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Steel Manufacturing

Nature of the Industry  |  Working Conditions  |  Employment  |  Occupations in the Industry
Training and Advancement  |  Job Outlook  |  Earnings

Significant Points

• Employment is expected to continue to decline.
• Opportunities will be best for adaptable individuals with technical skills and training in complex manufacturing processes.

Nature of the Industry

Faced with international competition and a complex global market, the United States steel industry responded by modernizing manufacturing processes to increase productivity. Despite successful efforts to reduce costs and an improving competitive position, steel manufacturing firms still face stiff competition (and employment is expected to continue to decline. However, investment in modern equipment and worker training has transformed the U.S. steel industry from one of the Nation's most moribund to one of the world's leaders in worker productivity and lowest cost producer for some types of steel. 

Establishments in this industry smelt and refine metals from iron ore and scrap. The molten metal output is solidified into semifinished shapes before it is rolled, drawn, and extruded to make sheet, rod, bar, tubing, and wire. 

New investment has sparked fundamental changes in the nature of this industry. The most significant change is the development of the electric arc furnace (EAF), sometimes called the “minimill,” which converts scrap metal from many sources—such as old bridges, refrigerators, and automobiles—into steel. The term “minimill” originated from the relatively small size of these mills when they first appeared, compared with traditional integrated mills. Today, many EAFs or minimills are larger than integrated mills producing steel from raw materials. The smaller initial capital investment required to start and operate an EAF has helped drive its growth. 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 can locate closer to consumers. EAFs now comprise about half of American steel production and their share is expected to continue to grow in coming years. 

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 the 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 but, because more steps are involved in the production process, it also is more costly. The initial step in the integrated mill process is to prepare coal for use in a blast furnace by converting it to coke. Coal is heated in coke ovens to remove impurities and to reduce it to nearly pure carbon. 

At the other end of the steel manufacturing process, semifinished steel from either EAFs or integrated mills is converted into finished products. Some of the goods produced in finishing mills are steel wire, pipe, bars, rods, and sheets. Products also may be coated with chemicals, paints, or other metals that give the steel desired characteristics for various industries and consumers. Also involved in steel manufacturing are firms that produce alloys, by adding materials like silicon and manganese to the steel. Varying the amounts of carbon and other elements contained in the final product can produce thousands of different types of steel, each with specific properties suited for a particular use. 

For workers, modernization of integrated and EAF steel mills often has meant learning new skills to operate sophisticated equipment. Competition also has resulted in increasing specialization of steel production, as various producers attempt to capture different niches in the market. With these changes has come a growing emphasis on flexibility and adaptability for both workers and production technology. As international and domestic competition continue for U.S. steel producers, the nature of the industry and the jobs of its workers are expected to continue to change. 

Working Conditions

Steel mills evoke images of strenuous, hot, and potentially dangerous work. While many dangerous and difficult jobs remain in the steel industry, modern equipment and facilities have helped to change this. The most strenuous tasks were among the first to be automated. For example, computer-controlled machinery helps to monitor and move iron and steel through the production processes, reducing the need for heavy labor. In some cases, workers now monitor and control the equipment from air-conditioned rooms. 
Nevertheless, large machinery and molten metal can be hazardous, unless safety procedures are observed. Hard hats, safety shoes, protective glasses, earplugs, and protective clothing are required in most production areas. 

Cases of occupational injury and illness in the industry were 9.6 per 100 full-time workers in 1999, higher than the 6.3 cases per 100 workers for the entire private sector and slightly higher than the 9.2 cases per 100 for all manufacturing. 

The expense of plant and machinery and significant production startup costs force most mills to operate around the clock. Workers averaged 44.7 hours per week in 2000, and only about 5 percent of workers are employed part time. Night and weekend shifts are common, as is overtime work during peak production periods. 

Employment

Employment in the steel industry declined to about 225,000 wage and salary jobs in 2000, less than half its 1980 level. The rate of decline, however, has slowed in recent years. The steel industry traditionally has been located in the eastern and midwestern regions of the country, where iron ore, coal, or one of the other natural resources required for steel are found. Even today, about 47 percent of all steelworkers are employed in Pennsylvania, Ohio, and Indiana. The growth of EAFs has allowed steelmaking to spread to virtually all parts of the country, although many firms find lower cost rural areas the most attractive. Large firms employ most workers in the steel industry. More than 9 out of 10 work in establishments employing at least 50 workers, and almost half work in establishments employing 1,000 or more persons (chart 1).

