Chapter 9

Steel and Technological Change

Technology has been at the core of what the steel industry and its companies do. Major shifts in the business models for the industry have been strongly correlated with new production technologies at the furnace end and at the rolling and finishing ends of the business. Examples have been previously discussed in Chapters 3, 4, and 8. A high-level view suggests a series of periodic major changes such as the Open Hearth being replaced by the BOF then the EAFs and the continuous casters. For economists and modelers of change, the industry has been characterized by step-function changes in technology. This suggests a linear path of punctuated equilibrium—long periods of incremental changes then disruption by a qualitative shift, then incrementalism resumes. We may now be at one of those incremental periods, while awaiting a probably environmentally mandated change to blast furnace technology in the coming decade.

That the process will be continuous does not mean that it will be easy or straightforward, particularly when confronted by the traditional culture of steel companies.

The chapter begins with a discussion of the general trends of technological change in the steel industry from the perspective of evolutionary economics. We then look at process innovation in the steel industry. Then, we will look at examples of product innovation in steel from steel manufacturing users to consumer product. More generally, we will look at the new product development practices in global steel companies. Finally, we will look at the present and future positions of steel in the materials competition in key product markets, particularly with aluminum in automobiles and with concrete in construction.

Steel and Evolutionary Economics

For an industry as capital intensive as steel and characterized by periodic production technology shifts, concepts from evolutionary economics are critical for understanding the dynamics of industrial change. Concepts such as path dependency and lock-in have been major factors in how the industry and its companies evolve over time.

In terms of technology alone, steel is best seen as a case of punctuated equilibrium, that is, for extended periods the industry proceeds with incremental innovation. Then, along comes a transformative technology like the wide strip mill, BOF, continuous caster, and minimill that shifts the goal posts for the whole industry. The industry and companies adapt, or not, then the path of incrementalism resumes.

Path dependence explains how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past, even though previous conditions may no longer be present. It can refer either to outcomes at a single moment in time or to a long-run equilibria of a process. In common usage, the phrase implies either: that “history matters”—a broad concept, or that small differences are disproportionately amplified in later circumstances

However, the story of path dependency and lock-in are more nuanced than just the technical technology story by itself. For the most part, the corporation has been a black box for economists. This is a general issue in business history, not just a steel problem.

Recent research has lifted the lid to open the black box of organizations and to view organizations as competing on the basis of their routines that are built up over time, where routines are seen as organizational competences that are more than just the skills of individuals. This perspective assumes that the success of firms is determined by routines built up in the past, that is, path dependence; and, views price signals as the main determinant of locational behavior. This evolutionary perspective has translated into a focus on groups of firms that have developed durable routines and habits, with the market environment operating as the mechanism of selection.1 At the same time, path dependence need not lead to or involve lock-in, or indeed lead to any form of equilibrium or stable state or trajectory.

If we fully elaborate this perspective, then an industry like steel, notwithstanding the global pipelines of technology, will always function in specific, unique “steel economic spaces.” There will always be a German steel industry, an American, an emerging Chinese steel industry. This is the basis of steel “clusters” distributed around the world. Economic geographers have consistently demonstrated the local bases of the mechanisms underpinning path dependence—for example, increasing returns and external/network economies—considering it to be “a process or effect that is locally contingent and locally emergent, and hence to a large extent “place dependent.” In summary, for an industry like steel and perhaps for all of manufacturing, place matters in determining the nature and trajectory of evolution of the economic system.

At the nonlocal level, steel companies operate as nodes in a global production network (GPN). The boundaries of the firm are in fact fuzzy. Firms are composed of internal, company networks embedded in external social networks. As the geographic extent and complexity of company operations increase, the nature of their local embeddedness becomes far more complex. Local social dynamics, politics, and culture are important and have direct impacts on managerial decision making.

What does this mean?

The emergence of international regulatory bodies like the World Trade Organization (WTO) and the International Standards Organization (ISO) shape the geography of different industries. For example, the multifibre agreement and its abolition in 2005 dramatically impacted the shape and distribution of the global textile industry. Operations of global companies are actually enhanced by things like ISO through the introduction of codifiable standards. At the same time, nation states are still critical. The media often say that nation states are irrelevant in a globalized economy but look at the Chinese example and the completely different geography of automobile production in China versus Eastern Europe. Finally, macroregional economic arrangements like NAFTA are critical. They change the surface on which industries and companies play. Where regional integration occurs it attracts inward foreign investment. The evolution of the NAFTA steel market as a clear example.

