7/18 reply. I lived through the creation of the industrial rust belt as a rank and file steelworker/union activist in NW Indiana from 1973-1987. America’s industrial heartland declined because of disinvestment and profit taking. The destruction of the industrial plant base and of the skilled worker population that made it possible, plus the advances in technology make it absolutely impossible to restore that American industrial power house no matter how many tariffs are imposed or how many infrastucture projects the government funds. Let me paint a picture of the deindustrialization process I witnessed.
Already, in 1973, the former center of the U.S. steelmaking industry had shifted from western Pennsylvania and Eastern Ohio to Chicago and NW Indiana. The very last integrated steel mill to be built in the US had opened at Burns Harbor, IN in 1968. A friend of mine started working there that year at age 18, retiring a few years ago with 50 years of service. An integrated mill makes steel from raw iron ore and metallurgical coke. Every new steel mill built in the US since then makes steel from scrap—recycled metal.
When I started, there were ten big steel companies, all but one of which owned mills at several locations. Today there are but two or three companies with integrated mills. Many integrated mills have closed, making wastelands of the surrounding communities. Of those plants remaining open, most have been repeatedly been purchased and consolidated by one corporation/conglomerate after another..
The company I worked for was owned by a Florida family of citrus growers who had leveraged that business to own a large Mississippi River barge operation, and buying the three steel mills of the 7th largest U.S. producer—the mill I worked at was more modern than the other two plants in Ohio. This family, Lykes, used the profits from the steel mills to create one of the largest fleets of ocean-going freighters in the world. A Congressional committee in the late ‘60’s criticized Lykes for its failure to make any investment of its profits in its steel factories. In 1973 my factory had a coke plant, two blast furnaces, an Open Hearth, a new Basic Oxygen Furnace, a pipe mill producing pipe for the oil industry, a ‘merchant’ mill for things like angle irons, and a slab mill to produce the intermediate product further processed by the two mills producing sheet steel for automotive and appliances. The plant employed just under 10,000 employees, producing over 2,000,000 tons of steel a year.
Within two years the Open Hearth and merchant mill were gone. Within 6 years the number of employees had fallen to under 4000 but production had increased to 3,000,000 tons per year. During this time the entire US Steel industry routinely produced 100 million tons per year.
While my mill was still owned by Lykes I would research the cargoes of their ocean freighters as recorded by the Journal of Commerce, which details the cargo of every ship in every U.S. port. Lykes was importing many tons of steel, the very same products made in their steel factories. At the same time Lykes and the rest of the industry were stridently lobbying the US government to impose tariffs on imported “foreign steel”.
By 1978 my mill had been purchased by LTV, a conglomerate of military industrial companies that had been built via leveraged capital, i.e., loans, lots of loans. Though knowing nothing of the steel industry, this company had already purchased the 8th largest steel company, and soon thereafter purchased the tenth largest company. In annual tonnage, we were the third largest U.S. steel producer. But soon the company closed its Ohio mills, causing near depression conditions in Youngstown, Ohio. In 1984 the company demanded wage cuts or they would declare bankruptcy. Despite the cuts, bankruptcy was declared in 1986, and the pension plan terminated. A wildcat strike ensued. The pension plan was reinstated by action of the US government. But the company again declared bankruptcy and was allowed to terminate the pension plan. The federal pension insurance program pays retirees a small percentage of what had been negotiated and what they were due.
I quit in 1987 but ownership has changed multiple times. At one time the plant was owned by an Indian mega-capitalist who owned more steel mills around the world than anyone. Then a Russian oligarch owned my mill and much of the US steel industry—yes a Russian, only about 20 years ago. Almost all of my old plant has been demolished. Only the newer bast furnace,[now about 50 years old] and the continuous slab caster built in 1984 remain, now owned by the independent mill across the canal. The coke plant is gone, as is the slab mill, the pipe mill and the two sheet mills.
What I have been describing is predatory financial capitalism in action. These owners have been investment bankers, not industrialists. During this time I’m describing, US Steel Company, for more than a century the nation’s largest producer, decided to buy Exxon, the oil company, changing its Dow Jones symbol from USS to USX. The oil company has since been sold off for the great profit of some, and now the current owners have inked a deal to sell itself to Japanese steel giant Nippon Steel—provided the US government approves the sale over union objection. Let’s see what a Trump administration promising a rebirth of industrial jobs does with this decision.
