U. S. Steel

Company and steel industry history

When founded in 1901, United States Steel Corporation was the largest business enterprise ever launched, with an authorized capitalization of $1.4

billion. Throughout the years,U. S. Steel responded to changing economic conditions

and new market opportunities through diversification and periodic restructuring.Today, over a century after

its founding, U. S. Steel remains the largest integrated steel producer headquartered in the United

States. (U. S. Steel website)

What is the impact of foreign steel imports on U. S. Steel company?

After a “boom” during the 1990's, China and the other newly developed countries such as India and Ukraine taken off with their entry into heavy industry products. Steel is one of them. They joined WTO and the open

market. With these newcomers, steel is no longer considered a monopoly market.

A glance at the market share of U. S. steel companies and the imported steel from foreign companies

“Nearly every steelmaker, including U. S. Steel, Nucor Corp., KA Steel and ArcelorMittal, has reported first-quarter losses and most expect losses to continue into the second quarter” (Canada warns U. S. Steel on shutdown, 2009).

U. S. Steel also officially reported “a second quarter

loss of $392 million, or $2.92 a share, and said it

expects operating losses in the third quarter, due to

continued low operating rates and lower average

realized prices” (U. S. Steel posts loss, offers

brighter outlook, 2009).

In the end, U. S. Steel and the other American steel companies “filed for bankruptcy protection, and their assets were purchased by other companies and investors who saw

value in consolidating the domestic steel industry.

But filing for bankruptcy does not mean the company is out of business. U. S. Steel is still operating and trying their best to weather the global recession.

Filing for bankruptcy protection is just the procedure to

protect firms from paying debts and their assets will

be purchased by other companies and investors who

see value in consolidating the domestic steel

industry.

What will U. S. Steel do to try to “survive” in these days?

Ask China and the other countries who export steel to the US to leave the market or at least reduce their level of exported

steel to the US by

.asking the Government to increase the imported steel tax

.asking for Government's subsidy.

Will this work for domestic steel market?

We do not know yet but with the tariff restriction and the subsidy from the Government, about 800 workers were recalled by U. S. Steel to be back with work. Whether this is a good sign or not nobody can guarantee because “steelworkers welcome the returning paycheck but are reluctant to spend it, showing how difficult it might be to juice consumer spending even when jobs return” (U. S. Steel posts loss, offers brighter outlook, 2009).

Conclusion

The entry of imported steel from foreign countries has ended the monopoly market of U. S. steel. This directly impacts many steel manufacturers in the US including U. S. Steel. In order to survive, U. S. Steel has to ask for government subsidiary. In my opinion, examining this at the microeconomics view, the “survival” of any firm based on the government subsidiary will not be the best choice for doing business.