The Decline of American Steel: How Management, Labor, and Government Went Wrong by Paul A. Tiffany

Abstract

TECHNOLOGY AND CULTURE Book Reviews 139 ogy or unpromising economics was to blame; as Alcoa’s chief execu­ tive officer explained, “frankly . . . early in the twenty-first century, I doubt that aluminum is going to be terribly important to the structure of the company” (p. 375). Thomas J. Misa Dr. Misa, assistant professor of history at Illinois Institute of Technology, is currently at work on a book dealing with the science, technology, and industrial structure of American steelmaking from 1870 to 1925. The Decline of American Steel: How Management, Labor, and Government Went Wrong. By Paul A. Tiffany. New York: Oxford University Press, 1988. Pp. xiii + 282; tables, notes, bibliography, index. $22.95. The steel industry typifies the ailing American industries that have lost world leadership to competitors from abroad. Indeed, steel may have been the first industry to feel the pressures that now affect American manufacturing universally, and I can remember, growing up in Pittsburgh during the 1960s, the mounting concern over Japanese imports. Paul Tiffany’s long-awaited study provides a solid historical analysis of the roots of the American steel industry’s difficulties. Rejecting the idea that these are the problems faced by all mature manufacturing sectors, Tiffany argues convincingly that confrontational relations between steel executives and both government and labor, especially in 1945—60, were central to the demise of steel. He shows that this pattern flowed from the long-held presumptions of both steelmen and government officials, whose attitudes were formed early in the 20th century and before. Basically, steel executives guided by Elbert Gary wanted stability of prices, markets, and technology. On the other hand, government officials, mindful of the size and power of U.S. Steel, saw these goals threatening competition. Since each side viewed the other with suspicion and even hostility, neither considered coop­ eration to be feasible, especially after the 1910s. The steel industry’s slowness in increasing capacity during the preparedness drive before World War II seemed to confirm federal officials’ views of steel executives as uncooperative and intransigent. The events of 1945—60 that are the focus of the book unfold against this backdrop. Just when the steel industry needed to work with government to solve a number of problems, the pattern of confrontation continued. One issue concerned the capacity in the steel industry, with postwar federal planners pushing a reluctant industry for expanded production. Another bone of contention was a foreign aid program that built the steel facilities for former enemies, allies, and even Third World nations who then exported steel to the United States. Finally, contention surrounded rising steel prices, 140 Book Reviews TECHNOLOGY AND CULTURE which federal officials blamed for inflation. Tiffany shows that both the Truman and Eisenhower administrations made decisions that harmed the steel industry in the long run. But while federal policy­ makers showed little understanding of the industry’s needs, steel executives retained a confrontational pose that seemed only to confirm the views of those in government. Moreover, steel executives made no effort to inform the public of their needs. Instead, they sought to retain traditional prerogatives in running their companies, frequently castigating the “interference” of federal officials. Winning higher prices became the industry’s solutions to all its problems and eventually culminated in the confrontation between John Kennedy and Roger Blough in 1962, which Blough lost. By then, Tiffany argues, it was too late to undo the damage of confrontational business-government relations. The strengths of this book include the exhaustive research required to compensate for the absence of corporate archival material. Better yet is Tiffany’s framework for understanding steel’s problems. His concluding chapter argues that steel’s case is instructive, given the belief in some quarters that industrial policy will solve the problems of American industry. How one creates and manages such a policy becomes problematic, for it is far from obvious whose goals should be served. In this regard, Tiffany’s study is a model in the use of history to understand current economic and business policy dilemmas. One also must admire Tiffany’s evenhandedness in assessing this troubled industry. He notes at several points that villains abound if one seeks to point fingers, but his structural...