Once the great symbol of American industrial strength, the steel industry by 1960 had begun its fall to a position of confusion and weakness, while its leading off-short competitors--primarily Germany and Japan--were surging into the world market. Most accounts of this shocking fall have focused on the short-sightedness of steel executives. But in The Decline of American Steel, Paul Tiffany offers a much broader perspective on the post-World War II steel industry, identifying the long-standing antagonism among steelmakers, government, and labor as the root of this industry's decline.
Focusing in particular on the crucial interval from 1945 to 1960, Tiffany finds that a combination of public policy failure, excessive labor demands, and management shortcomings accounted for the industry's subsequent problems. Immediately after the war, the Truman administration, worried about what it believed would be pent up demand for steel, pressured the steel producers to expand capacity by building new mills. The industry was skeptical about increased demand and only reluctantly took the less expensive "rounding out" approach (adding on to existing mills), instead of the more costly and time-consuming "greenfield" approach (building mills from scratch). As a result, the industry was saddled with obsolete mills and could not compete effectively with Germany or Japan. The leaders of the United Steel Workers union were equally short-sighted, says Tiffany, particularly during the disasterous strike of 1959, which permanently opened the doors to foreign steel.
Neither steel managers, nor union leaders, nor several Administrations escape blame in this study. If they had worked together, Tiffany argues, the industry might have maintained its dominant position in the world market. Instead, they provide a valuable lesson for executives, union leaders, and politicians involved in any aspect of the national economy.
Focusing in particular on the crucial interval from 1945 to 1960, Tiffany finds that a combination of public policy failure, excessive labor demands, and management shortcomings accounted for the industry's subsequent problems. Immediately after the war, the Truman administration, worried about what it believed would be pent up demand for steel, pressured the steel producers to expand capacity by building new mills. The industry was skeptical about increased demand and only reluctantly took the less expensive "rounding out" approach (adding on to existing mills), instead of the more costly and time-consuming "greenfield" approach (building mills from scratch). As a result, the industry was saddled with obsolete mills and could not compete effectively with Germany or Japan. The leaders of the United Steel Workers union were equally short-sighted, says Tiffany, particularly during the disasterous strike of 1959, which permanently opened the doors to foreign steel.
Neither steel managers, nor union leaders, nor several Administrations escape blame in this study. If they had worked together, Tiffany argues, the industry might have maintained its dominant position in the world market. Instead, they provide a valuable lesson for executives, union leaders, and politicians involved in any aspect of the national economy.