Taken together, all these factors affect technology development. The broader social and political environments will affect the directions and trajectory of technological change within the steel industry.

Steel Company Technology Development

Technical innovation has always been important in steel, as in all capital-intensive industries. However, it has taken on heightened importance in the past decade while changing its character and focus.

The emergence of the modern industrial corporation was closely linked to the development of technology in their internal corporate laboratories. The pioneers were German companies like Siemens in the late 19th century and followed in the early part of the 20th century by American corporations like DuPont. By mid-century, all major industrial corporations had developed large, specialized laboratories for product development.

In steel, this development came later. Early steel innovation was led by engineers focused on process innovation. It was in the late 1960s and 1970s that steel companies established separate R&D centers. The leader was U.S. Steel who once employed as many research scientists and engineers as all the rest of the steel companies combined. They were then followed by other leading steel companies. Research engineers became the technical leaders for their domestic steel industries in the postwar period. It was essentially an internal or indigenous model of innovation.

In the 1990s, the world of steel innovation changed. The major companies cutback or cut out their research and development facilities. They believed they were fighting for their very existence and could not afford such luxuries. If necessary, they believed that they could always license the latest technology from others.

A limited set of European, Japanese, and Korean steel companies, along with leading equipment vendors, became the technology leaders in global steel. Deep metallurgical engineering became the specialty of a limited number of global players like Nippon Steel and NKK in Japan and Usinor in Europe. The other steel producers increasingly depended on technology transfer and licensing or “traded knowledge,” for example, depending heavily on NKK in Japan for steelmaking technology and Usinor in France for automotive applications.² Even today, the business press confirms this development with regular reporting on the latest technology licensing agreement between Japanese, Korean, and German steel technology firms for the building of the new Chinese steel plants.

This was how the companies dealt with production technology innovation. The second stream of technical innovation was on the product side.

For commercial application development, steel companies increasingly adopted the metaphor of software platforms and applications. They would develop specialized, local product market applications based on underlying languages (metallurgical technologies) that they licensed from others. The most profitable integrated steel companies in North America developed this strategy in the 1990s.

The following are three cases of technological change in production process technology, which illustrate the step and incremental character of steel technological change. Technological change in steel has been lumpy. They also suggest, particularly in steel, the simple distinction between process and product innovation breaks down. Much on the product innovation actually takes place at the “hot end” of the mill.

Technology Cases: The Open Hearth and Basic Oxygen Furnace

The U.S. Steel industry built 22 new blast furnaces for ironmaking during World War II. Half were funded by the private steel industry and the other half by the Defense Plant Corporation. This amounted to approximately 10% of the capacity of the industry but included the largest and most efficient facilities where blast furnace man hours per ton had fallen from 1.1 to 0.56. There were few technical improvements in the furnace itself. However, improvements in refractory brick tripled the time between required relining and the flow of material to and from the furnace was significantly improved. The greater capacity expansion took place in the Open Hearth steelmaking shops. Instrumentation, which had been introduced to a limited extent in the 1920s, was extended. The improvements included instruments and controls for furnace pressure, temperature, fuel volume, and air volume, as well as devices to determine the amount of carbon in the heat of steel while it was being melted. These controls all contributed to the improvement of the quality of the steel and reduced fuel consumption.

During the war, the new developments in light flat-rolled products took a back seat to heavy plate and structural steels. Plate for ship construction led the way and most of the hot strip capacity was used for this purpose.

The Basic Oxygen Furnace (BOF) was introduced in the early 1950s as a substitute for the Open Hearth in steelmaking. It reduced heat times from 6 h to 40 min, at about half the capital cost. It was the classic Step Function improvement in technology. However, as described in Chapter 3, the US industry for cultural and political reasons, lagged its competitors in adopting it.

To compete with offshore producers, the U.S. Steel industry had to improve both yields and quality. Until around 1980, yield numbers, that is, the ratio of final steel to raw steel produced produced, hovered around 72%. BOF and continuous caster producers were getting 80–90%. It required the production of a lot more raw steel to meet shipments than is the case today. The presence of semifinished steel imports (slabs, billets) have increased in recent years is a complication in the numbers but the overall ratio of raw steel to shipments is now close to 100%.