But the obstacle to reindustrializing steel production in the US are insurmountable in less than a generation. The skilled workforce and practiced management that once existed in the US steel industry are substantially gone, not available even if the billions of dollars to build new capacity and the years to do it were to be attempted. I really haven’t described how the working class communities around closed mills in Pennsylvania and the Chicago area have deteriorated. It wasn’t just the employees of the big mills that lost their jobs. Hundreds of small steel fabricating companies have closed also, and that skilled workforce is no more.
Nor have I mentioned how some steel products utilized in construction are not even made in the US anymore. When the west span of the SF-Oakland Bay Bridge was rebuilt a few years ago, certain critical components had to be made in China.
Since existing US steel mills operate near capacity, where is the steel for the increased US auto manufacturing going to come from?
Finally, 76 million tons for Russia is significant. The USSR used to produce about 100 million tons annually for its larger population and territory. Restoring steel production to the Donbas is a smart move, and necessary for much steel will be needed to rebuild these war torn oblasts.
Thanks very much for your testimony. As foreign companies wanting to build factories in America are realizing, the lack of a skilled workforce is a huge hindrance and one that can't be conjured from thin air. The government aided war against labor can easily be seen as treason. You'll have noted Russia's efforts to continue the education of its specialists and establishment of 50 engineering schools nationally, a third of which are already operating. As you testified, deindustrialization took about two generations to accomplish--40 years--and reversing the process will take just as long or longer, although some industries have already consumed most of their domestic resource base.
That's why Russia's engineering schools as they realize automation is their only path given Russia's demographic problem. Putin has said many times the Russian workforce must be skilled and highly skilled, running robotics and creating other methods of heightened productivity. I'm sure you've watched video of China's automated assembly lines and the level of highly skilled automation is awesome to the point of being intimidating. Asimov tried to get the public to discuss robotics starting in the late 1940s onward via his Robot SciFi Series, but as we both know nothing of the sort occurred. As the 1990s began, it became clear to me that the economy of the future would be a knowledge-based economy, not heavily material based as was the case from @1880-1980, at least for a small portion of the world. How much of that heavy material-based economy the Global Majority will be able to bypass remains to be seen--a great deal of basic infrastructure requires those heavy materials, however.
No competitive economy for the foreseeable future can thrive without steel. Even small countries that want to advance their economies produce steel, e.g. Qatar produces 2 million tons of steel on its own.
Before I could even start finding out where Cleveland Cliffs has been getting its capital for its spree of gobbling up of other steel companies, I learned the federal grant of half a billion $ is to replace the existing blast furnace with a far less polluting process of direct iron reduction. The money comes from via the DOE because of its energy efficiency and reduction of CO2 pollution. Without explaining the chemistry of it, blast furnace produced steel results in two tons of CO2 release per ton of steel. The dri process has been slowly implemented around the world over the last 25 years, This Middletown Steel investment will be the very first dri process in the US. Meanwhile for most of a decade, more than 10% of Russia’s #5 in the world steel output has been via the dri process. India is the world leader with already built dri producing five times as much as does Russia, 34.5 million tons vs. 7.7 million tons. DRI and another still experimental competing low polluting process are the technology of the future. Once again, the US is slow out of the starting block, hampered by its private capitalization system as opposed to centralized planning models of Russia, China, and even India.
NYT article on Vance’s rust belt hometown Middleton Ohio and its distressed steel mill. Just what we’ve been discussing!! It seems Biden’s infrastructure bill is giving $500 million to the mill for modernization. The mill is now owned by the nation’s #2 largest steel company Cleveland Cliffs. I’m not as current on status of the US industry as I used to be or should be, so am unaware of what the planned modernization entails. In my day Cleveland Cliffs had one mill—in Cleveland, of course, and it was among the more distressed and least modern companies. Recently I’ve noticed reports of the company’s rebirth of sorts, with it purchasing other small steel companies and gradually rising in rank for total US tonnage. Cleveland Cliffs is the US bidder for US Steel, and would acquire US Steel if the government disallows the purchase by Nippon Steel. Buy American, indeed. I will have to research where Cleveland Cliffs is getting its money from and the degree to which it has been modernizing and how the workforce has been affected….
