American Steel

RICHARD PRESTON

Reviewed by Jack

American Steel is a startlingly well-written story by Richard Preston about a maverick who took an age-old, declining industry—U.S. steel manufacturing—and showed that it could not only compete, but win, by employing innovative manufacturing methods and a conscientious way of treating workers. But this book’s appeal goes beyond that of a conventional business book or history lesson. It reads like a romantic thriller, with Preston painting eloquent word pictures about a dangerous and desperate time in the life of the U.S. steel industry. “Long blue arcs snaked through the mountain of busted cars and smashed industry machinery. . . . The steelworkers couldn’t hear their own voices screaming in terror over the noise of melting steel. The noise seemed to open sutures in their skulls, and a musky odor filled the building, the reek of a long-arc meltdown.”

Since the mid-1800s and the development of the Carnegie Steel Company, the United States historically ruled the steel industry and reaped huge profits. With its comfy positioning, U.S. steel did not look for new methods to make steel more efficiently or more economically, adopting the classic “If it ain’t broke, don’t fix it” modus operandi. When money was invested, it was used to replace aged equipment, not to explore new ways to do business. Other monies went to the workforce as the unions were able to get superb contracts for their workers.

The standard production method involved using a blast furnace to turn iron into steel, but the manufacturing process was a space hog, with manufacturers such as the Gary Works in Gary, Indiana, occupying six miles of the Lake Michigan shore with a plant running a mile and a half deep. Clearly there was much wrong with Big Steel, and a perfect storm was developing—of high manufacturing costs, hubris, and growing competition from Asia and Europe.

European manufacturers developed an alternative method for creating steel. Electric arc furnaces, known as “minimills,” used scrap metal as opposed to iron ore to produce steel. This manufacturing method was also beneficial because it allowed the mill to diversify its output, and it could be easily started and stopped depending on demand. In 1969, Ken Iverson, president of the Nulcraft Corporation—a steel manufacturer that would later be renamed Nucor Corporation—and the hero of Preston’s American Steel, opened a minimill in the United States, specifically in Darlington, South Carolina, and this bold move set Big Steel back on its heels.

“[A] good businessman is hard to bruise and quick to heal.”

And for years, due to this pioneering, Nucor succeeded in an industry that was failing. Iverson was innovative not only in his production methods but also in his management approach. Iverson created a company with a small hierarchy of (currently) only five levels: from janitor to CEO required only four promotions. As Nucor grew from earnings of $1.1 million in 1970 to $42 million in the late 1970s, the corporate staff was contained to under twenty people. This lean staffing allowed for quick decision making and a more autonomous work environment for the steel mills. Success did not come without some troubles, however. Attempts to unionize Nucor have failed. Though steelworkers at Nucor earn far less than their unionized compatriots, Nucor offers a bonus program that can allow workers to potentially double their earnings with success.

In 1986, Iverson saw his company’s growth slowing and found new opportunity in the making of sheet steel that was in high demand in the automotive industry. He took the unprecedented step of investing in a new machine, enormous and untested, which would take the molten steel and, in one process, create rolled steel. With this new machine, Iverson believed that he could manufacture one million tons of steel with only five hundred steelworkers. In Japan—one of the most advanced steel industries in the world—2,500 steelworkers were required to do the same. The option to reduce the workforce completely changed the playing field, and Nucor significantly exceeded Iverson’s original goal.

Richard Preston’s tale recounts the riveting story of the building of this anomalous mill, located somewhat ironically in Crawfordsville, Indiana. But it makes sense when you consider that the mill needed scrap metal, a workforce, and good access to utilities, and these were all in plentiful supply in the Rust Belt. The cast of characters includes Iverson; the mill’s colorful general manager, Keith Earl Busse; and the committed workers who manipulated the molten steel in the name of Nucor. Preston imbues the story with all the romance and thrill of a fictional drama. His retelling of an explosion as workers were using an experimental process had me reading while walking, unable to put down the book, to find out the conclusion to the accident. Here is just a taste:

Five seconds after the ladle cleared the casting tower, there was a whining sound from the crane. Millett, standing near the control deck inside the pulpit, heard the sound and looked up. He saw that the crane cables had broken and unraveled. The ladle was falling to the ground. It was a huge object, fifteen feet high, filled nearly to the brim with liquid steel, and the bottom of it was forty feet off the floor. It seemed to pass the deck slowly as it fell, the crane cables singing in the winch. . . . There was a big, bright, yellow flash, and the lights went out.

I would be hard-pressed to find a book that I’ve quoted aloud to coworkers as much as American Steel. Richard Preston is simply a great writer of nonfiction, and I would rank him with contemporary storytellers like Malcolm Gladwell and Michael Lewis. Here he brings his talent to a tale of creativity and resurrection. The story of Ken Iverson and his success with Nucor is inspirational and educational, and demonstrates that an adoption of a new technology as well as an innovative organization that retains its humanity can succeed in business. JC

American Steel: Hot Metal Men and the Resurrection of the Rust Belt, Prentice-Hall Press, Hardcover First Edition 1991, ISBN 9780130296047

WHERE TO NEXT? Here for how disruptive Nucor really was Here for how engineering is an art Here for how innovation is an art | EVEN MORE: Plain Talk by Ken Iverson; And the Wolf Finally Came by John Hoerr; Making Steel by Mark Reutter; Andrew Carnegie by David Nasaw