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Steel Manufacturing

Industry Overview
Steel is one of the basic building blocks of the modern world. Automobiles, appliances, bridges, oil pipelines, and buildings, all are made with steel. While steel manufacturing has existed for centuries, the process for making steel continues to evolve.

Establishments in this industry produce steel by melting iron ore, scrap metal, and other additives in furnaces. The molten metal output is then solidified into semifinished shapes before it is rolled, drawn, cast, and extruded to make sheet, rod, bar, tubing, beams, and wire. Other establishments in the industry make finished steel products directly from purchased steel.

The least costly method of making steel uses scrap metal as its base. Steel scrap from many sources—such as old bridges, household appliances, and automobiles—and other additives are placed in an electric arc furnace, where the intense heat produced by carbon electrodes and chemical reactions melts the scrap, converting it into molten steel. Establishments that use this method of producing steel are called electric arc furnace (EAF) mills, or minimills. While EAFs are sometimes small, some are large enough to produce 400 tons of steel at a time. The growth of EAFs has been driven by the technology's smaller initial capital investment and lower operating costs. 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 thus can be placed closer to customers. EAFs now account for well over half of American steel production and their share is expected to continue to grow in coming years as they move to produce more higher end products by adding virgin iron ore to the mix of steel scrap and other additives.

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 an 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. The higher quality production process is more complicated and consumes more energy, making it more costly.

Industry Organization
The steel industry consists of EAFs and integrated mills that produce iron and steel from scrap or iron ore. Most of these mills also have finishing mills on site that convert iron and steel into both finished and unfinished products. Some of the goods produced in finishing mills are steel wire, pipe, bars, rods, and sheets. In these finishing mills, products also may be coated with chemicals, paints, or other metals that give the steel desired characteristics for various industries and consumers.

While wire, steel reinforcing bars, and pipes are considered finished products, rolled steel is unfinished, meaning it is normally shipped to companies, such as automotive plants, that stamp, shape, and machine the rolled steel into car parts. Finished products also are manufactured by other companies in this industry that make pipe and tubing, plate, strip, rod, bar, and wire from purchased steel. Competition from all these mills has resulted in increasing specialization of steel production, as various mills attempt to capture different niches in the market.

Also included in the steel manufacturing industry are firms that produce alloys by adding materials such as silicon and manganese to the steel. Varying the amounts of carbon and other elements contained in the final product can yield thousands of different types of steel, each with specific properties suited for a particular use.

Recent Developments
Steel manufacturing is an intensely competitive global industry. By continually improving its manufacturing processes and consolidating businesses, the U.S. steel industry has increased productivity sufficiently to remain competitive in the global market for steel. Investment in modern equipment and worker training transformed the industry. Over the past 25-30 years, steel producers have, in some cases, reduced the number of work-hours required to produce a ton of steel by 90 percent.

To achieve these productivity improvements as well as product improvements, steel mills employ some of the most sophisticated technology available. Computers have been essential to many of these advancements, from production scheduling and machine control to metallurgical analysis. For workers, modernization of integrated, EAF, and finishing mills often has meant learning new skills to operate sophisticated equipment.

As countries around the world attempt to reduce emissions and produce cleaner energy, the need for structural steel will increase. Steel will be needed for support towers as well as reinforcing rebar toward the construction of new power generation facilities. In addition, the transmission infrastructure needed to transport electricity also will result in greater demand for steel. The expansion of clean energy production is expected to result in demand for many types of steel products.

Working Environment 
The expense of plant and machinery and significant production startup costs force most mills to operate around the clock, 7 days a week. Nonsupervisory production workers averaged 43.8 hours per week in 2008 in iron and steel mills and 41.3 hours in steel product manufacturing; only 2 percent of workers are employed part time. Workers usually work varying shifts, switching between working days one week and nights the next. Some mills operate two 12-hour shifts, while others operate three 8-hour shifts. Overtime work during peak production periods is common.

