Steel Mills

Although the United States steel industry faces widely publicized economic problems that have eroded its steel production capacity, not all branches of the industry have been equally affected. The steel industry is not monolithic: it includes integrated producers, minimills, and specialty-steel mills. The integrated producers start with iron ore and coal and manufacture much more expensive products than minimills do and commonly have an active in-house research-and-development effort.

Both minimills and specialty-steel mills have succeeded in avoiding the worst of the economic difficulties that are afflicting integrated steel producers, and some of the mills are quite profitable. Both take advantage of new technology for refining and casting steel, such as continuous casting, as soon as it becomes available. The minimills preserve flexibility in their operations in order to fulfill a customer’s particular specifications.

Among the factors that constrain the competitiveness of integrated producers are excessive labor, energy, and capital costs, as well as manufacturing inflexibility. Their equipment is old and less automated, and does not incorporate many of the latest refinements in steelmaking technology. (For example, only about half of the United States integrated producers of integrated producers is an inherently inefficient process that is still rooted in the nineteenth century.

Integrated producers have been unable to compete successfully with minimills because the minimills, like specialty-steel mills, have dispensed almost entirely with the archaic energy-and capital-intensive front end of integrated steelmaking: the iron-smelting process, including the mining and preparation of the raw materials and the blast-furnace operation. In addition, minimills have found a For these reasons, minimills have been able to avoid the economic decline affecting integrated steel producers.