Struggles in the United States Steel Industry :: Business Essays

Struggles in the United States Steel Industry In the past decade the United States has encountered many challenges to its steel industry. The steel industry has changed tremendously since the early 1900’s when the United States dominated the steel market. According to figures on a Global Steel Business website, in 1900, the United States produced 37% of the world's steel. Now Asia produces 40% of the world's steel and China is the world leader in steel production. The United States decline in steel production has forced the United States to import 24% more steel in 1999 than 1998. (GSB 1) There are many reasons why United States steel industries are struggling. One main reason is the recent increase of steel production in poorer foreign countries. These countries have weak economies and are able to produce steel cheaper than the United States by paying smaller wages and using cheaper, less safe ways of producing steel. (GSB 1) An article headed by Global Steel Business writes â€Å" these economic stricken countries pay an average of four dollars less an hour than the United States.† (GSB 2) It also writes, â€Å"the methods used by such countries are abnormally dangerous.† (GSB 2) These changes have increased the United States imports from 98-99 from Japan 147.8%, South Korea 93.3% and Russia 53.3%. Another reason the United States is struggling is due to steel dumping. Dumping is the process when a company takes part in â€Å"pricing items below their production cost to drive competitors out of an import market† (SD1). Many countries, in cluding Japan, have been accused of steel dumping by the United States. Countries such as Japan are able to do legally dump steel on the United States do to their foreign government subsidies (SD1). According to an internet site dealing with steel dumping, â€Å"The U.S. Commerce Department ruled that Japan sold steel as much as 60% below fair market value† (SD1). The United States steel companies can't compete with these foreign steel prices and are constantly undersold. A third reason United States Steel companies are struggling is the problem within the company's management. Unlike a century ago when large companies ruled the market, now most steel companies are smaller. A recent article in The Economist magazine explains that these small companies often don't have the managerial skills to compete in the â€Å"highly complicated steel market† (The Economist 83).