What Made Andrew Carnegie's Steel Cheaper?

David Senra says Andrew Carnegie's steel lost less than rival mills when prices had to fall, because the works with the newest equipment could cut prices and still run full. Carnegie insisted on the newest technology every time. Older competitors often did not see why the spending mattered. Buying the Frick Coke Company gave Carnegie Steel a dominant position in coke, and Lake Superior ore reserves gave a near-overwhelming advantage in high-quality ore. He wanted control of both raw materials.

The edge, Senra says, was mostly Carnegie: pressure to cut costs, a habit of taking any order that kept the plants full, and plowing earnings back into bigger plants and later equipment. For 25 years he did not let up. Other makers rose and faded as founders got comfortable, shareholders wanted payouts, or good times let managers coast. Senra says almost the whole British steel industry did that after the rail boom of the 1880s.

Carnegie also insisted on railroad-style cost accounting while competitors stayed ignorant of their own costs. Monthly reports spread labor costs over each product and process and tracked raw materials, waste and scrap, defective returns, and how long furnaces and converters actually ran. Senra reads Carnegie's line that he would run the factory full the next year even if the works made only $2 a ton, rather than hold back for fear of breaking the market.