In the 1980s, the minimills were looking to move up the quality chain and produce more profitable value-added products, while the integrated mills collaborated with the Japanese steelmakers to install slab casting machines and maintain their share of the domestic auto market. The installation of continuous casters across the industry increased US raw steel yields dramatically.

From Continuous Casting to Continuous Process

The new steel technologies of the 1970s and 1980s, continuous casting machines, ladle refining, and vacuum degassing not only reduced significantly the number of man hours to produced steel but also led the way into the quality revolution and entire new product markets.

These technologies gave steelmakers the ability to fine tune the chemistry in ways that enhance characteristics like surface quality. Whereas the manipulation of steel chemistry had taken place in huge BOF furnaces previously, hot steel from the BOF is now directly fed to a ladle where temperature and chemistry can be controlled much more precisely. Further refinement in vacuum degassers has had much the same effect. By moving hot steel directly from the BOF furnace to an environment where that material’s properties could be carefully controlled, immense quality improvements were realized and new steel products were developed.

Traditional steelmaking constituted a series of batch steps, for instance with inventories of solid steel between the BOF and the downstream rolling operations. Molten steel would come out of the BOF to be poured into ingot molds, where it stood until it solidified. Then it would be stored to await the next stage. In addition to the time, cost, and energy required reheating the steel, the steel had to be committed to a semifinished shape—billets or blooms for long products and slabs for flat products. Rolling operations followed; each requiring reheating.

The advantage of the traditional process, relying on ingots, was related to the fact that integrated mills produced a wide variety of products. With an inventory of ingots, material could be fed to any of a number of lines producing different semi-finished shapes. If there were orders for rebar then the ingots were fed to a billet mill. Steelmaking and rolling operations could also use the ingot inventory as a buffer if there were disruptions or coordination problems. The BOF could continue producing if there were problems in rolling, and rolling could continue to operate when there were problems in steelmaking.

Continuous casting changed this process radically. Every caster is built for one and only one semifinished shape. It is dedicated to the product market that has been chosen. Once that strategic choice has been made, steel coming out of the BOF is never allowed to solidify before the casting operation. It goes directly from molten steel out of the furnace into one of the three basic semifinished shapes by passing through the continuous caster.

Steel Production Technology: The Future

The massive investments in new technology by steel companies in 1980s did not bring equal results. Studies of the combination of efficiency and technology implementation indicate very loose correlation between investment and results. Firms with comparable levels of investment could be 50% different in their results.

The differential had to do with the culture and presence of all the factors contributing to high-performance workplaces. Integrated steel plants, in particular, are composed of a series of processes and all the processes must be compatible and coordinated in order to achieve maximum efficiency and quality of product. Generally similar results were found for the much simpler processes of EAF producers.

With ingots gone and inventories eliminated, steelmaking became a continuous process. It is no coincidence that steelmakers invested heavily in ladle furnaces and vacuum degassers at the same time that they were investing heavily in continuous casters. The casters made it necessary to learn to work with hot steel and keep it flowing. It is a small matter to extend that control to intermediate steps at a ladle or vacuum degasser for adjustments in chemistry before proceeding to the casting machine. Success in coordination breeds further success.

Before the advent of ladle metallurgy fine-tuning the chemistry of steel really meant guesswork in adding needed alloys. Now, a steelworker in a control room high above the furnace keeps track of half a dozen control screens, checking tolerances in the chemistry and making changes as required. It illustrates the point that human capital has to be aligned in conformity and with equal dedication to capital equipment investment.

There has been a two-pronged process of decentralization of authority downward onto the shop floor at the same time as traditional layers of management above shop floor workers were eliminated. U.S. Steel, for instance, eliminated three layers of management, just within its operating mills. For instance, works managers, who were primarily responsible for daily operating decisions, have seen these responsibilities move to foremen and operators on the shop floor. Works managers now primarily deal with quality assurance and production planning.

Studies in the mid-1990s emphasized two trends for the future.

First, there will be a convergence at the steelmaking production technology end to blur the distinction between integrated and minimill producers. Both would be using sophisticated additions to their traditional primary charges of iron ore and scrap, allowing that there would still be differences in melt chemistry. However, both would use thin slab casting to feed generally similar hot rolled flat products and cold-rolled/galvanized flat products for the same markets in the future.

Second, organizational development would focus on fewer layers of supervision and bureaucracy, along with greater employee involvement, responsibility and training, ultimately relying on self-directed work teams on the shop floor. In this respect, the minimill style of work organization and decentralized management was expected to become the norm for the entire industry. This is discussed further in Chapter 11.