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. Many key tasks are now performed by machines that are controlled by workers sitting in air-conditioned pulpits supervising the production process through windows and by monitoring banks of computer screens.

Nevertheless, large machinery and molten metal can be hazardous unless safety procedures are observed. Hardhats, safety shoes, protective glasses, earplugs, and protective clothing are required in most production areas.

Employment
The steel industry provided about 159,000 wage and salary jobs in 2008. Employment in the steel industry is broken into two major sectors: iron and steel mills and ferroalloy production, which employed 98,900 workers; and steel products from purchased steel, which employed 60,100 workers. 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 42 percent of 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. Although most steel mills are small, about 88 percent of the jobs in 2008 were in establishments employing at least 100 workers.

STEM Degree Paths into this Industry
Engineers, chemists, and computer specialists are playing increasing roles at steel mills, helping to address a variety of issues. Metallurgical engineers work with the metals and ores that go into steel in order to change or improve its properties or to find new applications for steel. They make adjustments to the steel-making process in response to quality control issues. Industrial engineers work in process control and use computer models to design production processes to maximize efficient production of each job. They also work with engineers from other specialties to make plants more productive and energy efficient by designing and installing the latest technology. Mechanical engineers often are found in supervisory or management jobs, helping to solve mechanical problems on the production line. Environmental engineers design environmental control systems to maintain water and air quality standards or to clean up old sites.

Industry Forecast
Job opportunities should be very good for engineers and skilled production and maintenance workers despite a projected decline in employment over the 2008-2018 period.

Employment in the steel industry is expected to decline 13 percent over the 2008-18 period, primarily due to increasing consolidation, improvements in productivity, and strong foreign competition. Automation, computerization, and changes in business practices have created a leaner workforce and reduced the number of work-hours needed to produce a ton of steel in the last few decades. These productivity improvements, which were a leading cause of employment declines in the past, are not expected to be a powerful factor in the future, as most companies have automated the process as much as they can. Technological improvements, however, will continue to be made, affecting the number and type of workers hired. Low-skilled jobs will continue to be automated and the jobs that remain will require more education and training.

EAF mills, with their leaner workforce and lower cost structure, are expected to benefit from the industry's transformation and will continue to gain market share. They now produce more than 50 percent of the country's steel, up from 25 percent two decades ago. They are improving the quality of the steel they make by melting pig iron along with the scrap. In this way, they can more effectively compete with integrated mills in markets that demand higher quality steel. Thus, as EAFs continue to grow in relation to integrated mills, job opportunities will be better at these mills.

Employment in the steel industry varies with overall economic conditions and the demand for goods produced with steel. Much of the demand for steel is derived from the demand for products that consume large amounts of steel. Industries that are significant users of steel include manufacturers of structural metal products used in construction, motor vehicle parts and equipment—a typical car uses about a ton of steel—and household appliances. Many of these goods are expensive, so the consuming public is less likely to purchase them during economic downturns.

The economic growth in developing countries will drive global demand for, and the price of, steel. These developing countries may use large amounts of steel in the construction of buildings, bridges, and other infrastructure. In addition, as these countries grow wealthier, their citizens are purchasing more automobiles, appliances, and other steel products.

Rapidly growing output of the Chinese steel industry, however, also may have an impact on the amount and price of steel in the global market. As Chinese steel production continues to grow, demand for domestically produced steel may further weaken.

The push for cleaner energy may increase domestic demand for steel. As the Nation moves away from burning fossil fuels for energy consumption, the building of nuclear power plants and wind turbine towers will result in greater demand for steel, including large amounts of reinforcing and rolled steel. Once new power generation plants come on line, there also will be a need to transport electricity, which may further result in demand for steel.

Despite the projected decline in the number of jobs in the industry, job opportunities are expected to be good for a number of occupations. Demand is expected to be good for all types of engineers, including mechanical, metallurgical, industrial, electrical, and civil. Companies report great difficulty in hiring these highly skilled professionals.

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Note: Some resources in this section are provided by the US Department of Labor, Bureau of Labor Statistics.
 


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