Restructuring the Steel Industry in the United States

Abstract

On a global basis, the steel industry is shrinking and restructuring. In the industrialized world, consisting of the United Stales, Japan, and Western Europe, a total of 100 million tons of steelmaking capacity have been abandoned. Conversely, the Third World is adding steel capacity. Mainland China, South Korea, Taiwan, and Brazil are expanding rapidly. However, the total amount to be added in these countries in the next two years is by no means enough to compensate for the shrinkage in the industrialized world.

The restructuring process in Japan, the United States, and Western Europe consists of four steps:

1) steel plant closures

2) mergers of steel companies

3) joint ventures between companies, both domestic and international

4) diversification into non-steel activities.

In Japan, the major companies are engaging in joint ventures with some companies in the United States, Indonesia, and Brazil. They are also entering other fields such as electronics and ceramics, In Europe, overall plans have systematically reduced capacity in the EEC countries and more is in store.

In the United States, there have been many plants closed, reducing capacity by more than 35 million tons. One major merger of Republic and LTV resulted in LTV Steel. A number of joint ventures have taken place among domestic companies and between domestic and foreign companies, and there has been considerable activity in moving into non-steel areas such as oil and gas.