Steel Product and Process Innovation

Research on the steel sector has found that most of its innovation has been on the process side. This is because at the end of the day steel for most customers is still a commodity where the number one competitive advantage is price. While coatings and light-weight steel are important to markets such as automotive, in the end you sell steel because of a competitive price and an acceptable level of quality. The reality of steel as a commodity business dictates that research tends to focus on ways to make steel cheaper and to process it faster so as to be able to outbid competitors. Steel’s status as a commodity forces innovation on the process side.

This focus on process side innovation is reinforced by the relationship with customers. Customers from automotive to construction also tended to view steel as a simple commodity purchase and this limits the steel sector’s ability to develop new products. As the quote below illustrates, many customers are not willing to pay a price premium or be reliant on only one producer and this provides a disincentive to mills who wish to create new steels.

Maybe not so in the manufacturing processes but in steel products a patented steel product at least in automotive is not necessarily that great a thing. And that’s what I found out in this product that we developed. Because we were quite excited about it and went out to the automotive industry and we’re telling them about this…it was a win/win because it was a lower cost product to make but it had enhanced properties. So what better could you ask for. But the way the automotive industry works is they don’t want a single source of buyer of any steel product because they want multiple suppliers of the product that they can feed-off against each other to lower the price. ‘But if it’s only one company that can supply it that’s great but unless I have two people that I can put against each other to lower the cost I’m really not that interested in it.’ So until our competition catch up with us on that particular product it’s of really limited value. So it was an eye-opening experience for me. Now on the process side that’s probably not true. If I have the ability to make steel for $20.00 a ton cheaper then that is a huge advantage.

Steel Executive

Innovation within the steel industry has been traditionally led by engineers. They are the dominant vectors of technological change. But, engineering functions and labor markets are changing as discussed in Chapter 11. What is observed is a “thickening” of the engineering labor market. The boundaries and hierarchies between engineers, technologists, and technicians are becoming more overlapping and blurring. Two of the relevant implications are: The total cost of R&D may be reduced, as a result, to the advantage of local firms, and, increasingly technologists have taken over the lead role on the shop floor in process improvement engineering.

The standard picture of engineers for most of business history has be one of technical employees who undertook in-house industrial research to transform basic scientific research into activities to enhance the market position and profitability of firms, thereby increasing the aggregate rate of growth in the economy. A more nuanced view stresses their role in standardization as a means to increase the diffusion of technical knowledge and innovation by reducing the boundaries of the firm and increasing interdependence.3 This enabled industrial processes to facilitate the flow of standardized processes across the boundaries created by business organization. Professional engineering association emerged in the early 20th century, such as the American Society for Testing Materials (ASTM), the Society of Automotive Engineers (SAE), and the American Railway Engineers Association (AERA). Industrial standardization was one of the major activities of industrial and research laboratories from World War I to World War II. At the turn of the century, steel producers made concerted efforts to standardize certain products because they were increasingly required to produce a proliferation of similar products according to specifications drawn up by different customers. The producers’ motives were to reduce costs and increase exports. Specifications were typically detailed lists of physical and chemical criteria for products or materials to be purchased, sometimes including criteria for testing and sampling the material as well.

Innovation for Steel Consumer Products

The linkage between key steel production technology developments and downstream products has been noted. The following takes a number of steel-consuming industries as examples. The story of steel and the auto industry has been described above, particularly the tipping point represented by invention of the wide strip mill. But the same technology ushered in a wide range of innovations for other consumer products.

Steel Cans

The container industry also benefited from developments in cold reduction techniques, that is, taking steel sheets and processing them into thinner and longer dimensions by passing them through successive “stands” or sets of rollers that essentially squished the sheet dimensions downwards and outwards. In addition, they could have tin and other coatings applied. In the 1930s, the tinplate market shifted from demand for plain, ordinary tinplate to a product carefully made in accordance with elaborate specifications according to the corrosiveness of the product to be packed and from the probable physical abuse of the containers. At one end of the spectrum, the softer end, there were tinplate specifications for friction tops for cans of fish and bodies for cans of vegetables. At the stiffer end were specifications for beer and soft drink cans where pressure was strongest.

