why there was no talk of bailouts back in the 80s. We did get Reagan cheese, though.

I haven't read anyone who cited the 1980s steel industry collapse as a reason for bailing out the auto industry this time around.

Friday, November 14, 2008 3:37:00 PM  
Blogger Burgher Jon said...

First off, great post!

If anything the 1982 Steel Collapse is a reason not to bail out the auto-industry. After all we survived it didn't we? In 1982, some (in my opinion wise) politicians realized you can only bail out the American portion of a global industry in which we are not the strongest force so many times. The simple fact is that the Japanese and many of the europeans make BETTER cars FASTER and CHEEPER then we do. The economically efficient thing to do is to let the American Auto Industry die (or at least much of it will die) and replace it with something that we do WELL. Detroit will suffer as Pittsburgh did, but it will find a way to reinvent itself.

Monday, November 17, 2008 9:15:00 AM  

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