Occupations in the Industry

Opportunities exist in a variety of occupations, but the largest group of workers—45 percent—are employed in production occupations (table 1). Installation, maintenance, repair, and construction workers accounted for about 18 percent of jobs; and transportation and material-moving workers accounted for about 16 percent. About 20 percent of jobs were in managerial, professional, sales, and administrative support occupations. 
Although the steel making procedure varies with the type of furnace used, the jobs associated with the various processes are similar. At integrated mills, production begins when material-moving workers load iron ore, coke, and limestone into the top of a blast furnace. As the materials are heated, a chemical reaction frees the iron from other elements in the ore. Metal-refining furnace operators and tenders, also known as blowers and melters, direct the overall operation of the furnace to melt and refine metal before casting or to produce specific types of steel. They gather information on the characteristics of the raw materials they will use and the type and quality of steel they are expected to produce. They direct the loading of the furnace with raw materials and supervise the taking of samples, to ensure that the steel has the desired qualities. They may also coordinate the loading and melting of raw materials with the steel molding or casting operation to avoid delays in production. 

Generally, either a basic oxygen or an electric arc furnace is used to make steel. Operators and tenders use controls to tilt the furnace to receive the raw materials. Once they have righted the furnace, they use levers and buttons to control the flow of oxygen and other materials into the furnace. During the production process, assistants routinely take samples to be analyzed. Based on this analysis, operators determine how much longer they must process the steel or what materials they must add to meet specifications. Operators also pay close attention to conditions within the furnace and correct any problems that arise during the production process. 

Traditionally, liquid steel was moved from the furnaces into a ladle from which it was poured into ingots. Steel producers now use a process known as “continuous casting” almost exclusively. Continuous casting allows firms to produce steel ready for the next step in processing directly from liquid steel, thus eliminating many of the steps involved in pouring and rolling ingots. Metal pourers and casters tend machines that release the molten steel from the ladle into water-cooled molds at a controlled rate where it solidifies into semifinished shapes. These shapes are then cut to desired lengths, as they emerge from the caster. During this process, operators monitor the flow of raw steel and the supply of water to the mold. 

The “rolling” method shapes most steel processed in steel mills. In this method, hot steel is squeezed between two cylinders, or “rollers,” which flatten or shape the steel. Rolling machine setters, operators, and tenders operate the rolling mills that produce the finished product; the quality of the product and the speed at which the work is completed depend on the roller’s skills. Placing the steel and positioning the rollers are very important, for they control the product’s final shape. Improperly adjusted equipment may damage the rolling mill or gears. 

Extruding and drawing machine setters, operators, and tenders operate equipment to extrude or draw metal materials into tubes, rods, hoses, wire, bars, or structural shapes. Cutting, punching, and press machine setters, operators, and tenders operate machines to saw, cut, shear, slit, punch, crimp, notch, bend, or straighten metal. Welding, soldering, and brazing workers join metal components or fill holes, indentations or seams of fabricated metal products. Multiple machine tool setters, operators, and tenders operate more than one type of cutting or forming machine tool or robot. 

Team assemblers and leaders work as part of a team responsible for assembling an entire product or component of a product. Team assemblers can perform all tasks conducted by the team in the assembly process and rotate through all or most of them rather than being assigned to a specific task on a permanent basis. They may participate in making management decisions affecting the work. Machinists operate a variety of machine tools to produce precision parts and instruments. They may fabricate and modify parts to make or repair machine tools or maintain industrial machines. Inspectors, testers, sorters, samplers, and weighers check parts or products for defects, wear, and deviations from specifications. 

Millwrights are employed to install and maintain much of the sophisticated machinery in steel mills. As the technology becomes more advanced, they work more closely with electricians, who help repair and install electrical equipment like computer controls for machine tools. 

With more sophisticated technology and demands for specialized products, computer specialists, engineers, and engineering technicians have a significant role in the steel industry. For example, industrial engineers design, test, and evaluate integrated systems for managing production including quality control, inventory control, logistics and material flow, cost analysis, and production coordination. 

Training & Advancement

Many jobs in steel manufacturing require only a high school diploma. However, as machinery becomes more complex, employers increasingly prefer to hire graduates from formal postsecondary technical and trade schools for highly skilled operating positions.

After production workers are hired, they receive specific training on the job. New workers entering the production process as lower skilled operators and maintenance personnel generally assist more experienced workers, beginning with relatively simple tasks. As workers acquire experience, they specialize in a particular process and acquire greater skill in that area. The time required to become a skilled worker depends upon individual abilities, acquired skills, and available job openings. It generally takes at least 2 to 5 years, and sometimes longer, to advance to a skilled position. At times, workers change their specialization to increase their opportunities for advancement. Workers are continuously trained to perform a variety of tasks and provide more flexibility to the firm, as company needs change. Computers have become important, as companies have modernized. Workers must learn to operate computers and other advanced equipment. 

