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Long a rock in the Region, heavy industry faces challenges, technological change
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Long a rock in the Region, heavy industry faces challenges, technological change

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Heavy industry shaped Northwest Indiana, drawing immigrants from across the world to a frigid patch of marshland just south of Lake Michigan that was the last part of the Hoosier state to be settled.

It took many strong backs to unload iron ore boats, shovel pellets into blazing blast furnaces, raise high skyscrapers with steel beams and other laborious tasks. But the steel industry's footprint along the lakeshore also has been shrinking amid sluggish demand in recent years, including with the idling of East Chicago Tin, ArcelorMittal Indiana Harbor Long Carbon and several blast furnaces. And the work has become increasingly automated as the headcounts at Region steel mills and factories have shrunk, to the point where Region kids are now far more likely to go off to college than to consider the "golden handcuffs" of steelworker jobs that often pay over six figures a year with overtime.

That trend is only likely to continue over the next 20 years, according to experts.

"As technology continues to advance, heavy industry in Northwest Indiana, and the United States in general, is likely to continue becoming more automated," Indiana University Northwest Assistant Professor of Economics Micah Pollak said. "Firms that modernize with the changing technology will see their productivity grow, those that do not may be unable to compete."

Because of automation, Northwest Indiana's steel mills remain as productive as they ever were, despite a drop of employment from 30,000 to just a few thousands steelworkers per mill.

"Increasing productivity means that employment in manufacturing and heavy industry will likely continue to grow, but slowly," Pollak said. "In the next two decades we’re unlikely to see employment return to the level it was at even just two decades ago."

The work will become more and more high-tech and less and less labor-intensive, Pollak said.

"While the number of jobs in manufacturing and heavy industry will not change substantially, the nature of these jobs will," he said. "Workers who once directly participated in manufacturing will continue to be superseded by workers responsible for designing and maintaining the technology that is becoming increasingly responsible for directly producing goods."

Technological progress only will proceed apace, said Anthony Sindone, clinical assistant professor of finance and economic development and director of the Center for Economic Development and Research at Purdue University Northwest. 

"In spite of my crystal ball still being repaired in the shop, let me give you my take on what I see for the future," he said. "With emerging technologies such as AI, machine learning, Blockchain, cloud computing and Internet of Things or IOT, heavy manufacturing in the near and distant future will most likely not resemble what we see today."

Machines ultimately will end up doing most of the work people once did, Sindone said.

"We call this period the Fourth Industrial Revolution," he said. I see a day when the need for centralized large manufacturing operations contained in huge buildings consuming large quantities of energy will no longer exist. Or they will exist at a much smaller scale than today. I see manufacturing operations becoming increasingly decentralized. We are at the infancy of 3-D printing today. During the next 20 years or even less, that technology will allow specialized 'mom & pop' manufacturing firms to spring up and thrive."

Workers will have to attain more education and technical skills to stay relevant in the workplace.

"In the future, I see a workforce that has learned how to adapt to new technologies that will evolve at an even more rapid pace than today," Sindone said. "That will require new teaching and learning systems that will instill a love of learning new things beginning at a very young age."

Northwest Indiana's steel mills, many of which were built more than a century ago, may be facing a reckoning in the coming years, said Charles Bradford, of the New York City-based steel analyst firm Bradford Research. 

Mini-mills are adding 15 million to 20 million tons of new steelmaking capacity over the next few years, while no significant increase in demand is expected, Bradford said. 

"Automobiles aren't doing all that well," he said. "Infrastructure spending hasn't picked up. At best, steel could be flat. Analysts say the economy has to grow by 2.5% for steel demand even to stay flat. If anything, demand for steel will get a bit weaker."

U.S. Steel's Granite City Works and Great Lakes Works by Detroit are most likely among the vertically integrated steel mills to be vulnerable, but the electric arc furnaces coming online will only steal more market share from the blast furnaces, like those that line the Lake Michigan lakeshore in Northwest Indiana, Bradford said. "But integrated mills will remain relevant as they are the only ones capable of producing high-quality enough steel for the automotive industry."

But mini-mills may still be the future.

"Integrated mills have higher costs," Bradford said. "When it comes to labor, it accounts for 20% of their revenue. At the minimills it's only 10% with the non-unionized workforce. The mini-mills also emit much less carbon, which the environmental people are pushing very hard for.... They're looking at new technologies that would use hydrogen instead of coke at integrated steel mills, but that would create a lot of different problems. There's a lot of talk about eliminating hyrocarbons and that's a huge question mark right now."

"We call this period the Fourth Industrial Revolution. I see a day when the need for centralized large manufacturing operations contained in huge buildings consuming large quantities of energy will no longer exist. Or they will exist at a much smaller scale than today. I see manufacturing operations becoming increasingly decentralized. We are at the infancy of 3-D printing today. During the next 20 years or even less, that technology will allow specialized 'mom & pop' manufacturing firms to spring up and thrive."

Anthony Sindone, Purdue University Northwest

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.

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