From Allentown to the Present: How the Iron and Steel Industry Changed

The sale of US Steel to Nippon Steel prompts the question, what has happened to steel-making in the United States? The answer, in a sense, is obvious: the main source of iron ore in the United States has thinned out. From the mid 19th to the late 20th century, the United States dominated steel-making. Pittsburgh—though far removed from the country’s main deposits of iron ore—became the foremost center of steel-making. US Steel, when it was formed, was headquartered there.

Just as the Ohio River is formed by the confluence of the Allegheny and Monongahela Rivers, Pittsburgh emerged as a steel-making city because it was at the confluence of coal from West Virginia and iron ore from Minnesota and the Upper Peninsula of Michigan.

For decades, iron ore from the Marquette, Menominee, and Gogebic iron ranges of the Upper Peninsula, and from the Mesabi range of Minnesota was transported by ship to Cleveland, and then by rail or barge canal to Pittsburgh. At the same time, coal was transported by rail from mines in West Virginia to Pittsburgh.

After a hundred years, by the late 20th century, the iron ore thinned out and underground coal mining mostly gave way to open pit coal mining and natural gas. Not only did steel-making in Pittsburgh close-down, but steel-using industries in Pennsylvania and the industrial Midwest found it difficult to compete. For steel-making, the end came abruptly, with the recession of 1981-1982. For steel-using, the decline was more drawn out.

Billy Joel memorialized the workers of the steel industry in his 1982 song “Allentown.” A generation believed that if they graduated high school and kept their nose clean, there would be a job for them in a steel mill, as there had been for their fathers. This generation found instead that those steel mills were closing down.

Similarly, Gordon Lightfoot memorialized the crews of the iron ore lake freighters in his song “Wreck of the Edmund Fitzgerald.” In 1975, the Edmund Fitzgerald departed Superior, Wisconsin, with a load of iron ore bound for Detroit, Michigan. The ship was caught in a storm, and—while it could have made it to Whitefish Bay in about an hour—it sank, taking the lives of all 29 sailors on board.

Tennessee Ernie Ford memorialized coal miners in his song, “16 Tons.” “You load sixteen tons, and what do you get? Another day older and deeper in debt.”

How did a coal miner owe his soul to the company store? At the time, mining companies often paid their workers in advance, in scrip that would be received at company stores. With low pay, miners often fell behind in their debts, which was fine as far as coal-mining companies were concerned, because indebtedness secured their workforce.

For a time, US Steel was by far the largest steel-making company in the world. US Steel was added to the Dow Jones Industrial Average in 1901 immediately upon its organization. For decades, US Steel was joined by several other metal companies in that index. US Steel was substituted out of the index in 1987. Bethlehem Steel—the last remaining steel-making company in the index—was substituted out in 1991. Alcoa—the last remaining metal company in the index—was substituted out in 2013. Today, the Dow Jones Industrial Average is mostly composed of technology, financial and retail companies, as opposed to old-fashioned industrial companies.

Today, the largest American steel-making company is Nucor, a recycling company. Nucor uses “mini mills” and electric arc furnaces, as opposed to blast furnaces. Its source of iron and steel is scrap, such as old Japanese cars and old Korean kitchen appliances.

As for iron ore mining, advances in smelting enable steel-making companies to process the low-grade ore remaining in the Mesabi range at a profit. The material is transformed into pellets at the site, for ease of handling, and then transported to blast furnaces in the United States, Canada, and elsewhere in the world. Considering inflation, the price of steel has fluctuated substantially over the years, but is about the same today as it was in the early 1980s.

While popular culture seems to dwell on tragedy, the creative-destruction of the market process also involves progress. Better pay and working conditions, reduced rates of industrial accidents and higher standards of living don’t just happen. These things are gained through change brought about by economic growth.