The latest edition of Brian Potter’s Construction Physics newsletter is a history of U.S. Steel. He goes through why the company was formed, what it did when it dominated the world’s steel market, and what it has done in the decades of steady decline since then.
He condenses a lot of history into something you can read in one sitting. There are two recurring themes: consistent unwillingness to adopt new technology, and consistent willingness to use government and industry to block competition.
He mentions “Gary dinners,” where U.S. Steel’s Elbert Gary would gather steel executives to cartelize the industry. It’s a perfect illustration of Adam Smith’s warning from the Wealth of Nations: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
Here’s the gist of Potter’s article, from his conclusion:
Arguably, US Steel has been a disappointment since the day it was formed. It was created as a fundamentally conservative reaction to the vicissitudes of the steel industry, and this guided its early years and shaped its culture. The economies of scale it achieved were never passed on to the consumer, and instead it used its size to bully other steelmakers and extract money from consumers. When this stopped working, it used its political influence to prevent consumers from buying low-cost foreign steel. Improving the efficiency of its operations was something it did as a last resort when left with no other options.
The company’s large size made it unwieldy to manage, and it was late to every major advance in steelmaking technology of the last 100 years, from continuous rolling to the basic oxygen furnace to the minimill. When the company did try its hand at technology innovation, it reliably made missteps. . . . As far as I can tell, no major steelmaking technology over the last century came out of US Steel.
The US Steel of today is a far cry from the industrial giant of the 20th century. But being transformed into a lean, competitive company doesn’t seem to have changed its fundamental culture, a company that’s content to be a follower, rather than a leader in technological development and pushing the industry forward.
The whole article is worth your time, if you’re interested in a slice of American industrial history. Read it here.