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The Expansion of Blast Furnace Capacity, 1938–52: A Study in Geographical Cost Differentials1

Published online by Cambridge University Press:  24 July 2012

Marvin J. Barloon
Marvin J. Barloon
Affiliation:
Professor of Economics at Western Reserve University
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Abstract

The great expansion of American blast furnace capacity since 1938 has worked significant changes in the geographical distribution of the industry. Many persons have assumed that the furnaces erected at new locations have abnormally high costs for their mineral raw materials, and that their survival, like their origin, is dependent on the boom market of wartime and postwar, Federal financing, and accelerated amortization for tax purposes. This analysis is not correct. From the viewpoint of raw materials cost, the furnaces at relatively new locations in Utah, California, and northeast Texas, are lust as efficient as the furnaces at older locations such as Chicago and Pittsburgh. The data for the cost analysis which follows were collected directly from the firms involved.

Type
Research Article
Information
Business History Review , Volume 28 , Issue 1 , March 1954 , pp. 1 - 23
Copyright
Copyright © The President and Fellows of Harvard College 1954

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References

2 For a summary of these features, see U. S. Tariff Commission, “Iron and Steel,” War Changes in Industry Series, Report No. 15 (Washington, 1946).Google Scholar

3 Kaiser Steel Corporation, Annual Report, Year Ended June 30, 1953, p. 8. This quotation may overstate the growth in Los Angeles by comparing the county-wide permits of that city with only the central cities, exclusive of suburbs, elsewhere.

4 A list of references most actively consulted in the preparation of this study appears in Appendix II.

5 The following are previous studies of blast furnace raw materials costs at respective locations:

Daugherty, Carroll R., DeChazeau, Melvin G., and Stratton, Samuel S., The Economics of the Iron and Steel Industry (New York, 1937), I, 378ff.Google Scholar

Worthing, Marion, “Comparative Assembly Costs in the Manufacture of Pig Iron,” Pittsburgh Business Review, Pittsburgh, VIII (31 Jan. 1938), 21.Google Scholar

Haven, William A., “The Manufacture of Pig Iron in America” (paper presented at meeting of The Iron and Steel Institute, London, May, 1940), 22Google Scholar.

Wright, E. C., “The Economics of Raw Material Supplies in the Birmingham District,” Mining Engineering, Vol. 187 (1950), 1214.Google Scholar

6 Garrett, R. E., “Raw Materials Problems in Birmingham,” American Iron and Steel Institute, New York, Regional Technical Meeting at Birmingham, Alabama, October 27, 1948, page 214Google Scholar.

7 Wade, Henry H. and Alm, Mildred R., Mining Directory of Minnesota (University of Minnesota, Mines Experiment Station, May 1, 1952), 257.Google Scholar