US Steel industry continuous casting adoption failure

65% yield (ingot) → 97% yield (continuous casting) was a transformative productivity gain. Foreign governments backed the risk; American boards of directors would not. Setup for the Airbus/Boeing subsidy parallel.

When they first started continuous casting in the 1960s, a lot of people said that process will never work. Some people said going from 65 percent yield — pounds of steel produced per hundred pounds cast — to 97 percent is a big enough increase in profitability that they were willing to bite the bullet and do it. American steel companies were too conservative. Boards of directors were not willing to take a risk. It was people who were willing to take a risk, but some of those people were in foreign countries where the government was backing up their risk. It's sort of like the Airbus-Boeing controversy today — how much is the government supporting both of them.

The Armco decision treated as representative of a sector-wide management failure.

It turns out five years later they had to rip it out and put in continuous casting. Anyone who knew anything about the steel industry would have known that. But the steel industry executives, who were all trained at places like Harvard Business School, were so risk averse, they were not going to put any new technology that would have an immediate 50% improvement in productivity unless it was a proven technology. They were not going to be the market leader, they were going to be the market follower. That's what they were being taught by the likes of the faculty at Harvard Business School. Kim went on to become the dean of Harvard Business School. He was one of the great gurus in American automotive production, even though if we walked through a plant, I'm not sure he could tell you what was going on in an automotive assembly plant.

Referenced via Kim Clark's consulting work for the American Iron and Steel Institute c. 1980, framing continuous-casting adoption as a "dilemma" for AISI presidents.

And he was explaining to them about this dilemma: should they put in ingot casting versus continuous casting, which is something I haven't brought up yet. Ingot casting versus continuous casting was a process in 1970 that was absolutely obvious. You could go from 65% yield to 95% yield on your steel. Does it take a genius to know which one you would rather have? But for Armco Steel, it's a dilemma. For a businessman it's a dilemma. Armco Steel decided to put in ingot casting, and three years later, after they built it — takes about three years to build the plant and invested a couple hundred million dollars — they decided they were going to have to put in continuous casting. Anyone with a brain would have known before, but Kim said he was defending this dilemma. He was telling these managers how difficult this decision was. Well, of course you tell them that — they're paying your consulting fee, and you're not going to tell them they're idiots. My problem in my profession is I will tell them they're idiots. But in fact they were idiots. Kim became Dean, and here I am lecturing to you, but at least I have my integrity. I'd rather be lecturing, believe me, than sitting in those meetings.

§30. BOP process variations and the Sparrows Point pulpit [100:45]