Steel Industry Looking For $1 Trillion

by Chris Sturr | January 03, 2009

The next contender in the category of “too big to fail” appears to be Big Steel. Through the first three quarters of 2008, the steel industry was going gangbusters. By late December, however, weekly production had fallen by more than 50% from August levels. Prices have fallen like lead. Tens of thousands of workers, mostly unionized, have been temporarily laid off, with future prospects exceedingly grim. Now industry execs are praying for an Obama miracle of government investment and subsidies.

From the New York Times:

The steel industry, having entered the recession in the best of health, is emerging as a leading indicator of what lies ahead. As steel production goes – and it is now in collapse – so will go the national economy.

That maxim once applied to Detroit’s Big Three car companies, when they dominated American manufacturing. Now they are losing ground in good times and bad, and steel has replaced autos as the industry to watch for an early sign that a severe recession is beginning to lift.

The industry itself is turning to government for orders that, until the September collapse, had come from manufacturers and builders. Its executives are waiting anxiously for details of President-elect Barack Obama’s stimulus plan, and adding their voices to pleas for a huge public investment program – up to $1 trillion over two years — intended to lift demand for steel to build highways, bridges, electric power grids, schools, hospitals, water treatment plants and rapid transit.

The rest of the article is here.

2 comments

Comments (2)

  1. <>“The steel industry, having entered the recession in the best of health, is emerging as a leading indicator of what lies ahead. As steel production goes – and it is now in collapse – so will go the national economy.”<> I would like to ask – on what basis does the author make this claim? I keep reading these opinions that manufacturing is the canary in the coalmine for the US economy, but is this really true? The US has been a service-based economy for at least the last two decades. Heavy industry like steel went overseas years ago. Maybe what we’re seeing in the US steel sector is the logical result of companies that can’t compete in a globalized market and no longer have a soaring stock market to hide behind?

  2. The service sector is certainly in the ascendency, but manufacturing remains a vital part of the U.S. economy, both directly and indirectly. According to the Economic Policy Institute, manufacturing accounted for 10% of total US employment in 2007, and represented 12% of GDP in 2006. Many individual states are heavily dependent on manufacturing. See http://www.epi.org/content.cfm/webfeatures_snapshots_2008 this for more info.

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