By Mark Brennan
U.S. Steel, the iconic American company based in Pittsburgh, is possibly being bought by a Japanese industry powerhouse, Nippon Steel Corp. With this deal, the locus of the American steel industry may be shifting. South Jersey went through a similar shift 200 years ago.
From Pittsburgh to Harrisburg to Washington, D..C, corporate and union leadership, along with politicians, are debating over whether the sale makes sense. Those arguing against the deal are citing national security, industrial policy principles and labor concerns. Those arguing in favor are citing free trade, the environment, and the financial realities of modern steel plants. The debate does not even cut clearly along partisan lines. The deal is currently in limbo, as the Biden administration reviews it.
What hasn’t been generally mentioned is that South Jersey offers a unique historical perspective on this debate. The center of gravity of the U.S. steel industry shifted once about 200 years ago, and the Pine Barrens were central to the storyline.
South Jersey used to be the iron powerhouse of the United States. (Steel is iron plus carbon.) Iron from South Jersey fueled the American Revolution. Manufacturing ingredients were nearby, cheap and plentiful: Iron ore was harvested from bogs in the Pine Barrens and the trees are an easy source of made charcoal. Furnaces produced essentials like nails and wagon wheels. With the industry, came factory towns dotting South Jersey. The beams that make up the dome of the U.S. Capitol were produced in Trenton.
The industry did well locally until the 1800s. Then, supplies thinned, and ore and fuel had to be brought in from elsewhere. By the 1840s, the competitive landscape became unfavorable: New furnaces in the Pittsburgh region were more efficient, relied on nearby Pennsylvania coal instead of charcoal, and used a type of blasting that made more durable iron for customers like railroads. The Panic of 1873, which started out as a stock market crash in Europe, was a final nail in the coffin. The locus of the American steel industry fully moved from the Pine Barrens toward western Pennsylvania.
The New Jersey towns built around the industry emptied out. Plants and equipment were sold for scrap. Today the reminders of this once-booming industry are ruins of furnaces, unexpectedly and inspiringly rising out of the well-preserved forests of the Pine Barrens.
This is not to say that if the U.S. Steel deal goes through, what happened in the Pine Barrens will happen in Pittsburgh. Today, the geography of where plant owners sit, versus where manufacturing happens and where supplies for it are located, are often different, unlike the 1840s. A setup is entirely possible in which company owners in Japan would manufacture steel in Pittsburgh and U.S. Steel’s other plant sites, with raw materials from different states,
One takeaway, though, is that this potential deal should serve as a reminder that supply chains— even essential and iconic ones, like steel — do feel pressures to modernize. This may mean reaching efficiencies, and environmental goals, and keeping pace with industry sourcing practices. Not being able to deal with these pressures, or choosing not to deal with them, makes companies uncompetitive. As savvy as they were, iron producers in the Pine Barrens were not able to deal with the fact that Western Pennsylvania producers had abundant local supplies and the chance to build plants with the newest processes. No matter the outcome of the current deal, policymakers might look even more closely at how modern the American steel industry is now, and how modern it might be might be in 10 years.
Another takeaway is that if Nippon Steel sale does go through, and production does, in time, shift away from places like Pittsburgh, this must be addressed by corporate and government policy. When iron furnaces closed in the Pine Barrens almost 200 years ago, there were different expectations and realities about corporate responsibility and the ability of government to make displaced workers whole again. The result in South Jersey was emptied factory towns.
In reflecting on this deal, policymakers must look carefully at the impacts—again, today and in 10 years— on the people and communities that make steel.
Mark Brennan, a supply chain expert and central New Jersey native, begins this fall as an assistant professor at the Rutgers School of Business-Camden.
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