Purpose: In order to better understand the impact of globalization on a community, students will research and identify positive and negative effects of imported steel on the Indiana steel industry.
Background: The United States is the top steel producer in the world. Indiana employs over 33,000 people in the steel industry, making the state the nation’s second largest steel producer. Internal use of the steel for a variety of industries (automotive, shipping, buildings, rail) ranks as the number one use of U.S./Indiana produced steel. US steel exports also exist in limited quantities. Since January of 1998, nearly 43,000 people employed in the US steel industry have lost their jobs: 9,600 of them in January, 2002 alone. Of the seven steel mills (Bethlehem, Ispat/Inland, USX/US Steel, LTV, LaSalle, National, American) located in the tri-county region of Lake/Porter/LaPorte, four have fled to bankruptcy court and several require significant equipment overhaul costing millions of dollars.
Just as the steel industry was recovering from economic difficulties in the 1980’s, global currencies began collapsing in 1997, thus producing another round of economic difficulties for the US steel industry. Thailand and other southeast Asian nations suffered economic downturns that eroded internal demand for steel production. Shutting down the steel mills would have further hurt their economies; so, they began shipping low-priced steel to the United States. The shipments sparked domestic steelmakers to complain that their foreign competitors were “dumping” their product below the cost of production. Prices hit an all-time low.
Job losses from the steel mills are not the only impact on national and local communities, but many support industries are closing due to lack of business: for example, steel mill equipment repair, design and building trades. A host of impacts affect the community when a company faces economic difficulties: taxes paid by employees and businesses are not available for community, state, and federal governments, personal spending declines, stress on the family increases, environmental cleanup of production waste (legacy costs) is unmet, health care benefits stop for displaced employees, and pension benefits become unavailable to former employees. Examples exist across the country of similar situations where cities become heavily invested in one industry.
Some leaders in the steel industry believe that consolidation and restructuring are necessary in order to become a global player in the steel industry. Other leaders want to protect their segment of the industry by limiting imports. What do you think? (information obtained from Meltdown: Indiana’s Steel Crisis and Indiana BMT to Administer Department of Energy Technical Program - see Resources “a” and “c” below)
Grade Levels: 1-4
Time Required: a minimum of two class periods should be allowed to develop this activity
Objectives: Upon completion of the following activities, students will be able to
Indiana Social Studies Academic Standards:
Kindergarten: K.3.2, 4.1, 4.2, 5.1, and 5.4
Grade 1: 1.2.2, 3.1, 4.1, 4.2, 4.3, 4.4, 4.5, and 4.6
Grade 2: 2.2.2, 2.5, 3.3, 4.2, 4.3, and 4.5
Grade 3: 3.2.3, 2.5, 3.1, 4.4, 4.5, and 4.7
Grade 4: 4.2.6, 2.8, 3.1, 3.10, 5.1, 4.4, and 4.5 (enhance the activity to incorporate additional geographic and economic concepts as addressed by the Social Studies Academic Standards)
Day 2 (& 3)
5. Briefly review the previous day’s main concepts of steel and tax.
6. Distribute the northwestern Indiana map, and as a class, map the Indiana companies that make steel.
7. Distribute the world map and, as a class, identify the countries of Korea, Mexico, Brazil, Japan, and Canada. The United States (Indiana) is the world’s top producer of steel, but some steel, used in the United States, is purchased from five other countries because it is less expensive.
8. Introduce the concepts of quota: limits on the amounts of specific products (steel) that may be imported (Geography, Focus on Economics, see Resource below) and tariff: taxes on imported goods (steel).
9. Next, divide the students into four teams: Indiana steel workers (4 students), Korean steel workers (6 students), citizens (8 students), and government officials (3 students). Give the Indiana and Korean steel workers 3 “slabs” of steel each; give the citizens 20 one-dollar bills each, and give the government officials a notepad and pencil (to look important).
10. Introduce the activity: We are involved in a tough situation. The four Indiana steel workers will lose their jobs because of steel imported from Korea, which is less expensive than the steel made by Indiana. But by using the Korean steel, you can purchase more (stickers/M&M’s) because each item is less expensive, and more Korean people will be employed by their steel mills. But if you do not purchase steel from Indiana, the employees will be unemployed. What do you do? The three government officials must make a decision.
11. Have the groups model their group title: Indiana and Korean steel workers are making steel “slabs”, 3 each, which are then sold and made into (stickers/M&M’s/wheat) items used daily to the citizens. If the Korean workers can produce the steel less expensively, the citizens can purchase more (stickers/M&M’s) from the Korean company than from the Indiana company. But if the citizens want to remain “loyal” to their country and state, they will purchase (stickers) items only from the Indiana company, but they will not be able to purchase as much and may have to resort to a food quality change (shredded wheat versus the M&M’s). Each Indiana steel slab is $4.00; each Korean steel slab is $2.00; each slab is worth 2 stickers or 2 M&M’s or 5 shredded wheat.
12. During the entire interaction, the government officials are “taking notes” and listening to the comments by all involved. And at the conclusion of the activity, a classroom discussion must be guided by the teacher about “what” occurred. Then, a government vote, based upon all of the information shared, must determine the outcome of the Indiana steel industry. Depending upon grade level and classroom makeup, you can introduce the concepts of protectionism and free trade at this time.
Students should be able to spell and define steel, tax, tariff, iron, and quota. Students should be able to identify the approximate location, on a map, of four of the Indiana steel mills. Students should be able to identify, on a world map, the locations of Mexico, Canada, Korea, Brazil, and Japan. Students will be able to explain taxes, tariffs, producer, and consumer. (Students will be able to explain protectionism and free trade.)
a. Meltdown: Indiana’s Steel Crisis; Norm Heikens, The Indianapolis Star, September 2, 2001, www.starnews.com
b. The Myths of the Steel Industry’s Arguments for Increased Government Intervention; Aaron Schavey, The Heritage Foundation Web Memo, February 7, 2002, www.heritage.org
c. Indiana Steel Generations See Way of Life Melt Away; Robert L. Kaiser, The Chicago Tribune, February 17, 2002, www.chicagotribune.com
d. Korean Steel Makers Want Their Image Stainless; Asia Pulse/Yonhap, The Asia Times, December 20, 2001, www.atimes.com/koreas
e. Indiana in the World, The World in Indiana: Exploring Indiana’s International Connections; Indiana University International Resource Center, 2000 edition, firstname.lastname@example.org, (812)856-5523
f. National Geographic Society Map Machine, www.nationalgeographic.org
g. The National Park Service maps; www.nps.gov/indu/maps
h. Webster’s Dictionary
i. Geography, FOCUS on Economics; National Council on Economic Education, 1998, ISBN 1-56183-491-2.
j. How Steel is Made; Neil Curtis and Peter Greenland, Lerner Publications Co., 1992, ISBN 0822523787