Bar financial havens, steel has been an important part of all industrialization processes.   Britain, United States and Germany, Japan, Taiwan and Korea owe their success to steelmaking and this ability to make steel continues to be an essential input into all manufacturing economies. ‘National strength flows from iron and steel’, is the inscription that hangs at POSCO’s headquarters in Pohang, South Korea, the location of Korea’s first steel plant.

The success in steelmaking hangs on scale, corralling a limited number of inputs and incrementally improving the technology that has, at its core, not undergone much change in almost two centuries. The challenges that this brings about are best addressed under state ownership. Initially, the governments of Japan, Taiwan and Korea owned the steel plants. Policy-making also was in the state’s realm. These three nations ended up making exceptional steel and, at least in the case with Japan and Korea, eventually passed on the plants to private interests.

Malaysia tried the Taiwanese model of public ownership but fell woefully short in this important sector and the auto industry in this country, like all large-scale manufacturing in Malaysia, is nothing but a white elephant. In the meantime, in Korea, owing to private industry running steel as well as the important auto sector, theHyundai-Kia colossus became nothing short of a world-beater. This was all possible with export discipline.

The entrepreneur is compelled to compete in the international arena. The automotive sector is exceptionally brutal and cyclical. Korea’s government managed this sector very well by giving subsidies to a handful of hungry entrepreneurs who were measured by success in the export market. In a process that lasted almost 4 decades, the handful were slowly whittled down to Hyundai-Kia.

On the other hand, United States Steel, US Steel, attempted a hybrid model and did not place over-riding emphasis  on export and after a colourful history that involved JP Morgan, Andrew Carnegie and Charles Schwab, forays in Serbia and Canada, it is falling on hard times.