Quarterly Report to the Technology Assessment Board, April 1 - June 30, 1980 Page: 22
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Volume 11, Issue 8, July 1, 1980
'PUBLICATION BRIEF
will Technology and Steel
Industry Competitiveness
Steel will probably remain the world's most important engineering material, and
the steel industry, is vital to the Nation's security and economic prosperity. However,
unless action is taken, continued low profitability and some Federal policies, such as
long depreciation times for new facilities, will cause the domestic steel industry to
contract substantially. Many jobs could be lost, and the Nation might become vulnerable
to scarce and high-priced imports, which by 1990 could account for 40 percent of
the domestic market, compared with recent levels of about 15 percent.
The U.S. steel industry can be revitalized through increased investment in R&D
and the adoption of new technology. For that to happen, however, OTA estimates that
steelmakers must increase their capital spending on production facilities by at least 50
percent during the next decade, to approximately $3 billion per year as compared to industry
estimates of $4.9 billion (1978 dollars), in order to modernize existing mills, expand
capacity modestly, and bring profitability up to the level of most other domestic
manufacturing industries. At the $3 billion level, supportive Federal policies would be
required to generate at least $600 million of this additional capital per year.
Small nonintegrated steel plants that rely on ferrous scrap rather than iron ore to
produce the simpler steel products could nearly double their market share (now at
about 13 percent) in the coming decade, provided that adequate electricity and scrap
are available in specific market areas. Considerable market potential could be exploited
to increase exports by the highly competitive alloy/specialty steelmakers in the
next 10 years, if the new Multilateral Trade Agreement is enforced vigorously.
Following restructuring, modernization, and expansion in the 1980's, the industry
could adopt major new steelmaking innovations if the Federal Government supports
more basic research in steelmaking, provides incentives for more industry R&D, and
assists in pilot and demonstration projects. Such major process innovations could
then bring the domestic industry a competitive advantage, rather than mere parity with
foreign industries. This is the type of long-range strategic technology planning that
the industry has not done well.
A well-designed and vigorously implemented government policy has nurtured the
Japanese steel industry's expansion and adoption of new technology. The U.S. steel
industry, on the other hand, has been hurt by a long series of Federal policies that have
frequently been uncoordinated, contradictory, and inattentive to critical issues. A Federal
policy that coordinates the industry's needs, the Nation's interests, and specific
technical concerns is an important option.
Neither technology nor capital, alone, will solve the steel industry's problems.
New technologies could be adopted by the domestic industry if problems of insufficient
capital and uncertain import policies are resolved. One such technology already
used by major foreign competitors is the continuous casting of molten steel, which reduces
energy consumption, increases productivity, and expands steelmaking capacity.
Another, the coal-based direct reduction of iron ore to produce a low-cost substitute
for ferrous scrap and blast furnace iron, may be developed commercially within
the next 5 to 15 years. Potential advantages include reduced capital costs, reduced
pollution, and increased use of coal.
Copies of the full OTA report, "Technology and Steel Industry Competitiveness," are available
from the U.S. Government Printing Office. The GPO stock number is 052-003-00760-6; the
price is $8.00. Copies of the full report for congressional use are available by calling 4-8996.
Summary copies are available at no charge from the Office of Technology Assessment.The Office of Technology Assessment (OTA) is an advisory arm of the U.S. Congress whose basic function is to help legislators
anticipate and plan for the positive and negative impacts of technological changes. Address: OTA, U.S. Congress, Washington,
D.C. 20510. Phone: 202 224-0885. (OTA offices are located at 600 Pennsylvania Ave., S.E.) John H. Gibbons, Director.
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Office of Technology Assessment. Quarterly Report to the Technology Assessment Board, April 1 - June 30, 1980, text, 1980; Washington, D.C.. (https://digital.library.unt.edu/ark:/67531/metadc9232/m1/45/: accessed April 23, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.