ABSTRACT
In this chapter we examine the strategic response of the US steel industry to technological change. We show that past investments in old technology and risk-averse behavior of US firms placed the industry on a lower technological trajectory. The slow diffusion of modern technology and import competition in the US undermined the financial strength of American steel firms, leading to obsolete excess capacity. The industry responded with major restructuring at the plant level, reorganizing production assets by eliminating capacity and selectively modernizing plants. Unable to cope with the crisis, the industry also abandoned its self-regulatory approach in favor of a more cooperative business-government partnership. However, protectionism did not resolve the issue of technological backwardness. Instead, the net results of adjustment have been a loss in steel capacity, a decline in the level of employment, plant imbalances, and technological lethargy.
