In 2001, all but two of the United States biggest steel producers posted fourth-quarter losses, and Nucor Corporation was one of those two (Barnes and Tyler 243). By October 1 of that year, more than twenty steel companies had filed for Chapter 11 bankruptcy protection, including Bethlehem Steel Corp. and ITV Corp., the nationÆs third and fourth largest steel producers. Of the fourteen steel companies followed by Standard and Poor, only Nucor was considered healthy. The United States is the largest importer of steel in the world, yet in the fall of 2001, 25 percent of domestic steel companies were in bankruptcy proceedings. It was believed by experts that half of the U.S. steel companies would have to close before things got better.
The world was in the midst of its most unprofitable and volatile period because of a glut of steel that had sent prices to a 20-year low (Barnes and Tyler 243). While American companies were trying to stay out of bankruptcy, foreign steel markets desperately need to sell to the relatively open U.S. markets. At the same time, three European companies, FranceÆs USINOR, LuxembourgÆs Arbed SA, and SpainÆs Aceralia Corp, were merging to form the worldÆs largest steel company. Japanese companies NKK Corp. and Kanwasaki Steel Corp. were also talking of merging to become the second largest steel company in the world. These large companies would be in a position to out muscle the U.S. competitors. The largest U.S. company, U.S. Steel, was only the worldÆs eleventh largest, and would be pushed further back by these mergers.
The U.S. companies were faced with not only cheaper imports, but also rising energy costs at home, a weaker demand for steel, tougher environmental laws, and a changing cost structure among producers (Barnes and Tyler 244). The declining economy led to
reduced fuel costs, but also a reduced demand for automobiles, construction, and farm equipment. In March, 2001, Nuc...