Thanks again for a very interesting report on a crucial industry for Russia, but especially for the Donbass
Despite the war - it is remarkable that so much progress in the steel industry has been made in this region
VVP once again shows how it is done - leaving ideology to others, as you quote in the Lavrov post, he concentrates on the how and with who by an attention to detail which alone can prove the precise value of the central government and of his intervention
This parallels the Chinese system, in which the central state via the local bureaucrats are as intelligently involved in every aspect
If VVP succeeds in his educational and regional bureaucracy reforms, as per the May 7 Order, he will have laid the basis for lasting success
Without a project and a clear strategy, all efforts go down the drain. Russia has a project, a strategy, the determination to carry it out and the necessary means to do so. If we add to all this its excellent diplomacy, its alliances and the sympathy of the majority of the world's population, its success is assured in the short and long term.
Thank you. They have the resources and the know how and we double down on the gimmicks. We carry a stick and play wack a mole while they build and support countries all over the world
In addition to the substance we are accustomed to seeing in VVP's speeches, this one cleverly uses the word "tempering" other than as an aspect of metalworking: "Your hard work, which requires professionalism, perseverance and tempering, rightfully enjoys well-deserved respect and honor."
It concerns Russia and China. I always say that the war is systemic in nature. This article makes it very clear that two mutually exclusive systems are confronting each other. This is also the reason for the hot war in Ukraine. Because the Western fiat money system is not competitive with the state capitalist systems of Russia and China. The Western system serves solely to enrich an increasingly obscene minority at the expense of the population. This mixture of speculation, manipulation and fraud is not an economy. It is simply theft.
7/18 reply. I lived through the creation of the industrial rust belt as a rank and file steelworker/union activist in NW Indiana from 1973-1987. America’s industrial heartland declined because of disinvestment and profit taking. The destruction of the industrial plant base and of the skilled worker population that made it possible, plus the advances in technology make it absolutely impossible to restore that American industrial power house no matter how many tariffs are imposed or how many infrastucture projects the government funds. Let me paint a picture of the deindustrialization process I witnessed.
Already, in 1973, the former center of the U.S. steelmaking industry had shifted from western Pennsylvania and Eastern Ohio to Chicago and NW Indiana. The very last integrated steel mill to be built in the US had opened at Burns Harbor, IN in 1968. A friend of mine started working there that year at age 18, retiring a few years ago with 50 years of service. An integrated mill makes steel from raw iron ore and metallurgical coke. Every new steel mill built in the US since then makes steel from scrap—recycled metal.
When I started, there were ten big steel companies, all but one of which owned mills at several locations. Today there are but two or three companies with integrated mills. Many integrated mills have closed, making wastelands of the surrounding communities. Of those plants remaining open, most have been repeatedly been purchased and consolidated by one corporation/conglomerate after another..
The company I worked for was owned by a Florida family of citrus growers who had leveraged that business to own a large Mississippi River barge operation, and buying the three steel mills of the 7th largest U.S. producer—the mill I worked at was more modern than the other two plants in Ohio. This family, Lykes, used the profits from the steel mills to create one of the largest fleets of ocean-going freighters in the world. A Congressional committee in the late ‘60’s criticized Lykes for its failure to make any investment of its profits in its steel factories. In 1973 my factory had a coke plant, two blast furnaces, an Open Hearth, a new Basic Oxygen Furnace, a pipe mill producing pipe for the oil industry, a ‘merchant’ mill for things like angle irons, and a slab mill to produce the intermediate product further processed by the two mills producing sheet steel for automotive and appliances. The plant employed just under 10,000 employees, producing over 2,000,000 tons of steel a year.
Within two years the Open Hearth and merchant mill were gone. Within 6 years the number of employees had fallen to under 4000 but production had increased to 3,000,000 tons per year. During this time the entire US Steel industry routinely produced 100 million tons per year.
While my mill was still owned by Lykes I would research the cargoes of their ocean freighters as recorded by the Journal of Commerce, which details the cargo of every ship in every U.S. port. Lykes was importing many tons of steel, the very same products made in their steel factories. At the same time Lykes and the rest of the industry were stridently lobbying the US government to impose tariffs on imported “foreign steel”.
