How Once-Mighty U.S. Steel Ended Up on the S&P Scrap Heap

Overview of grimy USX steel works facili
Kevin Horan, Time-Life Pictures/Getty ImagesU.S. Steel's Gary Works in Gary, Ind.
The bigger they are, the harder they fall.

That can be true in sports and in corporate America.

At one time, U.S. Steel (X) was the largest company in the world, but as of Tuesday, it's no longer big enough to be included in the S&P 500 (^GPSC), the index that includes 500 of the largest public companies in the United States.

Back in the day, U.S. Steel was a corporate superstar. Like LeBron, Beyoncé and other stars of today, it only needed one name -- it was often referred to simply as Steel. It was the world's first billion dollar company, and at its peak in the late 1950s, the company had an inflation-adjusted market value of $39.7 billion. Now, though, the company is valued at less than $4 billion.

That means it's worth less than such corporate "luminaries" as International Game Technology (IGT), United Therapeutics (UTHR) and Lululemon Athletica (LULU), the struggling maker of yoga pants. And also, worth less than the minimum market cap for the S&P 500.

America's Industrial Might

U.S. Steel was founded in 1901 by the legendary financier and industrialist Andrew Carnegie and several partners. Throughout much of the first half of the 20th century, the company was synonymous with the industrial growth and power of the nation. In 1943, the company employed more than 340,000 workers. Now it employs less than one-tenth of that number.

Over the years, it has had a stormy relationship with its workers, including some long, contentious and sometimes-violent strikes. It also butted heads with government regulators, who at one time tried and failed to break up the company on antitrust grounds.

For many years, it was the major employer in its headquarters city of Pittsburgh. The city's National Football League team took its nickname from the company, and the logo that the Steelers use on helmets was derived from the company's original logo.

U.S. Steel is still based in Pittsburgh, but its largest domestic steel plant is now in Gary, Indiana. It also has facilities in Alabama, Illinois, Maryland, Michigan and Minnesota. It was part of the Dow Jones Industrial Average from 1901 to 1991, before getting the boot from that index.

Cheaper Imports and Five Years of Losses

Its business has been hurt by a number of factors, including cheaper steel products from overseas. It now accounts for just 8 percent of the steel used in the U.S. and it's been buried under red ink, with five straight years of annual losses.

On Wall Street, U.S. Steel's stock has enjoyed a bit of a rebound of late, up 48 percent from a year ago. But a longer-term look shows that it's lost 27 percent of its value over the past five years -- running in the wrong direction during one of the strongest bull markets in history. Most analysts who cover the company have a "neutral" rating on the stock.

As of Wednesday, it will be replaced in the S&P 500 by Martin Marietta Materials (MLM).

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If you separate the metals out of that soot that is on all of it, you can sell it. What's left is something called carbon black. You can sell that too - it's used in car tires and in paints.

July 02 2014 at 10:53 AM Report abuse rate up rate down Reply
1 reply to alfredschrader's comment

alfredschrader, the king of useless information.

July 02 2014 at 10:57 AM Report abuse rate up rate down Reply

Back in the 1980's a lot of trucking companies went out of business as Independents chased the freight under bidding each contract because they didnt pay overtime or other benefits. Some investor would come in buy a trucking company then strip it down for quick profit.

When the trade deals passed the freight began to dry up making it necessary for alot of mergers in trucking to maintain volume.

I was a Recieving&Shipping manager an saw how upper management would demand we find a cheaper carrier.

July 02 2014 at 10:47 AM Report abuse +1 rate up rate down Reply
1 reply to Iselin007's comment

I was a Recieving&Shipping manager an saw how upper management would demand we find a cheaper carrier.******* Management figured out that you were all on the take from the carriers….

July 02 2014 at 10:54 AM Report abuse rate up rate down Reply
1 reply to ted_wilson7's comment

I have my share of Trucking company hats but when the boss wants a different carrier you do what your told. I have the mold companies hat from their South Carolina plant because the owner's brother's wife send it to me. The miold companie was severly hurt by the trade deal scams. I feel for the owner whose father started the company in 1933 during the Great Depression. It took some greedy politicians and their campaign contributors to destroy the America that the people had buil

July 02 2014 at 11:16 AM Report abuse -1 rate up rate down

Evenually some engineer with your former corporation will break his silence and spill the beans confirming what you had assumed to be the driving force behind the job cuts.
You'll stumble upon the true story of a restructuring on the Internet sometimes by using key words. There are actually some professionals out there that have compassion for their fellow workers an break down when they see people being dumped in the curb because the corporation decides to gets it's profits by cutting workers and outsourcing their jobs.

