Tough times for steel
While the larger steelmakers saw the most upheaval in the 1970s, facing increasing competition from foreign makers and other structural issues, Armco in Butler County saw huge changes, as well.
One clear sign of that was a name change.
In 1978, Armco Steel Corp. became Armco Inc. Shareholders approved the change in April 1978 and it took effect in July. Company executives at the time said the name change reflected the fact the company was diversifying.
But the company was still the sixth largest steel producer in the nation that year, and in December the company announced a $50 million project to install improved production equipment — more than $240 million when adjusted for inflation.
In an interview with the Pittsburgh Press, John Soden, Armco group vice president, was clear that the company wasn’t abandoning steel.
“We expect to remain a major influence in the steel industry,” he said.
Armco was founded in 1900 as the American Rolling Mill Company in Middletown, Ohio. Owner George Verity wanted a facility that could handle every part of the steelmaking process, from creating ingots to casting or forging a finished part.
The Butler County Historical Society page on Armco explains how the company came to have a facility in Butler.
“The Butler Works traced its roots to 1908 with the establishment of the Forged Steel Wheel Company, which produced railroad wheels for Butler’s Standard Steel Car Company,” the site notes. “By 1916, the wheel factory was operating 10 open hearth furnaces. After Columbia Steel Company purchased FSWC in the early 1920s, the Butler Works team focused on implementing continuously rolling wide steel strips into coils. However, the Armco plant in Ashland, Ky., was developing the same process at the same time. Learning of the work being done in Butler, Armco’s lawyers notified the Butler Works that they were violating Armco patents.”
As is so often the case, the legal threats had their intended effect.
”Even though the Butler Works owners also held patents, they sold everything to Armco to avoid costly litigation,” the Historical Society site reads. “Armco paid approximately $20 million for the Butler Works in 1927. With the addition of Butler Works, Armco owned all patent rights to the revolutionary technique of running continuous rolling steel mills.”
Over the ensuing decades, Butler Works would become a specialized facility for Armco, focusing on producing lower-volume but in-demand materials like stainless steel and electrical steel, which is used to create power transformers.
As the decade opened, Armco, which employed about 4,300 people at the time, built a continuous casting facility at the Butler Works, allowing it to create 8-and-a-half ton slabs of electrical steel. As R.W. Kamerer, the manager of the Butler Works, explained when the casting machines opened, Armco’s Butler plant wasn’t focused on massive production numbers as much as it was focused on creating high quality specialty steel products.
The new casting facility opened after the company announced it would stop making steel wheels for railroad cars, the product that the Butler Works had originally been built to produce. By 1970, the company’s production line couldn’t compete with newer methods.
Massive facility improvements weren’t the only changes that the 1970s brought, though. In March 1973, the company announced the creation of a process computing department. The new department was created to handle the increasing specialized computer skills needed to run the Butler Works.
But the economic turmoil of the 1970s was hard on Armco. After announcing record profits for 1974, there were problems in 1975 because of a decrease in the construction of new power plants as well as fewer homes being built.
In late January 1975, there were 3,400 people employed at the Butler Works, about 250 fewer than normal, because of decreased demand.
Those problems didn’t stop further investment from Armco, however. Even as there were concerns about decreasing demand, the company announced it would install an argon-oxygen decarburization process reactor, which created more pure, uniform steel and was also more efficient, leaving less chrome and nickel in the slag left behind at the end of the steelmaking process.
By 1975, however, things were looking truly dire for the steel industry worldwide.
A recession started in 1973, around the same time U.S. steel production peaked at nearly 140 million tons.
The American Iron and Steel Institute estimated that in 1974, there were more than half a million people in the U.S. working in the steel industry. By the end of the decade, that number was under 400,000.
There were multiple reasons for the decline, including improved productivity and more competition from foreign producers.
For example, World Steel Association figures show Japan produced 62 million tons of steel annually at the start of the 1970s, and by 1980 produced 111 million tons a year.
The U.S., on the other hand, produced about 115 million tons of steel a year at the start of the 1970s, a figure that fell to just over 100 million tons by 1980.
Throughout the 1970s, Armco and other companies fought to get the U.S. government to step in and protect the industry from foreign competition. In 1976, for example, Armco filed a dumping complaint against an Italian steelmaker, claiming their actions violated the 1930 Tariff Act.
When, in 1977, the U.S. Treasury Department upheld a dumping complaint filed against a Japanese steelmaker by U.S. Steel, Armco used the opportunity to highlight its struggles.
G.H. McClure, senior vice president of Armco, told reporters, “Although the Treasury Department ruling applies only to the Japanese and one product, we are convinced that pervasive dumping is taking place on most other steel products from Japan, the United Kingdom and other European countries.”
The company continued to invest, however; in 1977, Armco highlighted a new production vessel that was larger than anything in Japan or the United Kingdom, making production more efficient.
And then there was the $50 million upgrades to its casting facility announced in 1978. The work to create a second continuous casting machine started in 1979 and was finished a few years later. By then, employment at the Butler Works had fallen to about 3,200 people — down more than 1,000 jobs from the beginning of the decade.
The 1980s were no kinder to the U.S. steel industry than the 1970s had been. By 1984, total employment in the U.S. steel industry had dropped to about 236,000.
In 1989, Armco sold 40% of its business to a Japanese company, Kawasaki Steel Corporation. By 1993, the two companies had merged, creating AK Steel.
In 2020, Cleveland-Cliffs bought AK Steel for $1.1 billion. Today, the Butler Works is one of only two steel mills in the United States producing electrical steel for power transformers.
