[HN Gopher] The Rise of Steel Part II
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The Rise of Steel Part II
Author : mooreds
Score : 80 points
Date : 2023-01-20 13:54 UTC (9 hours ago)
(HTM) web link (constructionphysics.substack.com)
(TXT) w3m dump (constructionphysics.substack.com)
| ourmandave wrote:
| Part I was a snake cult wresting the Secret of Steel from
| barbarians so everybody could use it.
| mdturnerphys wrote:
| See also: https://acoup.blog/2020/09/18/collections-iron-how-did-
| they-... (discussion at
| https://news.ycombinator.com/item?id=24517792)
| indus wrote:
| ThankYou for writing this.
|
| I grew up in a mining town in Eastern India, where I'd see 100s
| of dump trucks ferrying coal to power coke oven batteries to
| reduce coal to coke.
|
| The coke would be then sent to neighboring steel plant. There the
| coke would be used to "reduce"the ore to steel.
|
| IIRC, it was the blast furnace that took the coke and melted the
| ore.
|
| Been a while, but reading your post rekindled those memories.
| indus wrote:
| one of my favorite books on this topic is Cold Steel by the boss
| of Arcelor Mittal.
|
| He chronicles in pensive details about the politics of Iron &
| Steel manufacturing in Europe and America.
|
| The book is quite a thriller for the students of that subject. If
| you haven't read it already, you'll enjoy it.
| PaulHoule wrote:
| The part of the story that that author hasn't gotten to yet is
| that the open hearth process became very rapidly obsolete after
| WWII. Germany and Japan invested heavily in the basic oxygen
| process which had the speed of the Bessemer process and the
| quality of open hearth. US Steel producers responded by lobbying
| the government to protect the industry so they could keep using
| their old steel furnaces. It didn't end well.
| wolfram74 wrote:
| I was surprised to learn about how bad bessemer steel was, I'd
| heard about it in the past sort of revolutionizing the
| production, but I must not have kept in my head how singularly
| useful it was.
|
| Also it's an interesting case of how luck plays into things,
| were there people before Bessemer who'd tried something similar
| and had high phosphorous ores? How long would things have
| carried on before someone intentionally tried fiddling with
| that knob?
| PaulHoule wrote:
| It is not really that bad, but it is worse in some ways than
| the other options.
|
| Before modern steelmaking people made very high quality
| "crucible steel" despite understanding very little about the
| basic science behind metallurgy. See
|
| https://en.wikipedia.org/wiki/Wootz_steel
|
| it was crazy expensive though. (The bit cost more than the
| horse.) The high cost of steel caused Japan to conflate
| social status with military competence and led to the
| mystique of the Samurai sword, and contributed to Okinawa
| developing a system of fighting based on weapons with limited
| or no metal content
|
| https://en.wikipedia.org/wiki/Okinawan_kobud%C5%8D
| mooreds wrote:
| > It didn't end well.
|
| I mean, nucor figured it out eventually, right? :)
|
| Looks like the amount of steel the US produces has stabilized
| around 8M tons/year: https://tradingeconomics.com/united-
| states/steel-production
| melling wrote:
| According to Wikipedia Nucor didn't enter the steel business
| until 1968
|
| https://en.m.wikipedia.org/wiki/Nucor
| pfdietz wrote:
| Indeed, the history of the company is fascinating.
| eej71 wrote:
| The book American Steel by Richard Preston is an engaging
| read about the rise of Nucor.
| PaulHoule wrote:
| The story is told pretty well in this book
|
| https://www.foreignaffairs.com/reviews/capsule-
| review/1980-0...
|
| which makes as strong a case against protectionism as I've
| seen everywhere. Part of the cost of enabling the steel
| industry to keep using obsolete technology was harm to the
| competitiveness of other US industries such as the car
| industry because they were stuck using expensive and low-
| quality steel.
|
| There is some quality steel made in the US today but many
| communities have never recovered from the failure of the
| legacy industry.
|
| It's hard for me not to see
|
| https://en.wikipedia.org/wiki/Richard_Mellon_Scaife
|
| as a beneficiary of this policy who eventually spent much of
| his fortune in an attempt to warp the American political
| system.