Refinement and commercial production of the beer can was also a major preoccupation of steel producers and beer companies. The great pressure built up during sterilization caused standard food cans to buckle at the ends as well as straining the soldered side seam causing leaks. Improved forming and soldering practices solved the weak side seam problem. Adding phosphorous at the steelmaking stage solved the buckling ends problem.

The more challenging problem was the development of a more suitable lining for the beer can. Tin in the plate combined with a protein in the beer to produce a cloudy mess. Normal enamel did not work but a compound resin substrate with several coats of enamel solved the problem. To keep consumers from drenching themselves, the ubiquitous tab opener was developed at the same time. The beer can was brought to market in 1935. In its first year, notwithstanding the ongoing Depression, 160 million beer cans were sold. By 1953, sales were over six billion cans.

A greater challenge for steel can manufacturers was access to sufficient quantities of tin, in the late 1930s and even more so during the war when sources in Asia were cut off. Electro-tinning operations consisted of running the steel strip through an electrolytic bath in which large electrified tin anodes were submerged at set distances. The first commercial facility started production in 1937. Refinements during the war resulted in satisfactory results with one-fifth the required tin from traditional methods. Specifications for low tin and tin-less cans were developed during the war. Eventually tinplate substitutes and organic coatings were developed to lessen dependence on tin for some applications.

New Steel Appliances: Refrigerators, Stoves, and Washing Machines

Wide sheet steel also found increasing applications in appliances. A steel cabinet for a refrigerator could be made from a single sheet in a wide variety of shapes. The one-piece cabinet was more attractive and it eliminated problems of decaying insulation. Enameling operations for the new cabinet refrigerators were challenges not solved till 1933 with new paint enamels. Prices fell from $310 in 1927 to $130 in 1940.

One-piece, steel-bodied stoves also appeared in the 1930s. This allowed improvements in design, the range taking on a cabinet appearance with smooth lines and surfaces. It was the culmination of developments in stamping, enameling, and low carbon steel.

By the late 1920s the washing machine had basically evolved to its modern form. The coating problem being solved by Maytag in 1937.

Postindustrial Steel: The Rise of Digital
Manufacturing

Higher-value-added products have been identified as a survival strategy for the steel industry. With declines in automotive and general manufacturing, greater steel penetration in the construction sector is seen to be a key growth story for the future.4 The new-technology competition in construction is led by the fabricators rather than the steel-producing companies themselves.

Critical shifts are underway in the skills composition of the fabricating companies. The traditional knowledge base of craftsman welders and fitters are being displaced by CADCAM and BIM software systems. However, at the heart of design–fabrication interface, the critical visualization skills of the traditional craftsmen as embodied in the Fitters and Detailers is still required in order to formulate how a structure goes together. Steel manufacturers have increasingly teamed with graphics design studios to help produce the next generation of digital fabrication. They call it digital manufacturing. By combining traditional craft skills with graphic design skills, steel fabricators are seeking to position themselves as owning and controlling the DNA of building structures for the future.

The technical innovation is the conjoining of a traditional steel fabricator’s competencies with new media and design talent from the “new economy.” A prime motivator is that a steel fabricator faces a skills crisis. Its traditional base of welder-fitters is rapidly aging, with a special challenge in replacing the key tradesmen who have the capacity for visualization of how steel structures are assembled as the building goes up. The older work force is retiring and there are no replacements in the local economy. In an actual case, the CEO identified the HR issue as the need to recruit design talent. The key recruit was a steel sculptor who had a background in design, new media, and welding and ran his own graphics design company. This itself is an interesting transfer of knowledge and skill from the arts sector to manufacturing. The design entrepreneur himself had recruited industrial design talent from the auto industry along with designers with experience in household goods. To this were added art college and community college new media grads. Interestingly, they do not seek architectural students. The fabricator bought the design house, as now have several of their competitors. This esoteric combination of talents has become the technical anchor for an emerging $500 million digital manufacturing and fabrication company.

New Steel Product Development Practices

The generic new product development process for steel companies can be summarized as follows and is standardized as a methodology by local mills across global operations but with significant room for variation depending on regional markets.

• New steel products generally have some enhanced feature when compared with existing products. Examples include improved surface quality, increased strength, improved ease of forming, and improved corrosion resistance.

• The process employs the use of cross-functional teams with representation from all functional areas that are involved with manufacturing, marketing, and sale of the new product.

• The process employs a “Staged Gate” process. In other words, the development is broken down into a series of steps or Stages with decision points or Gates between each step.

