Steel business was poorly managed
March 8, 2018
For a self-proclaimed genius businessman, Trump sure makes a lot of poor business decisions. I guess that's why he bankrupted four casinos.
Trump's efforts to revitalize the steel industry with tariffs is just like revitalizing the coal industry. It is a fundamental principle of business that you can't revitalize an endeavor without a market. The steel market isn't as moribund as coal, but it isn't what it used to be, either.
I workded 17 years for Inland Steel in East Chicago, Indiana, right up until it went belly up in 1998, So I know more than a little about the steel industry and what happened to it. Protectionism would not have saved Inland.
The seeds of Inland's demise were planted when the technical people, the industrial and metallurgical engineers who founded and ran the company for nearly a century, got out of the business and were replaced by businessmen who knew nothing about making steel, and were too arrogant to ask the people who did. They apparently didn't know anything about making money, either.
Inland's businessmen were completely out-managed by the Japanese. Businessmen are supposed to anticipate market conditions. Inland's businessmen thought they could run cold rolled automotive turn after turn, day after day and the demand would never dry up.
Well, the automobile industry doesn't use as much steel as it used to, and they, too, have been out competed by foreign suppliers. So big, integrated steel mills like Inland were replaced by smaller, more versatile mini-mills. Isn't that the way free enterprise and free trade are supposed to work, you capitalists? Survival of the fittest.
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Near the end, Inland's desperate management hired representatives from Nippon Steel to teach them how to manage our business and make money in steel. Nippon Steel advised us to collaborate with the employees to set expectations and empower them to meet those expectations without someone looking over their shoulder. Give your subordinates a sense of ownership of the company, they said.
But Inland's management wasn't buying it. They liked the old dictatorial, do what I tell you management technique. When I left, I did not know one coworker who was proud to work for Inland Steel.
Foreign competition did not create the rust belt. Bad management did, and businessmen just like them are now running our country.
Fred Malo Jr.