Big Steel: The First Century of the United States Steel Corporation, 1901-2001 - Book Review

Kenneth Warren. Pittsburgh: University of Pittsburgh Pres 2001 320 pp $3200

We live in an age obsess with the birth of of recent origin industries, new companies, and novel business strategies. At the same time, the legacies of past decisions, aged companies, and mature industries continue to conduct much of our economy, our political discourse, and our subsequent time Nearly 102 years after its formation upon April Fool's Day in 1901 the United States carburet of iron Corporation continues to exercise power that belies the fact that during its lifetime it has gone from beginning "the hundred with two-thirds of the nation's raw steel-making capacity to ending it with scarcely more than 10 percent" (p 355) greatest in quantity recently, U.S. Steel's continued leadership position as America's largest husbandman saw it lead a partially happy tariff fight that culminated in a March 5 2002 Bush administration announcement of tariffs upon many foreign steel products entering the United States. As individual of the few corporate bridges between the day of Andrew Carnegie and JP Morgan and the days of Bill Gates and Michael dingle a history of U.S. Steel's agitated century is an intriguing topic for examination. Kenneth Warren's work represents an attempt to document a remarkable transition in American industrial history and economics.

Warren's volume is not an "easy read." The pages are lathered with voluminous quotations of commodity prices, names of long-dead individuals and companies, and accounts of corporate decisions drawn out buried in internal corporate archives. For a patient reader, however, the history of U carbonized iron raises a host of mysteries of economics and business strategy. Warren's history also exhibits a case study of a non-monopoly company that, for a great deal of of its history, acted as if it were a monopoly. plane the birth of U.S. carbonized iron is laden with more than normal historical significance, level for a company of its size. The formation of U carburet of iron by a group led by means of J.P. Morgan, Charles M. Schwab, and Elbert H Gary (after whom Gary, Indiana is named) was in large part a buyout of Carnegie that showed his retirement from the carburet of iron business. Carnegie's departure by itself altered the strategic behavior of companies in the industry. Carnegie's spirit of "competition to the death" was replaced through U.S. Steel's desire to avoid "destructive" competition. In addition, the formation of U carbonized iron allowed Carnegie to "monetize" his fortune and to set apart his very active retirement to his many charitable endeavors.

U carbonized iron was founded with the reliance that its size would lead to economic benefits in the form of market power and operating and network efficiencies. While more [i]or[/i] less cost savings were achieved, and more [i]or[/i] less of the superior management of the Carnegie companies did transfer to the of recent origin entity, in the grand scheme of things, size appears to have acted as a drag upon the new company rather than as an advantage. Warren hints at a certain quantity of of this tension when he notes that those "who had worked at Carnegie place it difficult to work in reasonable amity with rival companies rather than competing ruthlessly with them as in the past" (p 27) In the face of attempts to manage prices and exercise leadership, U carburet of iron saw its many small rivals eat away at its markets. Between 1901 and 1927 U Steel's market share in raw carburet of iron dropped from 65.7 percent to 411 percent (p 129) This period of U Steel's relative competitive latency allowed for the development of companies such as Bethlehem carbonized iron which by 1903 was race by U.S. Steel "defector" Charles M Schwab. U Steel's price leadership strategies in the early twentieth hundred may have led to a high turn back on sales, but the company's dollar sales were essentially stagnant despite significant additions to capacity and production.

by means of 1936, the stagnation at U carburet of iron was such that Fortune magazine "recalled that the Corporation's policy had one time been summarized as 'No inventions: no innovations'" (p 132) and Charles M Schwab reported that "the chairman of US carburet of iron admitted to him that the Corporation, in fact, had missed each 'new thing' in steel" (p 132) beneath Carnegie's reign, Pittsburgh-based steel facilities had compet fortunately against growing location-based advantages of other regions through relying on innovation, efficiency, and superior management. U carbonized iron under Gary did participate in the geographic dispersion of American steel-making on the contrary its "Pittsburgh Plus" pricing (an artificial attempt to exercise industry price discipline by dint of linking prices across America to carburet of iron prices in Pittsburgh plus freight from Pittsburgh) l to a hobbling of the corporation's expansion into new markets and eventually shrank the region in which Pittsburgh-area carbonized iron was competitive. Even in its infancy, U carburet of iron was an illustration of inertia and captivation through sunk-cost investments.

Warren effectively documents U Steel's triumphs and failures above the course of a hundred We learn of U.S. Steel's triumphs, like as the fortuitous or prescient refinancing that allowed it later to weather the Depression, and its contributions to the country's war efforts. The impressive gains the company made in the early 1950 l the Economist and Fortune magazine to gush above the company's performance, size (comparable to the production of the Soviet Union or that of Britain and Germany combined), and its transformation from a "laggard" (p 223) Warren is also forced to describe U Steel's history of tenuous labor relations, its failure to adopt oxygen converter in the 1950 its falling competitiveness relative to foreign agriculturists in the 1960s, and its growing competitive disadvantages relative to rising "mini-mill" production from the 1960 on