Japanese steelmaker Nippon Steel attempted to acquire U.S. Steel in December 2023. Investors were optimistic, but politicians and union members were less enthusiastic.
Politicians voiced concerns about keeping U.S. Steel under American ownership. At the same time, union members expressed unease, fearing that a foreign acquisition might impose stricter labor requirements on them.
There’s a great deal of nostalgia associated with U.S. Steel. Founded by J.P. Morgan in 1898, it was once the largest IPO in history and the first company to reach $1 billion in revenue. At its peak, it employed over 300,000 people.
Today, U.S. Steel is a shadow of its former self. The workforce has shrunk from 300,000 to 20,000, and its relevance within the corporate world has diminished. Once the seventh-largest company in the U.S., it now ranks 648th and is no longer part of the S&P 500.
After World War II, the U.S. was the largest steel producer in the world. Now, China leads the industry with a 54% market share, followed by India (6-7%) and Japan (5-6%). The U.S., meanwhile, accounts for just 4-5% of global steel production.
It’s safe to say that the U.S. is no longer the global leader in steel.
Last week, I wrote about how the U.S. has taken a dominant role in global communications and technology. However, it’s also losing ground in various other industries, and that’s okay.
Consider this analogy: Imagine you’re good at both accounting and cleaning floors. Despite being competent in both, you would likely focus on the one that offers greater rewards.
While the technology and communication sector continues to grow, several industries are declining due to technological advancements, shifts in consumer behavior, and globalization. But this is a natural progression. According to the principles of David Ricardo‘s comparative advantage, the U.S. should focus on sectors where it excels and allow other nations to expand in areas where they hold a competitive edge.
Here are some industries in the U.S. that are either “dying” or facing long-term decline:
1. Coal Industry
The coal industry has been in steady decline due to the rise of renewable energy, natural gas, and environmental regulations. As the world shifts towards greener energy sources, coal becomes less economically viable. U.S. coal production has dropped significantly since 2010, and the trend continues.
2. Brick-and-Mortar Retail
Traditional retail is struggling in the face of e-commerce giants like Amazon. Many department stores, such as Sears and JCPenney, have filed for bankruptcy. With more online consumers, shopping malls and physical stores are becoming increasingly obsolete.
3. Paper and Print Media
The rise of digital media has decimated the newspaper and magazine industries. Many publications have transitioned to online-only models or reduced their print circulation. In general, the demand for paper products has fallen as industries have become more digitized.
4. Tobacco Industry
While still profitable, the tobacco industry is declining in the U.S. due to public health campaigns, taxation, and regulation. Fewer people smoke today than in previous decades, and younger generations are less likely to pick up the habit. E-cigarettes and vaping have emerged, but they too face increasing regulation.
5. Manufacturing (Certain Sectors)
Some traditional manufacturing industries, like textile manufacturing, have largely disappeared from the U.S. due to globalization. Cheaper labor overseas has led to offshoring, and many factories have closed, particularly in industries like clothing and footwear. Automation and robotics have also played a role in reducing the demand for manual labor in manufacturing.
6. Cable Television
The rise of streaming services like Netflix, Hulu, and Disney+ has caused a major decline in cable TV subscriptions. The “cord-cutting” trend is accelerating, with fewer people paying for traditional cable packages, and more opting for flexible, on-demand content delivery systems.
7. Landline Telephones
The telecom industry has been revolutionized by mobile phones, and landline services are becoming obsolete. Many households no longer maintain a landline, relying instead on smartphones for communication. As a result, telecom companies have been shifting resources toward mobile and broadband services.
8. U.S. Postal Service (Mail Services)
Traditional mail services have seen a sharply declined as email and digital communication replace the need for letter-based correspondence. The U.S. Postal Service has struggled financially due to this trend, and the volume of first-class mail has steadily dropped. While package delivery has grown due to e-commerce, traditional postal services are in decline.
9. Textile Industry
The U.S. textile industry has faced severe declines due to global competition. Much of textile manufacturing has moved to countries with cheaper labor, like China, Bangladesh, and India. The few remaining textile manufacturers in the U.S. have shifted toward high-tech and niche markets.
10. Oil and Gas Refining
The shift toward renewable energy and electric vehicles is challenging the long-term viability of the oil and gas refining industry. While fossil fuels still dominate global energy, many see a future where oil demand diminishes due to the worldwide push for decarbonization.
Each of these industries faces a combination of disruptive technologies, regulatory pressures, changing consumer behaviors, and competition from globalization. Investors, businesses, and workers in these sectors must adapt or risk obsolescence.
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