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Did China or Automation kill America's Steel Industry?

Posted on 3/2/18 at 11:36 pm
Posted by TaTa Toothy
Everything in its right place
Member since Sep 2017
944 posts
Posted on 3/2/18 at 11:36 pm
Or both?
Posted by olddawg26
Member since Jan 2013
24560 posts
Posted on 3/2/18 at 11:38 pm to
Posted by rpr4695
Member since May 2013
2093 posts
Posted on 3/3/18 at 12:06 am to
Both and add the free market to that.
Posted by auggie
Opelika, Alabama
Member since Aug 2013
27757 posts
Posted on 3/3/18 at 1:18 am to
It's probably more due to EPA regulations.
Even with Electric Arc Furnaces,making steel is very dirty,and it's very costly to clean the output of a steel mill up.The air,the water,the by products.

To meet EPA regulations,you end up having to use a certain quality of products in production,and those cost much more money.
Cost of electricity is also very major.
Labor is a very small factor in the price of U.S. Steel nowadays. I have heard that it is less than 2%.
I worked in a steel mill,and I think that is pretty much correct. It doesn't require a ton of people to make a shite load of steel anymore.If you put your steel mill in a place where labor is cheap (china) though,you can bypass automating many parts of the process and just use human labor with shovels.Start up cost is greatly reduced. You can add computer controlled alloy and silica hoppers later,after you've killed a few hundred people.
Then there is the cost of aggressively addressing worker safety. The best boots,kevlar gloves,certain clothing,shields,safety glasses,explosion proof windows and walls for control rooms,the best of everything,and it wears out fast in a harsh environment. Crane straps,hooks,safety railings,walkways,fire safety..this stuff is never ending and costly.

Other countries don't have to deal with all of these issues like The U.S. does,because people are their most expendable resource.

Because of all of these issues,it is also much cheaper to BUILD your steel mill in Indonesia,Malaysia, or China.Probably a billion dollars cheaper.
This post was edited on 3/3/18 at 2:41 am
Posted by AUstar
Member since Dec 2012
16984 posts
Posted on 3/3/18 at 3:16 am to
quote:

Both and add the free market to that.


Add the EPA to that as well. It is virtually impossible to smelt certain types of metal in the U.S. thanks to environmental regulations. Most of our scrap copper goes to China for recycling because it's too expensive to do it here (thanks to EPA). While metal working can be toxic and there should be regulations, China is not hindered by any such regulations (they care not about the environment). Therefore, the metal industry is yet another industry China controls.

Libs are happy to destroy industries here for environmental reasons, but don't give two shits if we kick the can down the road and allow other countries to pollute for us. Libs like their metal too, they just don't want the American economy to benefit from it.

If Libs really cared about the environment, they wouldn't buy smartphones (all made in China). Why are smartphones made in China? It ain't because of slave labor. Labor is only a SMALL percentage of the savings a company gets moving over there. The big reason people move is because of 1) Taxes and 2) Lack of regulations. China doesn't care about the environment and companies don't need expensive insurance to manufacture over there. It's a "do whatever you want" attitude China affords these corporations and they are happy to take advantage. Meanwhile the CEO's of these same companies have the gall to lecture Americans about the environment and bitch about Trump lowering taxes. These hypocrites specifically moved to China to avoid high taxes and environmental regulations.

I don't care if someone is an environmentalist. Cool. What bothers me is the hypocrisy. If you are an environmentalist, I have a few recommendations:

1) Sell your car and ride a bike

2) Cut power to your home (unless you are self-sufficient with solar panels)

3) Do not buy smartphones

4) Never take a plane anywhere

5) Do not buy products from China

Do all those things, and you are cool in my book. Otherwise, STFU.
Posted by NC_Tigah
Carolinas
Member since Sep 2003
123769 posts
Posted on 3/3/18 at 4:45 am to
quote:

Did China or Automation kill America's Steel Industry?
Or both?
Unions killed the US Steel Industry.
Posted by auggie
Opelika, Alabama
Member since Aug 2013
27757 posts
Posted on 3/3/18 at 5:08 am to
quote:

Unions killed the US Steel Industry.


Not so much,labor costs in steel production are very low,even in Union Mills.
Most steel mills operate ,using a production bonus (even union mills) as a big part of the wages. Not a flat hourly wage,even though bonuses are based on the employee's hourly rate.This changes attitudes entirely,because the mill needs to be producing for the workers to make the best money,and the job descriptions are not as stringent as other type union factory jobs.

Of course,you are always going to hear that used as a major reason to make steel elsewhere.
They can't exactly come out and say,"we can pollute the air in other places,so that saves big money,we can overlook safety measures in other places,so that saves big money. We can run our used water out into the rivers untreated,so that saves big money. If somebody gets killed or maimed,it doesn't cost us nearly as much money,hell,we can even put insurance policies on the workers,and get paid if we kill somebody! Cha!Ching!"
You won't ever hear about that.It just doesn't sound as good as blaming unions and wages.
This post was edited on 3/3/18 at 5:30 am
Posted by gthog61
Irving, TX
Member since Nov 2009
71001 posts
Posted on 3/3/18 at 5:42 am to
Ummm the us steel industry still produces 70% of what we need. That is not "killed", that is " harmed".

