A previous version of this article incorrectly said that Esmark Inc. runs a steel mill in West Virginia. The mill is in Steubenville, Ohio.
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Steel, Forging a Comeback
In the past, large swings in the price of steel have been common, as companies were unable to adjust production to account for routine changes in the business cycle. Adding to the pressure on steelmakers, the industry was highly fragmented, fostering brutal price competition. But now three companies -- U.S. Steel, Nucor and AcelorMittal USA -- control nearly 70 percent of the country's production of sheet steel, which is used to make such products as automobiles, highway guardrails, storm doors and home appliances. That dominance allows the firms to better control price and production levels than in the past, when big buyers had more leverage in setting prices and mills found it more economical to run at full capacity, regardless of demand.
"Today you have fewer but much stronger companies that are able to manage across more volatile conditions more effectively," said Nancy Gravatt, vice president of communications for the American Iron and Steel Institute, an industry group.
Part of the credit for steel's rebirth goes to the pragmatism of the United Steelworkers. The union become a supporter of mill consolidations, agreed to more job flexibility in labor contracts and went along with a move to replace guaranteed pensions with defined-contribution plans. The union was able to extract agreements from owners to streamline companies' management ranks and set aside a share of profits to fund health-care and prescription drug plans for retirees and their families who had lost them in the wave of bankruptcies.
The union also mounted a sophisticated lobbying campaign that helped persuade President Bush to slap new tariffs on imported steel in 2002, a departure from the president's free-trade mantra.
The tariffs, which were lifted in late 2003, were in place long enough to give U.S. steelmakers some stability during a pivotal economic moment, union officials say. By then, the dizzying growth in China and other parts of the world was well underway and the dollar was weakening, altering the basic dynamic of the global steel business in favor of the domestic industry.
The mills themselves emerged much leaner and more technologically advanced, allowing many fewer workers to make roughly the same amount of steel.
Back in the 1970s, there were more than 500,000 steel workers in the United States, a number that has been reduced by more than two-thirds, even as the number of workers has edged up in recent years, according to the American Iron and Steel Institute. The amount of labor required to manufacture a ton of steel has gone from roughly 12 man-hours to about 1.2, analysts say. Steel workers continue to be well paid, union officials say, earning $65,000 a year or more, when incentive pay, profit sharing and a modest amount of overtime are included.
"Labor has become much less of a factor in the cost of steel," Rhody said. "That particular part of the equation has equalized, making domestic steel much more competitive."