By 1978 my mill had been purchased by LTV, a conglomerate of military industrial companies that had been built via leveraged capital, i.e., loans, lots of loans. Though knowing nothing of the steel industry, this company had already purchased the 8th largest steel company, and soon thereafter purchased the tenth largest company. In annual tonnage, we were the third largest U.S. steel producer. But soon the company closed its Ohio mills, causing near depression conditions in Youngstown, Ohio. In 1984 the company demanded wage cuts or they would declare bankruptcy. Despite the cuts, bankruptcy was declared in 1986, and the pension plan terminated. A wildcat strike ensued. The pension plan was reinstated by action of the US government. But the company again declared bankruptcy and was allowed to terminate the pension plan. The federal pension insurance program pays retirees a small percentage of what had been negotiated and what they were due.
I quit in 1987 but ownership has changed multiple times. At one time the plant was owned by an Indian mega-capitalist who owned more steel mills around the world than anyone. Then a Russian oligarch owned my mill and much of the US steel industry—yes a Russian, only about 20 years ago. Almost all of my old plant has been demolished. Only the newer bast furnace,[now about 50 years old] and the continuous slab caster built in 1984 remain, now owned by the independent mill across the canal. The coke plant is gone, as is the slab mill, the pipe mill and the two sheet mills.
What I have been describing is predatory financial capitalism in action. These owners have been investment bankers, not industrialists. During this time I’m describing, US Steel Company, for more than a century the nation’s largest producer, decided to buy Exxon, the oil company, changing its Dow Jones symbol from USS to USX. The oil company has since been sold off for the great profit of some, and now the current owners have inked a deal to sell itself to Japanese steel giant Nippon Steel—provided the US government approves the sale over union objection. Let’s see what a Trump administration promising a rebirth of industrial jobs does with this decision.
But the obstacle to reindustrializing steel production in the US are insurmountable in less than a generation. The skilled workforce and practiced management that once existed in the US steel industry are substantially gone, not available even if the billions of dollars to build new capacity and the years to do it were to be attempted. I really haven’t described how the working class communities around closed mills in Pennsylvania and the Chicago area have deteriorated. It wasn’t just the employees of the big mills that lost their jobs. Hundreds of small steel fabricating companies have closed also, and that skilled workforce is no more.
Nor have I mentioned how some steel products utilized in construction are not even made in the US anymore. When the west span of the SF-Oakland Bay Bridge was rebuilt a few years ago, certain critical components had to be made in China.
Since existing US steel mills operate near capacity, where is the steel for the increased US auto manufacturing going to come from?
Finally, 76 million tons for Russia is significant. The USSR used to produce about 100 million tons annually for its larger population and territory. Restoring steel production to the Donbas is a smart move, and necessary for much steel will be needed to rebuild these war torn oblasts.
Thanks very much for your testimony. As foreign companies wanting to build factories in America are realizing, the lack of a skilled workforce is a huge hindrance and one that can't be conjured from thin air. The government aided war against labor can easily be seen as treason. You'll have noted Russia's efforts to continue the education of its specialists and establishment of 50 engineering schools nationally, a third of which are already operating. As you testified, deindustrialization took about two generations to accomplish--40 years--and reversing the process will take just as long or longer, although some industries have already consumed most of their domestic resource base.
Nicely put. And beyond the shortage of skilled workers is the fact that new factories will have assembly lines more automated than ever….
That's why Russia's engineering schools as they realize automation is their only path given Russia's demographic problem. Putin has said many times the Russian workforce must be skilled and highly skilled, running robotics and creating other methods of heightened productivity. I'm sure you've watched video of China's automated assembly lines and the level of highly skilled automation is awesome to the point of being intimidating. Asimov tried to get the public to discuss robotics starting in the late 1940s onward via his Robot SciFi Series, but as we both know nothing of the sort occurred. As the 1990s began, it became clear to me that the economy of the future would be a knowledge-based economy, not heavily material based as was the case from @1880-1980, at least for a small portion of the world. How much of that heavy material-based economy the Global Majority will be able to bypass remains to be seen--a great deal of basic infrastructure requires those heavy materials, however.
No competitive economy for the foreseeable future can thrive without steel. Even small countries that want to advance their economies produce steel, e.g. Qatar produces 2 million tons of steel on its own.
