3 - How Have Consultants Mattered? The Case of Lukens Steel

Summary

Since the 1920s, management consultants have reorganized the largest institutions in the world, including IBM, The University of California, Shell Oil, Congress, Westinghouse, and the Bank of England. Listing their important clients, however, sidesteps the obvious question: “how have consultants mattered?” The case of Lukens Steel, which was purchased by Bethlehem Steel in 1997, is a particularly useful case-study of the efficacy of management consultants, because executives at Lukens corresponded with, and hired, many of the best-known consulting firms from 1912 through 1970. These consulting firms included: Harrington Emerson & Company; International Bedaux Company; Arthur D. Little, Inc.; Robert Heller & Associates; Arthur Andersen & Company; and Booz •Allen & Hamilton. Using Lukens's internal records, this chapter will analyze the continuing influence of management consultants on a medium-sized industrial firm that was always better known for its traditional production than for rapid changes in its organization or technology.

A Brief History of Lukens Steel

Lukens, founded over 170 years ago in Coatesville, Pennsylvania traditionally produced one major product: plate steel. Throughout the twentieth century, Lukens trailed the two largest manufacturers of plate steel, U.S. Steel and Republic Steel. U.S. Steel and Republic, both nationally known, vertically integrated steel producers, made a range of plate steels. But the two industrial giants focused on high volume, low-cost steel. Lukens, by contrast, remained a specialty competitor focused on high quality, batch production with consistently higher costs than the market leaders.