How to close a steel mill: Lessons from Pittsburgh

U.S. Steel has closed the last blast furnace in Birmingham, Ala., the “Pittsburgh of the South.” What can the city learn from Pittsburgh?

The week before Thanksgiving, U.S. Steel closed the blast furnace at Fairfield Works in Birmingham, Ala. Over 1,000 people lost their jobs.

If that timing seems a bit harsh, it might be helpful to look back to 1982 in Pennsylvania. The day after Christmas, Bethlehem Steel announced it was cutting 10,000 jobs. 2,300 of those jobs were in Johnstown, where unemployment was already at 20 percent.

The 1980s were disastrous for the Pittsburgh region particularly. Between 1980 and 1983, approximately 95,000 manufacturing jobs were cut from a labor force of one million. Unemployment was as high as 27 percent in some areas, dropping only when thousands of workers left the region to find work elsewhere.

One of the places they found work was Birmingham, Ala. The Birmingham region was, at one point, the largest iron and steel producer in the southern United States. The area was rich with iron ore, coal and other mineral deposits needed to feed the factories.

There’s a reason that Birmingham was called the “Pittsburgh of the South.” But now, the steel industry continues to decline nationwide and the historic Fairfield Works is being shut down.

No city knows the decline of the steel industry better than Pittsburgh. We asked city officials and urban planners about the lessons they’ve learned from watching the decline and recovery of the Steel City.

First, worry about the workers

The closing of a steel mill first affects the employees that are laid off and their families, said Sabina Dietrick, co-director of Urban and Regional Analysis at the University Center for Social and Urban Research at the University of Pittsburgh.

“From a city’s perspective, those are people that will need immediate assistance and long-term plans to re-enter the workforce,” said Dietrick. “They are residents who may not be trained for an economy that isn’t centered on manufacturing.”

In the 1980s, the Community College of Allegheny County started a free, “dislocated workers educational training program” for county residents hoping to get back into the changing workforce. For many, that meant improving skills like reading, writing and math that had been less essential in the steel economy.

The city also required former steelworkers to have three counseling sessions to help them cope with the major changes.

“That caused a lot of consternation at first,” said Tom Murphy, former mayor of Pittsburgh. “But being a steelworker wasn’t an option anymore. They had to think about their lives and find their direction again.”

For layoffs on Birmingham’s scale, these solutions could reintegrate workers into the job market. But in western Pennsylvania in the 1980s, the numbers were just too large to handle. The Pittsburgh region lost nearly half its population between 1965 and 1990.

“There’s a reason there are so many Steelers bars across the country,” says Dietrick. “It’s not because everyone is a Steelers fan. It’s because workers from Pittsburgh ended up all over the country.”

Second, reinvest and reinvent

In Pittsburgh, steel had been such a giant that the steel mills had all the best land in the city. When Murphy took office in 1994, he had a broke city operating on shoestring margins. But he decided to buy the steel mills.

“We weren’t just going to manage the decline, we were going to imagine Pittsburgh growing again,” said Murphy. “We cut $6 million a year from the operating budget to finance a $60 million bond issue.”

His administration, along with the redevelopment authority, bought 1,000 acres of land. It was a risk that required eliminating police positions and vacant city jobs. But looking back, Murphy says it paid off.

“My father worked at Southside Works for 51 years with 10,000 men and women. There’s now $600 million worth of investment there, new housing, retail and technology companies, including a Cheesecake Factory,” said Murphy. “I always joke, my father would shoot me if he was alive and knew that. 10,000 people used to make steel there, and now, it’s a Cheesecake Factory.”

But that Cheesecake Factory, plus the American Eagle corporate headquarters and tech startups, revitalized the site of the defunct steel mill — and the neighborhood around it.

Building a city that is inviting to newcomers is one thing. But helping current residents redefine their understanding of the city is another. Pittsburgh was known for one thing, and that was steel.

“There was a lot of angst about what Pittsburgh was going to be,” said Anne Madarasz, museum division director at the Heinz History Center. “What is our base? What is our identity? What will be the thing that draws people here and keeps them here?”

Third, be thankful it’s 2016, not 1983

In that regard, Birmingham is very lucky. Today, cities are often less dependent on a single industry than they were 30 years ago. In Birmingham’s case, the loss of a steel mill will hurt the economy, but it won’t send the whole city into a tailspin.

By the 1980s, cities realized that they needed to diversify their economies. But that wisdom came too late for many rust belt cities. In fact, it was the decline of those cities that proved the need to diversify.

“Before the [steel] downturn, Pittsburgh had begun to invest heavily in the medical sector and universities,” said Anne Madarasz, museum division director at the Heinz History Center. “But then, it just took the city a long time to recover from the loss of jobs and population.”

Cities like Birmingham were able to develop other industries while still benefiting from the steel economy.

Today, the University of Alabama-Birmingham, St. Vincent’s Health System and Children’s of Alabama are three of the largest employers in the city. In addition to “eds and meds,” banking is a large industry: Regions Bank is headquartered there.

That sounds a lot like Pittsburgh today. But it took nearly three decades after the end of steel to get Pittsburgh to that point. Birmingham already has that more resilient economy in place.

And finally, don’t underestimate the power of football

Hopefully, Birmingham will be able to bounce back from this loss fairly easily. If managed correctly, this downturn could end up being an opportunity for the city: those workers will find new jobs in the modern economy, and the vacant steel mill could become something else the city needs.

But, like Pittsburgh, steel was a large part of Birmingham’s identity — the city may be in need of a morale booster after this news.

So, one final piece of advice from those who have been there: find a sports franchise for the whole city to get behind. In the 1970s, as steel was beginning to decline, the Steelers were not suffering the same fate. Nor were the other teams in the area.

“We had four Super Bowl wins, two World Series Championships, Pitt won the National Championship in football,” said Madarasz. “A new identity emerged as the City of Champions. People transferred that mill mentality into their sports teams.”

After the Steelers loss to the Broncos on Sunday, the City of Champions might seem a distant memory to most Pittsburgh sports fans. But so are the days of 27 percent unemployment and mass exodus from the city.

Things are looking up in Steel City. Perhaps it’s time for another city to use sports as the panacea to their economic woes. So, Birmingham, from all of us here in Pennsylvania, we’d like to say: Roll Tide! War Eagle! And good luck with that economic recovery.