U.S. Steel Industry: History, Overview, and SWOT Analysis

Introduction

This paper examines the United States steel industry and its current status on the world market. First, it provides a brief history of the steel industry. Second, it offers an overview of how the industry is currently performing. Third, it presents a SWOT analysis of the steel industry, evaluating the industry's strengths, weaknesses, opportunities, threats, and trends.

History of the Steel Industry

For as long as the United States has been a nation, steel has been an important industry. It began with iron mining in Virginia and Massachusetts, and by the year 1700 the Americas were producing 2% of the world's iron. Demand grew, and as a result so did production of a specific form of iron called pig iron. "In 1723 only fifteen tons were exported, all from Virginia and Maryland" (Gordon, 2004, par. 3). By the Revolutionary War, the United States was producing one-seventh of the world's supply of iron. After the war, these numbers increased markedly as mills producing nails, hinges, and plows were built in other states.

Up until the Civil War, the United States imported most of its steel. With the advent of steam technologies, this changed and opened a whole new market. After the Civil War, the steel industry grew at astonishing speed as the nation's new economy expanded to become the world's largest. During this time, "steel production increased from 1.25 million to more than 10 million tons" (Gordon, 2004, par. 11). This growth continued through the World Wars but peaked in 1969 at 141,262,000 tons produced. The industry then began facing competition abroad from producers who could make more steel faster and at lower cost. By 1988, production had fallen to 102,700,000 tons, and the industry showed signs of weakness as it began to lose employees (Gordon, 2004, par. 15). The United States steel industry has since become competitive on the world market once again, but the Steel Age has been replaced by that of the computer and microchip.

Overview of the Steel Industry

Vicki Smith (2005) writes, "Borders have blurred as the ever-changing Steel Industry goes global, with fewer major players duking it out" (par. 4). The global market has made it possible for American companies to produce steel for foreign firms. Where the United States industry was once the dominant giant, a growing trend has been to look abroad for better or cheaper steel. Not only European countries are at the forefront of this shift — the United States steel industry is also facing significant competition from China.

American producers have lacked the consolidation achieved by competitors in other countries, and as the domestic supply starts to shrink, more plants close and blue-collar towns decline. Compounding the situation, the United States began importing cheap steel from abroad, alongside new trade law agreements imposed during the Bush administration. All of these changes have left the American steel industry in a period of adjustment and recovery.

Conclusion

This paper examined the United States steel industry and its current status on the world market. It traced the history of the steel industry, provided an overview of current conditions, and presented a SWOT assessment evaluating the industry's strengths, weaknesses, opportunities, threats, and trends. This analysis allows members of the industry to better understand where the steel sector stands and how to implement more effective strategies to improve its competitive position.

Gordon, J.S. (2004). The Reader's Companion to American History: Iron and Steel Industry. New York: Houghton Mifflin.

Smith, V. (2005, June 29). Steel industry shrinks, brings profits, pain and pondering. The Miami Herald.com. Retrieved June 29, 2005.

SWOT Analysis. Retrieved June 29, 2005 from the World Wide Web: http://www.quickmba.com/strategy/swot/.