Before I could even start finding out where Cleveland Cliffs has been getting its capital for its spree of gobbling up of other steel companies, I learned the federal grant of half a billion $ is to replace the existing blast furnace with a far less polluting process of direct iron reduction. The money comes from via the DOE because of its energy efficiency and reduction of CO2 pollution. Without explaining the chemistry of it, blast furnace produced steel results in two tons of CO2 release per ton of steel. The dri process has been slowly implemented around the world over the last 25 years, This Middletown Steel investment will be the very first dri process in the US. Meanwhile for most of a decade, more than 10% of Russia’s #5 in the world steel output has been via the dri process. India is the world leader with already built dri producing five times as much as does Russia, 34.5 million tons vs. 7.7 million tons. DRI and another still experimental competing low polluting process are the technology of the future. Once again, the US is slow out of the starting block, hampered by its private capitalization system as opposed to centralized planning models of Russia, China, and even India.
Russia's clearly keen on greening its heavy industry while expanding it--continual modernization as Xi would say.
https://www.nytimes.com/2024/07/16/us/jd-vance-middletown-ohio.html?unlocked_article_code=1.8U0.OLcJ.AOmMqmv5B1BP&smid=url-share
NYT article on Vance’s rust belt hometown Middleton Ohio and its distressed steel mill. Just what we’ve been discussing!! It seems Biden’s infrastructure bill is giving $500 million to the mill for modernization. The mill is now owned by the nation’s #2 largest steel company Cleveland Cliffs. I’m not as current on status of the US industry as I used to be or should be, so am unaware of what the planned modernization entails. In my day Cleveland Cliffs had one mill—in Cleveland, of course, and it was among the more distressed and least modern companies. Recently I’ve noticed reports of the company’s rebirth of sorts, with it purchasing other small steel companies and gradually rising in rank for total US tonnage. Cleveland Cliffs is the US bidder for US Steel, and would acquire US Steel if the government disallows the purchase by Nippon Steel. Buy American, indeed. I will have to research where Cleveland Cliffs is getting its money from and the degree to which it has been modernizing and how the workforce has been affected….
Thanks again for a very interesting report on a crucial industry for Russia, but especially for the Donbass
Despite the war - it is remarkable that so much progress in the steel industry has been made in this region
VVP once again shows how it is done - leaving ideology to others, as you quote in the Lavrov post, he concentrates on the how and with who by an attention to detail which alone can prove the precise value of the central government and of his intervention
This parallels the Chinese system, in which the central state via the local bureaucrats are as intelligently involved in every aspect
If VVP succeeds in his educational and regional bureaucracy reforms, as per the May 7 Order, he will have laid the basis for lasting success
Without a project and a clear strategy, all efforts go down the drain. Russia has a project, a strategy, the determination to carry it out and the necessary means to do so. If we add to all this its excellent diplomacy, its alliances and the sympathy of the majority of the world's population, its success is assured in the short and long term.
It's also favored by the vast majority of Russians. Now if only a bigger war with NATO/Outlaw US Empire can be avoided.
Amen, so be it.
Thank you. They have the resources and the know how and we double down on the gimmicks. We carry a stick and play wack a mole while they build and support countries all over the world
Agreed.
In addition to the substance we are accustomed to seeing in VVP's speeches, this one cleverly uses the word "tempering" other than as an aspect of metalworking: "Your hard work, which requires professionalism, perseverance and tempering, rightfully enjoys well-deserved respect and honor."
It concerns Russia and China. I always say that the war is systemic in nature. This article makes it very clear that two mutually exclusive systems are confronting each other. This is also the reason for the hot war in Ukraine. Because the Western fiat money system is not competitive with the state capitalist systems of Russia and China. The Western system serves solely to enrich an increasingly obscene minority at the expense of the population. This mixture of speculation, manipulation and fraud is not an economy. It is simply theft.
Bastiat said about the same about 175 years ago regarding the Rentier economies of plunder that prompted the series of 1848 revolutions. Crooke's Monday article about the happenings in Europe is also about the political outcomes resulting from the West's decline. https://strategic-culture.su/news/2024/07/15/operation-jupiter-and-a-revolution-in-the-making/