| qikInNdOutReply wrote:
| So protectionism is basically reducing the fitness of a
| whole industry sector, until it just vannishes?
| PaulHoule wrote:
| Yes and no. It doesn't always go that far. Sometimes
| dirigisme has a success story such as the development of
| semiconductor manufacturing in Taiwan or Brazil's plan to
| back national champions in areas such as aviation and
| meatpacking. (Ride in an Embraer E-Jet, never mind a
| A220, and you will experience for yourself why the 737 is
| obsolete. On the other hand, massive subsidization of
| both Airbus and Boeing has contributed to an absence of
| competition for the narrowbody jets such that a 1967 jet
| competes with a 1987 jet -- although even an evolved 1987
| car would struggle to meet current safety and
| environmental requirements.)
|
| More often a government chooses to coddle a "national
| champion" that turns out to be irrelevant in the larger
| industry, such as many European car manufacturers. Cases
| like that unfortunately don't lead to death but instead
| can linger on for decades and have a negative impact on
| all sectors of the economy (because of dirigisme in
| steel, you're stuck driving an expensive low quality car,
| paying extra taxes for the privilege, and forgoing public
| services and investment that really would help you.)
|
| See also https://en.wikipedia.org/wiki/Corn_Laws a story
| which is by no means over...
| mooreds wrote:
| Well, people make plenty of money while the fitness is
| being reduced. The costs are spread widely, but the
| benefits felt narrowly.
|
| The protected industry doesn't always vanish, sometimes
| it re-invents itself. The US semiconductor industry was
| protected in the 1980s: https://www.nber.org/system/files
| /chapters/c8717/c8717.pdf
| photochemsyn wrote:
| I think the real reason Wall Street made the decision to
| move US steel production to China is that a Chinese
| steelworker makes only about USD 12,000 per year, which
| more than makes up for any costs involved in shipping the
| steel across the Pacific to the US when it comes to the
| profit margin equation.
|
| It could be true that there was some domestic monopolistic
| behavior going on, in that the steel industry's
| shareholders were blocking investment into research and
| modern process development, and since they faced no direct
| overseas competition due to protectionism, they got away
| with it for a while. Hence your argument about
| protectionism being a bad policy has some merit, but _only_
| if there 's no robust domestic competition driving
| innovation and better technology (see SpaceX vs. ULA as an
| example of how competition drives progress).
|
| Similar accounting-based cost-of-labor reasoning was
| involved in not investing in high-grade silicon and
| computer chip manufacturing facilities within the United
| States, although the consequences (supply chain
| vulnerabilities) seem to have caused something of a panic
| as seen with the 2021 & 2022 CHIPS Acts, which are probably
| good ideas, though no doubt they could also be called
| 'protectionism':
|
| https://www.investopedia.com/chips-and-science-act-6500333
| comte7092 wrote:
| >I think the real reason Wall Street made the decision to
| move US steel production
|
| This is quite the statement, Wall Street didn't do
| anything. Foreign countries developed their own steel
| industries and the US couldn't compete. This had little
| to do with Wall Street. The largest steel companies
| aren't US subsidiaries that moved production offshore.
| Chinas steel industry is dominated by large state owned
| enterprises.
| PaulHoule wrote:
| The steel industry was hollowed out long before trade was
| opened with 'the new China'.
|
| I wouldn't say protectionism is inevitably a bad policy,
| but it frequently is, may be so by default, and it is not
| driven by movements for justice and equality but rather
| by 'special interests' that can feed back a small amount
| of their gains to finance politicians and thus put their
| 'activism' on a sustainable basis.