• In preparation for Gate meetings a Gate report is prepared. At the Gate Meeting a presentation is given to the Gatekeepers summarizing the report.

• Gatekeepers include local management representatives from all areas including manufacturing, commercial, financial, etc.

• Support by Gatekeepers is required to move the product along to the next Stage of development.

• Decision to promote a product to the next Stage of development is based on a predetermined set of criteria.

• Development of products is coordinated by a Product Strategy Board (PSB), which includes local representation. The coordination of product development between plants is done in order to maximize efficiency and minimize duplication of effort.

Within this procedure, some examples of types of current product developments include the following:

Steel companies also have gotten much more involved in the manufacturing processes and even cost management efforts of their customers.

An example is the appliances industry. The steel companies engage in a “teardown process.” It is a technical approach to value creation for the customer. They systematically and rigorously disassemble the customer’s appliance product. They brainstorm on cost savings, evaluate the manufacturing process (stamping, fabrication, assembly), design, material utilization, and quality. In recent years, this has resulted in tens of millions of dollars of savings that flow to the manufacturing customer.

The steel companies also engage in co-engineering support. Much of this involves the use of the state-of-the-art predictive tools to assist their customers in product development and improved material utilization.

Suppliers are also involved in disseminating new technology. Because their goal is to sell new equipment to their customers, suppliers are always letting their customers know about the latest advances in technology. Many firms rely on this dynamic to ensure that they are using the best equipment and materials available for their processes.

Conferences are important not only for marketing to customers but also for keeping up-to-date on what other competitors are doing, and what new markets they are targeting. Well-established, specialized industries, such as the steel industry, are more reliant on trade organizations for information. Organizations like the AIST often have their own political systems within, meaning that business contacts are often heavily linked to involvement in these organizations. The AIST has local chapters and meets regularly to discuss matters relating to the industry, including presentations by member companies on their newest product or service.

In terms of innovation theory, product innovation in the steel industry is no longer the internalized, top-down process it once was entirely within the clear boundaries of the firm. It now takes place in a broad “loosely coupled” network of relationships and interaction among facilities, customers, and even educational institutions, where the local is very important but so also are linkages between local and nonlocal actors.

The Future of Materials Competition

How steel performs in the New Economy in the future very much turns on how well it competes with other materials, partially for energy and environmental reasons. Its future is also dependent in part on where it is placed in the merging of materials and manufacturing.

Everyone knows steel vs. aluminum and the huge resources in people, R&D and marketing and PR have gone into it. UltraLight Steel Auto Body (ULSAB) was its poster child. If a similar effort was made in construction in contending with cement, brick etc., then it would have a big payoff for steel volume. If steel penetrates construction in these ways it has a much greater impact on volumes than further work in auto.

The cement and wood guys are around lobbying on the Building Codes all the time. A new steel requires new codes and specs, all different. However it is not tougher than trying to get all the different car companies to agree on the use of new steel for a strategic frame part or something.

Steel Executive

The competition between materials is well illustrated by the contrasting auto and construction steel cases.

For the past 30 years, there has been intense competition among steel, plastic, and aluminum for their respective places in the future of the automobile. Projections of future aluminum or plastic body cars have been more the stuff of science fiction than what you can observe in parking lots or car sales lots. The steel industry has mounted a vigorous forward-looking technology development vision around the (ULSAB) Consortium. The case for steel is that the new products are lighter and stronger, with better surface qualities and much better energy efficiency and recycling records than either aluminum or plastic. This is a true and an under-appreciated story.

It is also the case that there is 85 years of experience with the steel unibody in automotive assembly, tooling and skills, from assembly workers to auto engineers, all embedded in manufacturing practices. The competing materials have huge learning and retooling challenges to overcome if they are to ever be really competitive with auto steels.

Fundamentally, the material competition in auto is around the respective metallurgical properties of the product.

It is a very different but equally interesting story in the new construction steels. Here steel competes against wood, concrete, asphalt, and more. The competitive barriers and challenges in construction are less issues of metallurgy than other factors external to steel or to manufacturing. If the new steels are to really penetrate and take off in construction then they have to confront the barriers that are embedded in building codes, construction regulations, and building trades’ certification and training.

The challenges to new steels in construction are not metallurgy. They are regulatory reform and human resource policies. This is a very difficult and different challenge than in automotive. However, if quantitative growth in North American steel demand in the future critically depends on construction, then this will have to find a place in the public policy agenda of the industry.