An alloy composed of iron and carbon. Its high strength and low cost have made it the life blood of virtually every American industry…and Indiana has led the nation in its production for over four decades, providing more than a quarter of our country’s total output of steel. But that kind of achievement didn’t happen in a day. Or in a thousand days…
GARY WORKS, 1925
Indiana’s relationship with steel began in earnest over a hundred years ago, when J.P. Morgan decided to close several of his Chicago-based US Steel mills and open a larger one on the shores of Lake Michigan, establishing not only the mill, but an entire city to service it: Gary, Indiana. At the time, US Steel was the largest business in world history. Within two decades, this industrial island city and its mill, known as the Gary Works, would provide employment for almost 20,000 people and operate 12 blast furnaces at its height.
The downsizing of steel production in the 80s affected US Steel as well, but instead of returning subsidies to steel production, the company decided to diversify, investing heavily in energy production, such as Marathon Oil, and becoming USX Corporation, relegating US Steel to a subsidiary company.
US Steel was not the first to set foot on Indiana’s pristine lakeshore. Several years earlier, Inland Steel built a plant at Indiana Harbor, branching out from its plant in Chicago Heights. East Chicago’s Inland Steel would become one of the largest steel producers in the country, expanding to four blast furnaces and 9,000 employees in the 1930s, flourishing even in the midst of the Great Depression.
America’s automative industry favored Inland Steel, and it expanded to 25,000 employees by the late 1960s. Maintaining profitability for decades afterwards, despite setbacks, the company was sold, changing hands and names several times, from Inland Steel to Ispat International to the ArcelorMittal of the present day.
Bethlehem Steel, once the nation’s second largest steel producer, also moved into Indiana Harbor, establishing a plant in the 1960s. Despite the company’s initial success, it was undone by a decline in the steelmaking industry and its hiring practices; the large number of retired employees meant increased costs for pensions, and while its executives drew record-settings paychecks, the company failed to properly fund these pensions, leading to lawsuits and catastrophic public relations.
It attempted to regain its former stature for the next two decades, but was forced to declare bankruptcy in 2001, with the Burns Harbor Plant going to Mittal Steel, through a system of liquidations, negotiations and mergers that seem more soap opera than steel-making.
6Decline: Constricted or Concentrated?
The downsizing of American steel in the 1970s didn’t just affect Indiana plants, but plants across the entire United States. The myriad reasons for the downsizing are, even today, as controversial as these companies’ attempt to retain, or in some cases imitate, profitability.
Among the possible causes: a sharp increase in environmental regulations, a changing tax structure, greedy management, greedy unions, or a sudden increase in imported, low-cost foreign steel (often attributed to improved relations and trade with China).
Given the size of the American steel industry in the 70s, it took years and even decades for the extent of the industry contraction to become apparent, but by the 90s, it was.
7Indiana Steel Today
Hoosier steel remains one of Indiana’s leading exports and employers. Although fewer companies exist, those that do have shown remarkable resilience and output, with a steady increase in steel production nearly every year.
Today’s chief competitor to the United States in steel-making is India, which surpassed American steel production four years ago, but since the US only imports a quarter of the steel we use, its a safe bet to say Indiana steel isn’t going anywhere anytime soon.