Steel Manufacturing Sector

Significant Points

* Employment is expected to continue to decline due to consolidation and further automation of the steelmaking process.
* Employers staffing production and maintenance jobs increasingly prefer individuals with 2-year degrees in mechanical or electrical technology.
* Opportunities will be best for engineers and skilled production and maintenance workers.

Nature of the Industry

Steel is one of the basic building blocks of the modern world. Automobiles, appliances, bridges, oil pipelines, and buildings, all are made with steel. While steel manufacturing has existed for centuries, the process for making steel continues to evolve.

Goods and services.

Establishments in this industry produce steel by melting iron ore, scrap metal, and other additives in furnaces. The molten metal output is then solidified into semifinished shapes before it is rolled, drawn, cast, and extruded to make sheet, rod, bar, tubing, beams, and wire. Other establishments in the industry make finished steel products directly from purchased steel.

The least costly method of making steel uses scrap metal as its base. Steel scrap from many sources—such as old bridges, household appliances, and automobiles—and other additives are placed in an electric arc furnace, where the intense heat produced by carbon electrodes and chemical reactions melts the scrap, converting it into molten steel. Establishments that use this method of producing steel are called electric arc furnace (EAF) mills, or minimills. While EAFs are sometimes small, some are large enough to produce 400 tons of steel at a time. The growth of EAFs has been driven by the technology’s smaller initial capital investment and lower operating costs. Moreover, scrap metal is found in all parts of the country, so EAFs are not tied as closely to raw material deposits as are integrated mills and thus can be placed closer to customers. EAFs now account for well over half of American steel production and their share is expected to continue to grow in coming years as they move to produce more higher end products by adding virgin iron ore to the mix of steel scrap and other additives.

The growth of EAFs comes partly at the expense of integrated mills. Integrated mills reduce iron ore to molten pig iron in blast furnaces. The iron is then sent to an oxygen furnace, where it is combined with scrap to make molten steel. The steel produced by integrated mills generally is considered to be of higher quality than steel from EAFs. The higher quality production process is more complicated and consumes more energy, making it more costly.

Industry organization.

The steel industry consists of EAFs and integrated mills that produce iron and steel from scrap or iron ore. Most of these mills also have finishing mills on site that convert iron and steel into both finished and unfinished products. Some of the goods produced in finishing mills are steel wire, pipe, bars, rods, and sheets. In these finishing mills, products also may be coated with chemicals, paints, or other metals that give the steel desired characteristics for various industries and consumers.

While wire, steel reinforcing bars, and pipes are considered finished products, rolled steel is unfinished, meaning it is normally shipped to companies, such as automotive plants, that stamp, shape, and machine the rolled steel into car parts. Finished products also are manufactured by other companies in this industry that make pipe and tubing, plate, strip, rod, bar, and wire from purchased steel. Competition from all these mills has resulted in increasing specialization of steel production, as various mills attempt to capture different niches in the market.

Also included in the steel manufacturing industry are firms that produce alloys by adding materials such as silicon and manganese to the steel. Varying the amounts of carbon and other elements contained in the final product can yield thousands of different types of steel, each with specific properties suited for a particular use.

Recent developments.

Steel manufacturing is an intensely competitive global industry. By continually improving its manufacturing processes and consolidating businesses, the U.S. steel industry has increased productivity sufficiently to remain competitive in the global market for steel. Investment in modern equipment and worker training transformed the industry. Over the past 25-30 years, steel producers have, in some cases, reduced the number of work-hours required to produce a ton of steel by 90 percent.

To achieve these productivity improvements as well as product improvements, steel mills employ some of the most sophisticated technology available. Computers have been essential to many of these advancements, from production scheduling and machine control to metallurgical analysis. For workers, modernization of integrated, EAF, and finishing mills often has meant learning new skills to operate sophisticated equipment.

As countries around the world attempt to reduce emissions and produce cleaner energy, the need for structural steel will increase. Steel will be needed for support towers as well as reinforcing rebar toward the construction of new power generation facilities. In addition, the transmission infrastructure needed to transport electricity also will result in greater demand for steel. The expansion of clean energy production is expected to result in demand for many types of steel products.



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