Friday, November 07, 2008

Homestead: The Glory and Tragedy of an American Steel Town part 2

"The corporation was said Life in 1946, "the most fabulous giant yet produced by the industrial revolution." Steel was the basic metal on which the development of America, and the building and rebuilding of the post war world, depended. The steel making facilities in Germany and Japan had been destroyed in the war and those in Great Britain substantially damaged. since no other countries had had a sizable steel industry, the corporation and the rest of the American steel industry faced almost no competition. There were no steel imports to America and American companies dominated the export trade."

The result was astronomical profit and sleepy complacency. "In 1950, the corporation produced 31.4 million tons of steel, surpassing it's war time high of 30.8 million tons per year. It's workforce in 1950 reached 288,265, the highest level in it's history except for the war years. Profits were immense. In 1950, the corporation made 215 5 million (that was real money back then folks-- multiply by something like 20 to come up with what that equals today) three times 1946 earnings and the largest amount since 1917, during World War I, when earnings were 224 million."(Page 243)

In spite of a string of additional acquisitions, mostly of new plants built during the war and the clear intent to create a safe monopoly environment, U.S Steel's market share had dropped dramatically from the 65% it had at it's creation to 33% in 1950. The company's lazy nature breed competition from smaller American firms like Bethlehem and Republic and also soon from a few foreign competitors. The basic oxygen furnace was developed in Austria, but there was no need to worry and more than enough business to go around.

And, the workers and their union's shared the prosperity with substantial wage increases in the 1947 contracts as well as new efforts to study plant safety and provide worker health plans. The succeeding contracts grew ever more generous and the once militant union grew into a stagnant giant resembling the industry it operated in.

It seemed like the problems of production had been "solved" once and for all. The plants were looked at as giant money trees that could never die or fail and perhaps could bear fruit with little water or fertilizer. The big issue was sitting down and sharing all the fruit. Investment and invention were a dangerous, disruptive hassle, best left to somebody else. New foreign mills adopted continuous casting technologies and new management methods based on continuous improvement. In fact, most USS plants were running on obsolete equipment, but that wasn't seen as an important issue like providing higher and higher salaries and increasingly large health and pension benefits for which to little was set aside. The patient was fat, happy and terminally ill. The union and management wanted one thing--- stability and a nice even lifestyle free of change or strikes.

A new sick culture had developed in the mills. " The notion of "getting it at the mill"was now a way of life---pencils:toilet paper; hammers, wrenches, pliers and screwdrivers; nickel, brass and other metals which could be sold to scrap dealers--- almost anything people wanted, they took, blue collar and white collar workers alike." Some workers slept on the job and golf became the universal path to success among management.

"The 1963 contract contained a new item-- an extended vacation plan that gave every worker with more than five years of service a thirteen week vacation with pay every five years. The plan was extremely costly and no other American industry had anything like it. But it was, for the most part, not questioned and highly praised." One worker called the situation in the early 1970's as " harvest mode". " Take everything out you can get and abandon the rest. And when you just take out and don't put anything back in, well pretty soon your holding pieces together with baling wire." The truth is that the company was eating it's seed corn leaving future workers to starve. The union's new goal was "total job security"; the only path to anything close to that meant producing the best possible products at at the lowest possible price and it looked like that hadn't been a priority in years.

A few years later when the reckoning came, both labour and management bent over backwards to act shocked at the company's condition and to shift the blame. Kind of looks like America today, doesn't it? We were in harvest mode for too long, most of our seed corn is gone and if we don't wake up we will starve.

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