July 02 2014 at 10:30 AM Report abuse +1 rate up rate down Reply
1 reply to Iselin007's comment

Anyone that believes that they are anything but a liability to their company is either very naive or eleven. Employees are the most expensive overhead ( especially older employees). Just as companies upgrade equipment and change business models, they will jettison employees when necessary to improve the profit picture. Corporations are cold blooded, contract entities, with the same rights as you. The stockholders are its heart and profit its life's blood. Profits are the ONLY thing that sustain it and make it grow..

July 02 2014 at 10:41 AM Report abuse rate up rate down Reply
1 reply to ted_wilson7's comment

Stocks can be a leech once applied to a company. A family owned corporation worries about the customers, products and keeping their employees.

July 02 2014 at 11:23 AM Report abuse rate up rate down

You get to know the restructuring game after a while, They speed work and do surveys and as expected the company closes, or down sizes with much of the manufacturing outsouced,

I have seen too many of these restructurings in manufacturing personally. There is nothing you can do to preserve a spot with these companies because the end game is to whittle the work force down and outsource. Your often too up set to do anything because you know you can't save you job.

July 02 2014 at 10:18 AM Report abuse +1 rate up rate down Reply

We all know what is going on, the politicians are protecting their corporate campaign promises an will steer around any issues that effects them.

NAFTA and China has been eating our lunch with the help of own politicians.You have been sold out.

July 02 2014 at 9:49 AM Report abuse +2 rate up rate down Reply

SomeyEvanMac, the jack of all trades, but a master of none.

July 02 2014 at 9:09 AM Report abuse -1 rate up rate down Reply

Why is it that the Conservative ideology that takes such a strong stance against Marxism has no problem with AMERICAN COMPANIES pursuing business relations at such a large scale with COMMUNIST CHINA?
Stranger still, some who consider themselves to be "Conservative Christians" don't have a problem with these same companies doing business with a country that places such strict control on religous freedom (look up Christians in China and state approved religons) while complaining about hearing Happy Holidays instead of Merry Christmas at home? ******** Clinton's the guy that paved China's wat into the WTO, and not long after they showed their true colors at Tiananmen Square.

July 02 2014 at 9:00 AM Report abuse rate up rate down Reply

A company doen't just go out of business, it works at going out of business. biggest reason, "we do it like this, because we have always done it like this", if a company isn't going to work at change and improvement, time will run out.

July 02 2014 at 2:12 AM Report abuse rate up rate down Reply

mac2jr You are an imbecile, ALL the Steel Companies were doomed in the late 50's when Nixon then VP forced them to give in to Union demands of retiring after only 25 years of service in the company. They only agreed because the Federal Government avail the Pension Funds; they all started to diversified as they new they were going under and it was just a matter of time until the pension liabilities would eat them alive; eventually Kaiser Steel became Kaiser Permanente now successfully in the healthcare business & US Steel became USX now in the oil business!! and de pension funds? well Uncle Sam got stuck with them, Bush Sr. told these Union freeloaders to go find a job that the Federal Government was NOT goind to give them a dime until they reached 65 years of age! put tarriffs on imported steel so they can raise the money given away to the Steel Workers retirees; the companies went under, the Steel Workers lost their jobs, taxpayers pay higher steel prices because of Union greed!! Lost of loosers for a handfull of "winners" able body guys retired @ 43 years of age!! Investigate before you put your foot in your mouth you Komi free loader!!

July 02 2014 at 2:08 AM Report abuse +1 rate up rate down Reply

The costs of regulatory rules, EPA, Worker's Comp, and strong unions care capable of sinking any company and driving the business overseas where the costs are less. Your great job benfits cost you your job.

July 02 2014 at 1:18 AM Report abuse rate up rate down Reply