Introduction:
U.S steel companies faced several challenges which forced them to change their strategies or adapt new strategies. Some of the challenges are described below:
Overcapacity:
The steel industry of U.S had far more production capacity than was needed to meet market demand. There are many manufacturers compared to small customers, which incur over capacity of the steel industry in 1986, when industry capacity was at 130 million tons, the outlook was for a continued decline in per capita consumption and movement towards capacity in the range of 90 to 100 million tons, so excess capacity was there. There are too many marginal competitors and too much production capacity in U.S steel industry. So it was a big issue for the firm to sustain in the market.
So the U.S government had recently given $1 billion of subsidies to 9 mills, allowing them to remain in operation.
Consumer demand decline:
A slowing economy, particularly in auto sales led the decline of customer demand. Evidence says that decline in motor vehicle production and consumer durable goods hit the producers of flat rolled sheet steel hard. In late 1997 and in 1998, declining demand for steel promoted Nucor and other U.S companies to reduce prices to better compete against an unprecedented surge of imported steel.
Economic recession and terrorist attack:
The economic recession that hit Asia and Europe in the late 1990s, reached the united states in 2000 and 2001 and then orders for steel eroded further after the september11, 2001, terrorist attacks. The slowing economy affected major steel consuming industries such as construction, automobiles and firm equipment. And all those things hampered steel production in the United States.
Dumping steel:
Foreign steel producers with few market opportunities abroad were dumping steel in the U.S market at cut- rate prices. In 1999 commerce department