The expansion and restructuring of the steel industry : the case of POSCO and BSC.
This thesis provides an analytical and empirical comparison
of the evolution of the British and Korean steel industries.
Although there are important similarities, the main companies
BSC and POSCO, having been state-owned for most of their
lives, and both recently privatised, their historical
evolution was quite different. POSCO expanded continuously,
BSC restructured and retrenched. We examine the three main
factors that have shaped the fortunes of the two companies:
international competition, corporate strategy and government
The world steel industry witnessed a significant trend of
internationalisation. The primary form has been through the
spatial expansion of steel production and the growth of steel
trade. The steelmaking activity has been still under the
control of national capital and government. The
internationalisation of productive capital was relatively
slow. The nation state and national capital have more room
to organise its steel industry.
The rapid expansion of POSCO and the restructuring of BSC has
consisted of two main components; massive capital investments
and intensive utilisation of inputs, - particularly labour.
POSCO's corporate strategy has been rewarded successfully by
its rapid capacity expansion, profitable performance and
strong competitiveness. BSC's restructuring was very costly.
After heavy investments based on misguided forecasts in the
1970s, BSC had to massively restructure its operations,
closing marginal plants and increasing the intensity of
operation. This restructuring produced a much smaller, but
low cost and profitable producer.
The British and Korean government developed different forms
of state-ownership, government supports and control. The
massive supports and elaborated control structure tended to
undermine the commercial objectives of BSC. The Korean
government effectively provided POSCO with incentives for its
expansion. BSC and POSCO had significant autonomy in running
One interesting feature of both histories is the role of
economic irrationality in success. In Korea, most analyses,
e. g the World Bank, indicated that creating a steel industry
would be wasteful and uneconomic. In Britain, successful
restructuring of the 1980s was only possible on the basis of
the misjudged investments in integrated facilities of the