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Saving steel
For more than two decades, overcapacity has plagued the steel industry. The price of steel, as a result, has fallen by more than 2 percent annually for the past 25 years—much faster than costs. Along the way, industry giants have failed and masses of steelworkers have joined unemployment lines. What can be done to remedy the chronic oversupply of steel?
The take-away: The authors of this opinion piece suggest a bold plan to cut global capacity to the tune of 15 percent or more by creating, through multilateral agreement, regional companies whose sole purpose would be to restructure or destroy excess capacity. Only such a plan, which distributes the pain—including provisions for pensions, health care payments, and the environment—throughout the beleaguered industry, can rescue it, the authors assert.
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© 1992-2003 McKinsey & Company, Inc
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