Death of American Industry

This article is interesting in many ways.  It highlights the shift that is taking place that is slowly taking shape around the world with China and their “industrial revolution.”  The steel industry has long been an American dominated industry because its superior manufacturing processes.  China has been making serious in roads to compete locally.  The article talks about the implications of opening the proverbial “can of worms” of using Chinese steel to build United States infrastructure.  It speaks of the price differential between Chinese and US steel, and it talks about the future of the steel industry.  The United States steel industry could have an uphill battle for future construction and bridge work if the steel used in the bridge projects in New York and San Francisco prove out to be high quality.

The common thought within the United States manufacturing and building sector was (and still is) that Chinese steel was inferior and could not be trusted.  The American Recovery and Reinvestment Act was supposed to help out industries like construction and the steel industries by putting limitations on where you can buy material and employing people.  The problem with this restriction, is there has been so much consolidation in the steel industry that many items are not made by ANY American producer.  In some cases, even if there is the American alternative, the price can be much higher and the project manager needs to reassess its job priorities.  The article talks about the situation where a company was able to find material in the United States that was almost double the price of the imported steel.


The steel industry and the manufacturing world run in tandem.  Manufacturing has been sputtering in the United States and the steel industry is dependent on people buying cars, appliances, and building infrastructure.  The manufacturing sector has defected overseas to places like China and India because of cheap labor. The majority of the construction industry has stayed within the United States because of the superiority of the American made steel products.  Companies like Nucor have had a stranglehold on the construction industry because of the high quality, yet economically made steel that they were able to produce. The danger, as the article talks about, is the threat on the construction industry which has started to shift towards Chinese steel.  I think that if President Obama extends tariffs, it will have a temporary positive effect on the industry by putting China and the US on equal footing in terms of pricing, but what is the long term game?

While I agree that it is important for China and the United States to be on an equal playing field, I think that the bigger problem is the need for more planning within the industry to become a feasible and efficient producer of steel and employer of American jobs.  Assessing our risks of bringing in more capacity to the industry vs. not being a significant player will be something to watch for.  How does the industry help bring manufacturing jobs back into this country without a plan towards the future?


Main Article:

Supporting Articles:


To Invest or Not to Invest – That is the question

I was checking out the Financial Times of London today and found an interesting story about resurgence in the American steel industry due to the development of shale natural gas and oil supplies. Basically as you may or not know, there is a large energy revolution within the US in the form of capturing natural gas and oil supplies through a process called fracking. As part of this process, there is a significant need for steel tubes to act as a casing for the shafts into the ground a well as for the drilling machinery.  While this reinvestment in the US steel industry is being fueled by demand from the energy boom as well as the fuel itself being captured from this book, I think the real story is the potentially poor planning that is being brought to light by the story.

Steel Tube Production

One of the major examples of poor planning by American steel firms that lead to their downfall was the fact that they did not plan for the future of the industry or evolve processes as required to ensure their survival. From reading the article, it seems that this same chain of errors is taking place once again within the steel industry. While it is true that there is a renewed demand for steel due to this boom, the boom is quite limited and the number of players within the expansion along with the sheer volume itself will provide a significant challenge.  For example, the article quotes both the fact that expansion will increase the US’s steel tube production by 60 percent while it also remarks the fact that there will be a lot of shifting to producers at lower causing a cannibalization of the industry.

Upon reflection of this story, I think that there is almost an emotional high that is taking the place of logical analysis of the market place. Why is this so important for us to recognize in our studies of project management? As we have learned in class from our participation in the ever-changing project resource allocation exercise, the reality on the ground is ever changing. I think firms that are currently expanding within the US Steel industry are not considering the overall impact of such expansions into a market place ripe for adoption by domestic producers which are already in a position to lock out competitors through locking up demand fueled by cheaper fuel sources.

The second emotional link that can be observed in my opinion is the fact that many of these firms are all expanding and entering the market at the same time without a thought as to the long term demands. This also relates to our studies of needing to be fluid with how we handle projects. A relatable example would be how we react if our charitable projects were to derail? Would we stay the course or attempt to reignite our efforts through a totally new strategy?  What if a project at work implodes? Would you be able to make the necessary divestments to bring about a successful completion or perhaps a total scrapping of the effort?

Steelmakers reap benefits from US shale gas revolution