U.S. Steel Industry Crisis and Japanese Competition

Bethlehem Steel 1973 most-profitable-year-ever as the high-water mark before two decades of decline. US steel's 75% world capacity in 1945 → 25% by mid-1970s. The "fully depreciated 1911 coke ovens" anecdote from the 1975 Bethlehem new-hire training serves as Tom's archetype of monopoly-era managerial complacency.

I worked for Bethlehem Steel in an era like that. Bethlehem Steel in 1973, the year before I went to work for them, had its most profitable year ever. The American steel industry after World War II owned 75% of the world steelmaking capacity in 1945, because we had bombed out most of the rest. It's great — you just bomb out your competition. There's a good businessman: when you can bomb out your competition you can take a world leadership role. Well, I went to work for them in '74, which is 30 years later approximately, and all the managers who had been hired as young employees in 1945 were now running the company. They still had the attitude that they controlled 75% of the world steel business and that they could dictate prices and everything else. When I went to work for them, we controlled 25% of the world steel industry. But they still thought they controlled 75%, because that's what they grew up on. And it was continuing to decrease.