Global Geography of Economics: the Indiana Steel Industry

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:  7-12

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

  1. define tariff, quota, protectionist, free trader, legacy costs, and import “dumping”,
  2. map the Indiana steel mills,
  3. identify the top five international “competitors” of U.S/Indiana steel companies and locate on a world map (Canada, Mexico, Brazil, Japan, Korea),
  4. explain the arguments of protectionists and free traders as they relate to the (Indiana steel industry),
  5. evaluate the arguments of protectionists and free traders,
  6. describe the short?term and long?term effects of tariffs on consumers, firms, and the U.S. and world economies,
  7. identify the impacts of a major industry lay-off or closure on a community (social, economic, governmental, environmental, other industries),
  8. identify the needs of the workers, community agencies, and other firms affected by the closure, and
  9. gain a better understanding of the geographical relationships that are in our daily lives.
National Geography Standards:
1.     How to use maps and other geographic representations, tools, and technologies to acquire, process, and report information from a spatial perspective.
2.    How to use mental maps to organize information about people, places, and environments in a spatial context.
4.    The physical and human characteristics of places.
11.  The patterns and networks of economic interdependence on Earth’s surface.
14.  How human actions modify the physical environment.
15.  How physical systems affect human systems.
16.  The changes that occur in the meaning, use, distribution, and importance of resources.
18.  How to apply geography to interpret the present and plan for the future.

Indiana Social Studies Academic Standards: (grades 6-12)
Grade 6:  6.1.19, 3.22, 3.9, 3.11, 3.13, 3.15, 3.16, 4.5, 4.7, 4.8, 4.9, 5.2, 5.3, 55, 5.8
Grade 7:  7.1.18, 3.3, 3.15, 4.2, 4.3, 4.4, 4.6, 4.7, 5.4, 5.7, 5.8, 5.9
Grade 8:  8.2.12, 3.2, 3.7, 3.9
Grades 9-12:
     World History: 11.2
     World Geography:  1.3, 1.5, 2.1, 2.7, 3.10, 4.1, 4.5, 4.7, 4.12, 4.13, 4.16, 4.17, 5.1, 6.11
     U.S. History:  9.1, 9.2
     U.S. Government:  1.2, 3.13, 4.6, 4.10, 4.13, 4.14, 5.4, 5.7
     Economics:  1.10, 2.1, 2.2, 2.5, 2.9, 5.10, 5.11, 8.1, 8.3, 8.4, 8.9

Materials Required:

 Day 1
1. Assign students to teams of three (self-selected or teacher-selected).   Distribute one copy of Handout 1:  The Gains and Strains of Trade:  The Case for Free Trade and The Case for Protection to each student AND one copy of Handout 2:  Protectionism Versus Free Trade to each Team.
2. Have students, individually, read the text and, as teams, complete the worksheet (Handout 2).
3. Each Team evaluates the arguments for protectionists and free traders and prepares a team statement (you may need to provide guidelines as to the team statement content) as to which has the stronger position.
4. As a class, review the arguments of protectionists and free traders.  List all of the arguments on a flip chart for future use.  Draw the students’ attention to the transitions involved when an (American) industry closes or moves production elsewhere.  Discuss the effects that the local community would experience if a major industry left tomorrow.

Day 2
5. Again, assign the students to teams of three/four.  Designate Team roles:  P = protectionist, FT = free traders, EL = environmental lobbyists, GO  = local government officials, CE = community citizens and former/current steel mill employees, TS = transportation specialists, and MBK = representatives from Mexican, Brazilian, and Korean steel mills.  Distribute one copy of each of the following articles (see the Resource list below) to the respective Teams:   P – Resource article a and Resource article d;  FT – a, b;  EL – h;  GO – a, f, g, n;  CE – a, e, f, j;  TS – a, k, l, m;  MBK - i.  Teams will research additional materials to support their roles.
6. Teams will examine the case study of Indiana’s steel industry.  Students will read through the various handouts identifying reasons for the Indiana steel industry difficulties AND the effects on employees, the community, local businesses, and local/state/national government.  Each team will identify at least five arguments supporting the roles they have adopted  (that of environmentalists, Korean steel industry representatives, local citizens, government officials, protectionist supporters, free trade supporters, and transportations specialists).
7. Encourage Teams to think beyond the impacts mentioned in the articles and, as they search for more
ideas, to consider the impacts of a major (closure/lay-offs) in their own community.  Log arguments on
a piece of paper.
8. If the Teams have trouble identifying causes and effects, assist them by explaining these actual or
anticipated impacts:
a. Reasons or causes of the steel industry lay-offs:  competition, an aging work force with
high seniority, wage differential.
b. Effects on thousands of employees:  loss of pay, benefits, and seniority;  many skilled only
in this industry, little training for other opportunities, little education, solutions.
c. Effects on employees’ personal lives:  increased incidence of drug, alcohol, spousal, child abuse
divorce increases, depression, lack of ability to participate in social functions.
d. Effects on other firms in the community:  transportation (both vehicle production and railway
transport and shipping).
e. Effects on the community:  greater demand for services provided by social services (mental
health and emotional support), soup kitchens, and missions;  environmental cleanup of
abandoned buildings/site;  reduced charitable contributions;  reduced incidental spending.
f. Effects on the government:  loss of the tax base;  reduced revenues from income taxes and sales
taxes;  greater demand for unemployment benefits, welfare, Medicaid, food stamps, rent
subsidies, job training, and educational assistance.
g. Possible benefits and costs to consumers:  lower vehicle purchase price;  lower building costs
to entice an out-of-state corporation to build in Indiana may result in higher property taxes;
students have less income/allowance due to cut-back at own jobs or due to parental income loss.
h. Environmental concerns:  addressing legacy costs and remains;  decreased environmental
degradation with eventual return to a balanced local ecology.
i. Increased awareness of global cultures.

