Only two of the 10 largest steel companies worldwide are based in America.
First in a four-day series
CLEVELAND (AP) -- In steel cities across America, massive abandoned mills tell the story: The U.S. industry used to be giant, with dozens of thriving companies in nearly every state.
Today, the biggest steelmakers mostly have addresses abroad, and the number of independents is dwindling.
International ties are increasingly entangled: Paychecks from European employers are cashed by steel workers in Cleveland; burgeoning businesses in China are coached by American executives; and Russians are helping to rebuild aging coke ovens in West Virginia.
Borders have blurred as the ever-evolving steel industry goes global, with fewer major players duking it out for profits and bragging rights.
"Globalization is an extremely important phenomenon," said Frank Giarratani, a University of Pittsburgh professor. "We now understand that we're not shielded from competition from the rest of the world."
Of the world's top 10 steelmakers today, only two are American: Pittsburgh-based U.S. Steel Corp. and North Carolina's Nucor Corp. The others span the earth: Japan, China, South Korea, Luxembourg, Germany and the Netherlands, home of Mittal Steel Co., new owner of International Steel Group Corp. The Cleveland company just a few months ago was the largest steelmaker in the U.S.
Industry experts say the consolidation is necessary because raw materials such as iron ore and coal are scarce and must be shared. Additionally, steel's biggest customers are increasingly global, from rapidly developing India to up-and-coming China, where among the building industries is a burgeoning steel empire that the rest of the world is watching closely. Will China become a fair competitor or trample the world markets with a flood of cheap steel?
And even though prices have been volatile this year, experts say the consolidators are trying to ensure that steel production won't outpace demand, which could drive prices too low and spark a worldwide trade war. Steel companies are now able to prevent large stockpiles -- that's mainly why average prices have softened by about 30 percent this year to about $540 a ton in May for the kind of hot-rolled steel used in automaking and appliances like washers. Lower scrap costs have also contributed to lower prices.
In the United States, "competition has worked for us for many, many years," Giarratani said. "Global competition is just the next step of it. What makes it so worrisome is that we can't think ahead to what the outcomes will be. Are we going to be on the winning end or not?"
When Ron Turnick picked up his hard hat 32 years ago, he had his choice of jobs. Steel was booming, particularly in his home state of Ohio.
In 1973, his employer was J & amp;L. That became LTV Corp., then Republic, ISG, Mittal.
The names roll out much like the freshly fired steel, rolling into baths of molten coating at the Cleveland mill where Turnick is now a maintenance worker.
He's one of the lucky ones -- a steel worker who still has a job. And he knows consolidating the industry through buyouts and shutdowns was a necessary evil.
"For me, and for those there now, Mittal so far has been pretty good," said Turnick, 50, of Oberlin, Ohio. "They're keeping us working. It seems like they've trimmed down enough in the industry to keep us going."
Though he'd built a career as an electrician, Turnick is a man of many trades in the new steel world, doing whatever job needs to be done.
That's the way it is -- the way it has to be -- with fewer steelworkers and more efficiency demanded of those who remain. The days of one person, one job are gone.
Mittal's Cleveland operations employ about 1,500 of the 3,100 workers LTV laid off in 2001. They have a combined 35,000 years of steelmaking experience.
"We're still making money and that's really amazing," Turnick said. "But I do worry about the ones not called back. I have no idea what kind of jobs they have now.
"If the economy continues to be bad, will they be able to buy the cars and the products that need our steel?"
End to isolation
In the business world, globalization isn't new. However, it is for the U.S. steel industry, which lagged behind the European consolidation of the 1980s, when many government-owned businesses began to merge in response to market pressures.
Most U.S. steelmakers tried to survive alone -- restructuring, cutting tens of thousands of jobs, pushing for government aid.
In the late 1990s, when cheaper imported steel began flooding the U.S. market, the bankruptcies began. Firms hamstrung by complicated labor contracts found it difficult to streamline, and over the next few years cities like Cleveland, Pittsburgh, Gary, Ind., and Gadsden, Ala., were devastated as huge components of their tax bases shut down.
Five years ago, bankrupt Gulf States Steel shuttered a plant in Gadsden that employed 1,900 and had been an economic staple for 96 years.
The city, like other blue-collar towns, was forced to reinvent itself by attracting new retail, health care and other jobs that some of the laid-off steel workers later filled.
Leaders realize steel probably will never again be king in America, said J.R. Countrymen, a councilman in the city of about 39,000 some 60 miles northeast of Birmingham.
"You've got to just step up and do what you've got to do to survive," he said. "It was a struggle before we started seeing things turn around, but we can start seeing some daylight now."
The struggle has been just as hard for steel companies.
For 18 months, beginning in 2002, protective tariffs helped the industry regroup. Firms such as ISG swallowed up some of the bankrupt companies such as West Virginia's Weirton Steel -- minus commitments to more than 80,000 retirees.
Thousands more steel workers lost their jobs as a leaner industry emerged, trying to catch up with international competitors.
"Everything we can do to make steel faster, better, cheaper, we do," said John Armstrong, spokesman for U.S. Steel, the world's seventh-largest steelmaker and this nation's largest. "It's not the same industry."
For four generations, the Weirton mill was good to the Littleton family.
Then the boom went bust and Delbert Littleton became one of the 80,000 American steel workers whose pensions were sacrificed as the industry downsized.
Littleton, of Colliers, W.Va., retired last year after 32 years, when ISG bought Weirton Steel in a bankruptcy court auction. Now 52, he spends his days tending to a few rental properties and a farm he bought years ago.
He lost his health insurance and half his pension, but wise investments and solid savings in a 401(k) plan gave Littleton the financial freedom to redirect his life -- even though he remains uncertain which path he will take.
However, some of his friends are forced to sell auto parts and plumbing equipment to make ends meet. "These were people once making the best steel in the country," he said.
Littleton's 35-year-old son, Eric, is trying desperately to remain his family's fifth-generation steel worker. As word of 700 layoffs broke earlier in June, the father recalled trying to steer the son in another direction.
"He's the oldest of my kids, and he wanted to do what I did. Weirton Steel had given us a great living, and he felt that was good enough for him," Littleton said. "But I wasn't sure."
After the bankruptcies, many of the remaining companies began adopting the approach of nonunion Nucor, eliminating dozens of job classes in labor contracts to create more efficient, cross-trained work forces that can compete globally.
Mark Glyptis, president of the 2,100-member Independent Steelworkers Union at Mittal's Weirton mill, said workers fall into five categories instead of 30 and earn bonuses based solely on production.
"So there is some degree of peer pressure," he said. "You don't want to be the weak link."
Generally, employees have adapted well.
"Do they like every change? No. But do they recognize it was necessary? Yes," said Glyptis, a steelworker for 31 years. "Most people understand we had to do what we had to do to be viable."
After several years of domestic consolidation, companies elsewhere began taking over the American mills.
Earlier this year, ISG merged with Mittal to form the world's biggest manufacturer of steel used in highways and homes, cars and trucks, and dishwashers and dryers.