To work as an engineer, scientist, or in some other technical occupations in the steel industry, a college education is necessary. Many workers in administrative and managerial occupations have degrees in business or possess a combination of technical and business degrees. A master’s degree may give an applicant an advantage in getting hired or help an employee advance. Managers need strong problem-solving, planning, and supervisory skills. 

Job Outlook

Employment in the steel industry is expected to decline by about 22 percent over the 2000-10 period, primarily due to increased use of labor-saving technologies and machinery. Other factors affecting employment in the industry include foreign trade, overall economic conditions, growth of EAFs, and environmental regulations. Despite the continuing decline in employment, qualified workers still will be needed to replace workers who retire or leave the industry. In production occupations, opportunities will be best for individuals with the technical skills and training to handle technologically advanced machinery.

Employment levels in coming years will be greatly affected by the ability of steel makers located in the United States to compete with imports from abroad. Worker productivity has increased in U.S. firms in recent years, leaving the domestic steel industry better able to compete with imports. The unintended consequence of productivity gains and growing foreign competition has been a glut of steel on the international market. Overcapacity stemming from increased output and slowing demand for steel has reduced the market price of steel to all-time lows. Many American steel producers complain that these low prices are the result of unfair competition from abroad and that foreign producers subsidize their operations through government intervention. This “dumping” of steel in the U.S. market puts further pressure on domestic producers to decrease costs and increase productivity. Efforts currently are underway to improve trade relations in steel and help provide security for a historically significant domestic industry. If successful, the most efficient American firms could take advantage of an increasingly attractive trade market that will result in export opportunities. It also would hasten the demise of inefficient plants trying to compete with low-priced imports. 

Employment in the steel industry varies with overall economic conditions and the demand for goods produced with steel. For example, as the automotive industry produces more cars and light trucks, it will purchase more steel. In this way, much of the demand for steel is derived from the demand for other products. Other industries that are significant users of steel include structural metal products, motor vehicle parts and equipment, and household appliances. As many of these goods require a large outlay, consumers are more likely to purchase them in good economic times. 

Steel companies, like most businesses, have entered the era of sophisticated technology. Taking several forms, this technology has improved both product quality and worker productivity. Computers are essential to most technological advances in steel production, from production scheduling and machine control to metallurgical analysis. Computerized systems change the nature of many jobs, while they eliminate or reduce the demand for others. For example, computers allow one worker to perform duties that previously took the efforts of several workers. However, computer-controlled equipment often requires operators to have greater skills. Hence, workers who are comfortable with computers and other high-tech equipment—as well as those willing and able to learn—will be more widely sought after by employers. This automation will contribute to better opportunities for engineers and other professionals, while causing significant declines for lower skilled machine operators and inspectors. 

Environmental issues also have affected the steel industry. Past decades have seen technological changes spurred by environmental emission regulations. Emission standards, under the present Clean Air Act, will likely result in costly modifications or shutdowns in many coal-processing facilities that employ a dirty, heavily polluting process. Necessary furnace modifications will require major investments and increase the overall cost of production for coke-producing plants. These modifications are, therefore, likely to raise costs in integrated mills that use coke to produce steel. 

The emergence of EAFs is perhaps the most important factor in transforming the steel industry. This trend will continue in the foreseeable future, as EAFs dominate the new capacity expected to begin operation in the next few years. Integrated mills are expected to maintain a major share of the market in higher grade steel and are also entering areas like residential construction, but EAFs will continue to account for a larger share of the international steel market. Growth of EAFs is driven by many factors, including relatively low startup costs, flexibility, and the ability to locate close to the consumer. This is especially important in the construction industry. Because the scrap steel they need to operate is widely available, EAFs have provided job opportunities in the steel industry in additional geographic areas. However, because they generally have higher worker productivity, as EAFs capture more of the domestic steel market, fewer workers will be employed to meet the existing demand for steel products. 

Earnings

The iron and steel industry traditionally has been highly unionized. In 2000, 40.3 percent of steel workers were covered by union contracts, compared with 16.2 percent in durable goods manufacturing and 14.9 percent in all industries. In some instances, companies are closed shops—that is, workers must belong to the union in order to work there. EAFs, though, typically are nonunion. The overall decline of employment in traditional integrated steel mills and the growth of EAFs, together, have caused union membership to decline in recent years.

Source: Career Guide to Industries, Bureau of Labor Statistics

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