Although the United States steel industry faces widely publicized economic problems that have eroded its steel production capacity, not all branches of the industry have been equally affected. The steel industry is not monolithic: it includes integrated producers, minimills, and
specialty-steel mills. The integrated producers start with iron ore and coal and produce a wide assortment of shaped steels. The minimills reprocess scrap steel into a limited range of low-quality products, such as reinforcing rods for concrete. The specialty-steel mills are similar
to minimills in that they tend to be smaller than the integrated producers and are based on scrap, but they manufacture much more expensive products than minimills do and commonly have an active in-house research-and-development effort.
Both minimills and specialty-steel mills have succeeded in avoiding the worst of the economic difficulties that are afflicting integrated steel producers, and some of the mills are quite profitable. Both take advantage of new technology for refining and casting steel, such as continuous casting, as soon as it becomes available. The minimills concentrate on producing a narrow range of products for sale in their immediate geographic area, whereas specialty-steel mills preserve flexibility in their operations in order to fulfill a customer’s particular specifications.
Among the factors that constrain the competitiveness of integrated producers are excessive labor, energy, and capital costs, as well as manufacturing inflexibility. Their equipment is old and less automated, and does not incorporate many of the latest refinement in steelmaking
technology. (For example, only about half of the United States integrated producers have continuous casters, which combine pouring and rolling into one operation and thus save the cost of separate rolling equipment.) One might conclude that the older labor-intensive machinery still operating in United States integrated plants is at fault for the poor performance
of the United States industry, but this cannot explain why Japanese integrated producers, who produce a higher-quality product using less energy and labor, are also experiencing economic trouble. The fact is that the common technological denominator of integrated producers is an
inherently inefficient process that is still rooted in the nineteenth century.
Integrated producers have been unable to compete successfully with minimills because the minimills, like specialty-steel mills, have dispensed almost entirely with the archaic energy and capital-intensive front end of integrated steelmaking: the iron-smelting process, including
the mining and preparation of the raw materials and the blast-furnace operation. In addition, minimills have found a profitable way to market steel products: as indicated above, they sell their finished products locally, thereby reducing transportation costs, and concentrate on a
limited range of shapes and sizes within a narrow group of products that can be manufactured economically. For these reasons, minimills have been able to avoid the economic decline affecting integrated steel producers.
1. Which one of the following best expresses the main idea of the
(A) United States steel producers face economic problems that are shared
by producers in other nations.
(B) Minimills are the most successful steel producers because they best
meet market demands for cheap steel.
(C) Minimills and specialty-steel mills are more economically competitive
than integrated producers because they use new technology and avoid the
costs of the iron-smelting process.
(D) United States steel producers are experiencing an economic decline
that can be traced back to the nineteenth century.
(E) New steelmaking technologies such as continuous casting will replace
blast-furnace operations to reverse the decline in United States steel
2. The author mentions all of the following as features of minimills
(A) flexibility in their operations
(B) local sale of their products
(C) avoidance of mining operations
(D) use of new steel-refining technology
(E) a limited range of low-quality products
3. The author of the passage refers to “Japanese integrated
producers” (line 43) primarily in order to support the view that
(A) different economic difficulties face the steel industries of
(B) not all integrated producers share a common technological denominator
(C) labor-intensive machinery cannot be blamed for the economic condition
of United States integrated steel producers
(D) modern steelmaking technology is generally labor-and energy-efficient
(E) labor-intensive machinery is an economic burden on United States
integrated steel producers
4. Which one of the following best describes the organization of the
(A) A hypothesis is proposed and supported; then an opposing view is
presented and criticized.
(B) A debate is described and illustrated: then a contrast is made and
the debate is resolved.
(C) A dilemma is described and cited as evidence for a broader criticism.
(D) A proposition is stated and argued, then rejected in favor of a more
general statement, which is supported with additional evidence.
(E) General statements are made and details given; then an explanation is
proposed and rejected, and an alternative is offered.
5. It can be inferred from the passage that United States
specialty-steel mills generally differ from integrated steel producers in
that the specialty-steel mills
(A) sell products in a restricted geographical area
(B) share the economic troubles of the minimills
(C) resemble specialty-steel mills found in Japan
(D) concentrate on producing a narrow range of products
(E) do not operate blast furnaces
6. Each of the following describes an industry facing a problem also
experienced by United Stated integrated steel producers EXCEPT
(A) a paper-manufacturing company that experiences difficulty in
obtaining enough timber and other raw materials to meet its orders
(B) a food-canning plant whose canning machines must constantly be tended
by human operators
(C) a textile firm that spends heavily on capital equipment and energy to
process raw cotton before it is turned into fabric
(D) a window-glass manufacturer that is unable to produce quickly
different varieties of glass with special features required by certain
(E) a leather-goods company whose hand-operated cutting and stitching
machines were manufactured in Italy in the 1920s
7. Which one of the following, if true, would best serve as
supporting evidence for the author’s explanation of the economic
condition of integrated steel producers?
(A) Those nations that derive a larger percentage of their annual steel
production from minimills than the United States does also have a smaller
per capita trade deficit.
(B) Many integrated steel producers are as adept as the specialty-steel
mills at producing high-quality products to meet customer specifications.
(C) Integrated steel producers in the United States are rapidly adopting
the production methods of Japanese integrated producers.
(D) Integrated steel producers in the United States are now attempting to
develop a worldwide market by advertising heavily.
(E) Those nations in which iron-smelting operations are carried out
independently of steel production must heavily subsidize those operations
in order to make them profitable.