| kragen wrote:
| doesn't seem plausible that the difference between 12000
| dollars per year per worker and 120000 dollars per year
| per worker would be a large fraction of the price of the
| steel produced
|
| first steel mill i googled up is https://monvalley.uss.co
| m/uss/portal/monvalley/monvalleywork... which produces
| 2.9 million net tons of steel (net of what?) with 3000
| employees
|
| that's about a thousand tonnes per employee
|
| shitty steel costs about 50C/ a kg, so that's half a
| million dollars per employee per year, but fine steel can
| cost 10 dollars a kg, which would be ten million dollars
| per employee per year
|
| the cost of shipping shit across the pacific varies
| wildly, but it is often about 3000 dollars per 40-tonne
| feu, which is about 8C//kg, comparable to the cost of a
| steel mill employee making 80000 dollars a year, so it is
| plausibly false to say that 'a Chinese steelworker makes
| only about USD 12,000 per year, which more than makes up
| for any costs involved in shipping the steel across the
| Pacific to the US'
|
| also as paul houle points out, the collapse of the steel
| industry in the us happened 50 years ago, at which point
| prc was not a significant competitor
|
| if there's robust domestic competition driving innovation
| and better technology usually there are no calls for
| protectionism; it's your overseas competitors who have to
| worry about getting undercut by you, not vice versa
| runesofdoom wrote:
| When looking at profitability and corporate decision
| making, never forget that decisions are often made _not_
| on the basis of the corporation 's benefit, but on the
| advantages _to the executive(s) involved_.
| swagasaurus-rex wrote:
| Incompetent executives will do everything they can not to
| innovate
| sandworm101 wrote:
| Labor is a very small part of steel making. What maters
| most is the availability of needed resources,
| specifically energy and iron/coal. Then comes distance to
| markets and environmental regulations.
| Doubling/tripling/halving the cost of people is a
| secondary consideration.
| photochemsyn wrote:
| Well, perhaps it's more complicated than any single
| factor can account for. However, US steel production has
| dropped from 115 Mt around 1970 to 72 Mt todays, even as
| the US population has increase from 200M to 330M, which
| you'd think would mean increased domestic demand for
| steel.
|
| Overall output is worth looking at. The rise of China as
| the single largest producer begins around 2000-2001,
| which coincides to the US Congress agreeing to admit
| China to the WTO. China today produces almost 15X as much
| steel as the USA, and employs 2.5 million people in the
| industry, relative to about 200,000 employed in foundries
| and mills in the USA (bls.gov stats).
|
| Wages in the steel mills in 1970 were about $6 an hour,
| about equivalent to inflation-adjusted $45 an hour today.
| Today's USA steel mill worker averages about $30 an hour
| by comparison, a relative wage cut of about a third since
| the heyday of US steel manufacturing.
|
| https://www.visualcapitalist.com/visualizing-50-years-of-
| glo...
|
| Now, there are a lot more billionaires in the USA and a
| lot more poor people as well as a result of these general
| policies on all kinds of manufacturing, I think that's
| pretty hard to argue with. Lot more homeless people on
| the streets, too.
| sandworm101 wrote:
| The location where of heavy/bulky goods always follows
| demand. North America could switch to only ever using
| domestic steel. That wouldn't make a dent to the demand
| that backs China's production.
|
| 2023 estimated demand in North America: 140 million
| metric tons.
|
| 2023 estimated demand in Asia (China): 1,284 million
| metric tons.
|
| https://www.statista.com/statistics/246397/estimated-
| demand-...
| pfdietz wrote:
| > 8M tons/year
|
| That's per month.
| zokier wrote:
| * * *
| photochemsyn wrote:
| Yes, there's a lot more to the story. The modern developments
| in steel production eliminate the blast-furnace-to-basic-
| oxygen-process entirely, by using the direct reduction method
| (which has used natural gas as the hydrogen source, but it can
| also use water-sourced hydrogen).
|
| Here's a nice visual (gif) comparison of the direct-reduction
| -> electric-arc-furnace and blast-furnance -> basic-oxygen-
| furnace method pipelines. They converge on the same point, the
| steel refining facility:
|
| https://www.steel.org/steel-technology/steel-production/
|
| That shows how the process has traditionally been used, and
| here's how it's modified to eliminate fossil fuel inputs:
|
| https://bellona.org/news/industrial-pollution/2021-05-hydrog...
| a3w wrote:
| Typo in footnote 2 (scan) "Meanwhile, the carbon monoxide burns
| with a blue flame" should that be (instead of carbon dioxide -
| CO2 is the product, not reactant, that burns.)
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