Minimills and Japanese Steel

    After the devastation in Japan in WWII, the country rebuilt with a focus on being a modern industrial nation. They studied American production techniques and improved on them.  The combination of efficiency, modern equipment, and cheap labor made the Japanese suited for manufacturing competition, especially with the inflated American steel industry.  By 1980, Japan made more than 70% of its steel with modern continuous casting equipment; the US only used this technique for 20% of its production, the rest being produced by older, inefficient methods.  (61)  Labor rates were also a significant factor, as is shown in the average hourly pay for steelworkers in 1976:

 United States $16.39
 West Germany $13.55
 Japan   $ 9.73   (106)

US companies discovered these savings during 1959, and realized that they did not have to sacrifice quality for price any longer if they imported steel.
    The other major competitors with Bethlehem Steel in the ‘60’s and ‘70’s were the growing number of minimills in America.  These mills began appearing around the time of the 1959 strike, providing customers with a lower cost domestic steel source.  They used electric furnace-continuous casting operations which melted scrap.  They worked with only a fraction of the overhead costs of integrated mills like Bethlehem since each produced only selective products.  This smaller scale, smaller investment set-up allowed the minimills to adopt new technology easily, maintaining efficiency and competitiveness.  Perhaps the most cost-saving aspect of minimills was their use of non-union labor.  (72)  By 1980, members of the Bethlehem union made $24 an hour, while the minimill average was $15 an hour plus profit-sharing bonuses.  (200)  Notice how the minimills used a system similar to Schwab’s original bonus plan for Bethlehem Steel.  Most  minimills could produce 60,000 tons of steel per year, as compared to Bethlehem’s  20,000,000 tons per year.  (73)  Yet dozens of these mills opened, each capturing a corner of the market, so that by the end of the’70’s, minimills could produce 30% of the nation’s steel.  (231)