Day 3
9. Each Team must present their arguments before their peers.  Attempt to work toward a classroom consensus on the accuracy of the arguments.  At the conclusion of the presentations, a classroom vote, based upon all of the information shared, must determine the outcome of the Indiana steel industry:  protectionism versus free trade.

Students should complete all of the team work successfully.  Students should be able to explain the impact of local firms’ exports/imports on the local economy.  Students should be able to convey a geographical perspective of the steel industry during discussions: Indiana county’s involved, major international steel importers, transportation, environmental impact, human impact, raw materials.

1.  Further study the international steel industry by analyzing the various country’s involved in production for
     environmental impact and human impact:  raw materials, infrastructure, population statistics (poverty,
     literacy, birth rate, mortality, per capita income, illness/health, climate – The World Bank, The Census
     Bureau, The Population Reference Bureau).
2.  Develop a series of population pyramids of major steel producing countries.  Attempt to develop a definition
     of poverty utilizing base-line statistics from a variety of agencies (as mentioned in #1 above or The World
     Factbook).  Develop a series of population pyramids for the Indiana counties affected by the steel producers
     economic downturns:  Lake, Porter, LaPorte.  Compare the “levels of poverty” between the three Indiana
     counties and those of the poorest steel-producing nation.  Equate those to the students’ lifestyles.
3.  Visit a steel mill for a tour.
4.  Analyze the transportation mechanisms required for steel production, delivery, import, and export.
5.  Further delve into the problem of a community relying on one industry.  Diversification.
6.  Develop an analysis tool, utilizing GIS (Geographic Information Systems) for several U.S. one-industry
     towns (Ohio, Alabama).

a. Meltdown:  Indiana’s Steel Crisis;  Norm Heikens, The Indianapolis Star, September 2, 2001,
b. The Myths of the Steel Industry’s Arguments for Increased Government Intervention;  Aaron
Schavey, The Heritage Foundation Web Memo, February 7, 2002,
c. Indiana BMT to Administer Department of Energy Technical Program;  Guy Johnson/David Snow/Melanie Bradley, Indiana Business and Modernization and Technology Corporation, August 1, 2001,
d. Visclosky, International Trade Commission to Hold Public Hearing on Steel in Merrillville;  Staff for Congressman Pete Visclosky Press Release, August 30, 2001,
e. Indiana Steel Generations See Way of Life Melt Away;  Robert L. Kaiser, The Chicago Tribune, February 17, 2002,
f. County Workers Put on Notice;  Vicki Urbanik, The Chesterton Tribune, January 29, 2002,
g. Visclosky Looking to Fund Business “Incubator” for Region;  Kevin Nevers, The Chesterton Tribune, February 17, 2002,
h. Indiana Dunes National Lakeshore Natural and Cultural Resources (Fauna, Vegetation, Restoration);
i. Korean Steel Makers Want Their Image Stainless;  Asia Pulse/Yonhap, The Asia Times, December 20, 2001,
j. Nearly 10,000 Lose Steel Jobs in January;  The Chesterton Tribune, February 2, 2002,
k. State Eyes Six Lanes for 49 Through Chesterton;  Paulene Poparad, The Chesterton Tribune, July 23, 2001,
l. State Takes a Look at High Speed Rail;  Paulene Poparad, The Chesterton Tribune, November 8, 2001,
m. South Shore Trains Get Tighter Security;  Paulene Poparad, The Chesterton Tribune, September 21, 2001,
n. County Funding Cut 17% for Social Service Agencies;   Vicki Urbanik, The Chesterton Tribune, Feburary 15, 2002,
o. Indiana in the World, The World in Indiana:  Exploring Indiana’s International Connections;  Indiana University International Resource Center, 2000 edition,, (812)856-5523
p. National Geographic Society Map Machine,
q. MapServer via MapTech,
r. The Economic Problem;  Robert K. Heilbroner and James K. Galbraith, 9th ed., Englewood Cliffs, NJ:  Prentice-Hall, 1990, pp.  652-58
s. The Population Reference Bureau world statistical data-sheets;
t. The US Census Bureau U.S. census statistical data;
u. The World Bank world statistical data;
v. The National Park Service maps;

Special THANKS to Lisa Ellison of Kokomo and the Indiana University International Resource Center!