America's energy boom revives Ohio's steel industry
The Severstal Wheeling Steel Mill in Steubenville, Ohio.
Ohio's jobless rate is lower than the national average. Its manufacturing employment is trending up. What gives? Part of the story is booming domestic oil and gas drilling. Energy companies need steel pipe. So steel giants are investing an estimated billion dollars in mills in Youngstown, Lorain and Canton.
At the Timken steel company's Faircrest facility in Canton, vice president Tom Moline gazes proudly upon a big hole in the ground. "It will be the largest jumbo-bloomcaster in the world," he says.
Translation: "This machine is going to be a monster," Moline says. "It will be the tallest structure in Stark County when it's done. And I believe the depth of this pit is close to the average depth of Lake Erie."
Timken is building a next-generation steel plant, in large part because oil and gas companies need pipe for drilling: in the Gulf, in North Dakota, Texas, and right here under Ohio's buckeye trees.
Inside the mill, workers dump tons of scrap metal – old fridges, junked cars – into a 3,000-degree furnace. They melt the steel, stir it, add and subtract stuff (alloys good, hydrogen bad). Then they pour it, cool it, stretch it, cut off the ends, and eventually out come highly pure, highly engineered metal tubes.
And the oilmen are buying.
"The Rust Belt places are undergoing the very beginnings of a massive renaissance of industrial development," says Citigroup energy analyst Ed Morse.
Morse predicts domestic oil and gas production may create 600,000 direct energy jobs, and an additional 1.1 million in related manufacturing sectors, like steel. American factories have become competitive again, he says, because they not only sell to oil and gas companies but also buy cheap energy from them.
"If you have low-cost available energy, you can be a very efficient steel producer," Morse says. "The traditional energy-intensive industries, where the U.S. had lost its competitive edge, it now has regained it.
MORE FROM THIS SERIES: Listen to part one of Scott Tong's series on the rise of the Petro State. And watch this video explainer on how hydraulic fracking works.
Steel industry supplier Solmet Technologies is having its best year yet, due to oil and gas, says vice president Matt Halter. He sells some high-end steel products for $400, others for $25,000. To him, a key leading indicator in town is the Canton white truck index.
"These companies around here that are drilling, that's how they get around," Hatler says. "And when you start seeing your roads full of white pickup trucks, it means good things are coming."
It's a new chapter in an old story of eastern Ohio and steel. Canton's heyday goes back to railroad days, and making track.
"We're the early Chicago in frontier America," says historian Jacci Stuckey Welling at Malone University in Canton. "With the boom in the production of iron and steel, we're located near coal fields. We're located near transportation routes."
But after the 1930s, Welling says, the eastern Ohio steel industry began to decline. The nation's economic center of gravity moved west. Technology replaced workers. Labor costs rose. Tens of thousands of workers in the region lost jobs.
On September 19, 1977, Youngstown Sheet & Tube closed. In these parts, they still call it Black Monday. Today, eastern Ohio is known dubiously for as a place people have left: John D. Rockefeller, the Hoover vacuum company, the original Cleveland Browns. And don't get people here started on LeBron.
"Of course it's happening in Northeastern Ohio," Welling says. "The river catches on fire in the late 1960s. In Cleveland, I think, if I remember correctly, the mayor's toupee catches on fire. It's like, what else is going to happen?"
Now, of course, steel jobs are happening. State employment in durable goods manufacturing rose 2.7 percent over last year.
For Ohioans conditioned to look for the catch, Ohio State economist Mark Partridge offers this: not all those lost jobs will come back.
"We look at a steel mill of a couple generations ago, they employed thousands and thousands of people," Partridge says. "Today's steel mills might just employ maybe hundreds of people. So it isn't going to turn around the Midwest."
Partridge says globally competitive U.S. companies today employ lots of machines, not so many people. But Canton will take it – a proverbial shot in the arm, for an economy punched in the face.
"We come from good stock," says Timken steel worker Jim Davidson. "We go to work every day. If people get famous and leave, that's not our lot in life. I mean, we're lunch box toters. We to go work every day and grind out a living."