Might lead to better discussions if thread titles were not marinated in hyperbole
Posted by NC_Tigah
Carolinas
Member since Sep 2003
123769 posts
Posted on 3/3/18 at 5:45 am to
quote:

Not so much,labor costs in steel production are very low,even in Union Mills.
Most steel mills operate ,using a production bonus (even union mills) as a big part of the wages. Not a flat hourly wage,even though bonuses are based on the employee's hourly rate.
Perhaps we are talking different eras. E.g., Though the 1960's Birmingham was a "steel city". It was far and away the city's dominant industry. Unions, both in cost of labor, and in reticence to accept new work structure --- smaller mills, higher productivity, basically killed the industry. My grandfather was a lifelong steelworker there. He benefitted wonderfully from the Union and enjoyed a great retirement as a result. It just couldn't be sustained for those who followed him.

Since then, there has been a slight resurgence in the US steel industry. Unions likely recognize the role they played in previously shuttering plants, and have modified their approach. Perhaps that is your reference.
Posted by cokebottleag
I’m a Santos Republican
Member since Aug 2011
24028 posts
Posted on 3/3/18 at 5:49 am to
Never seen someone so completely dominate a thread so quickly with facts.

The rest are just pretenders.

Posted by Vacherie Saint
Member since Aug 2015
39372 posts
Posted on 3/3/18 at 6:17 am to
Great thread so far. Automation shouldn't kill any industry. If anything, it should create higher productivity. For example, China spends more on robots than anyone in the world.

Our steel industry is affected by cheap, often subsidized imported steel, unions, and environmental regulations mainly.
Posted by Retlaw
Atlanta, Georgia
Member since Sep 2013
1253 posts
Posted on 3/3/18 at 6:49 am to
China? I thought we imported way more cheap steel from Canada and Mexico than we ever have from China.
Posted by RolltidePA
North Carolina
Member since Dec 2010
3466 posts
Posted on 3/3/18 at 7:13 am to
A lot of you guys nailed it. The decline of the industry typically gets blamed on labor costs and inflexible union practices, which was a significant factor, but wasn’t the only factor.

I grew up in Pittsburgh, specifically during the 70’s and 80’s during the mass decline of the industry. A lot of family members worked either directly, or indirectly for the steel industry. Really what it boils down to, is that the business was rapidly changing, from regulation, labor structure and modernization of technology. Both from the corporate and labor side, they were unwilling to change enough to keep up with the business.

Now if you talk to the man on the street in Pittsburgh, they’ll make no bones about it. They’ll tell you, it was complex, but the unions killed the business there. That may not be the case more broadly for the industry in the country, but was the main factor in Pittsburgh. My dad would tell me, if you can drop out of school in 9th grade, get a job in the mill and be driving a Cadillac and buy a home 3 months later, something is wrong with the labor dynamics. When the union can dictate what type of innovation a company can make and have minimum employment number requirements, you’re going to destroy a businesses ability to make necessary modernization. Again, this is the Pittsburgh specific take on things and not the overall business.
Posted by Rebel
Graceland
Member since Jan 2005
131181 posts
Posted on 3/3/18 at 7:15 am to
Steel Workers Union killed US Steel.
Posted by LSU7096
Houston
Member since May 2004
2490 posts
Posted on 3/3/18 at 8:05 am to
You forgot to include union wages/benefits as cause for decline in the industry.

If your labor costs are too high for a commodity, you will not be competitive.

I do think that foreign countries like Russia and China which have quasi private/government companies greatly benefit from subsidized energy prices that allows for lower production costs.

Once the EU can break the RF monopoly on gas transmission, you will see Putin and his colleagues in trouble, as the industries benefiting from energy being sold at or below production costs will cease. When the EU has enough gas to cause the RF to sell it externally & internally at market rates, this will be a major tipping point internally in Russia steel & energy oligarchs and their politicians.


Posted by Boatshoes
Member since Dec 2017
6775 posts
Posted on 3/3/18 at 8:11 am to
quote:

Labor is only a small part of the savings.


False. The average median income in the first world countries of the EU, North America, and Australia/New Zealand is anywhere from 1000% to 1500% higher than those of third world countries like China and India.

Not that regulations don't play a part - and we should be addressing that on the home front - but the labor savings are massive and using blanket tariffs against countries with low standards of living to equalize that part of the equation is a very good idea.
This post was edited on 3/3/18 at 8:13 am
Posted by Zach
Gizmonic Institute
Member since May 2005
112393 posts
Posted on 3/3/18 at 8:42 am to
I read a fascinating explanation about what is wrong with the US Steel industry. It was WWII. During the war steel factories were a prime target all over the world for bombing. But our steel plants never got touched.
That meant that in the 1950s all the new plants were brand new with brand new design and technology. Ours were just refurbished from the original plants that were really old. It's an interesting idea.
Posted by Dale51
Member since Oct 2016
32378 posts
Posted on 3/3/18 at 8:47 am to
quote:

Unions killed the US Steel Industry.


That^. Eventually they kill every public and private entity they touch. Their time can and passed decades ago.
Posted by 76Forest
Member since May 2011
124 posts
Posted on 3/3/18 at 9:39 am to
Seems to me we were most worried about Japan when our domestic steel industry was in decline in the 70s and 80s. The issues, as I recall, were unions labor costs, and old technology - which may have been related. Just like the auto industry in the 60s and 70s got beat technologically by Japan while we were worried about keeping unions from going on strike again. In the end Japan's "modern mills" and Quality practices gave them a huge advantage, in steel and autos. China was still a backward, uncompetitive country. Modern technology might really put us back in the lead, but how long will it take?
Posted by Taxing Authority
Houston
Member since Feb 2010
57074 posts
Posted on 3/3/18 at 9:41 am to
quote:

Because of all of these issues,it is also much cheaper to BUILD your steel mill in Indonesia,Malaysia, or China.
This. And the fallacy of Trump's theory on this is that the tariff will cause investment here. It won't because it doesn't address the real issues. It's just going to make consumer pricing for goods higher.
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