Andrew Carnegies Techniques That Reshaped the Iron and Steel Industry - Essay Example

Andrew Carnegie, once reputed to be the richest man on Earth, by a succession of mergers and acquisitions, cost-minimizing measures, and centralization of supplies created some of the big industry giants in America, and by extension, the world. Andrew’s first venture into the Iron and steel industry was as a result of his engagement in the railroad transport industry, first as a telegrapher and secretary then as superintendent of Pennsylvania Railroad. Here he was charged with, among other things, acquiring the steel rails for the expanding railway networks and engines.

Through the railroad contacts he met while working here, he recognized the opportunity of manufacturing the heavy equipment needed for the industry. He was successful in organizing Keystone Bridge Company, the first successful manufacturer of iron rail, and Pittsburgh Locomotive Works into a unit to supply the equipment. He also encouraged George Pullman to join up with him and form the Pullman Palace Car Company to market sleeping cars to the Union Pacific, in so doing he created a monopoly.

Eventually, his close ties with John Pierpont Morgan led him to sell his vast interests in the steel industry to J. P. Morgan. The negotiations that ended on March 2, 1901, to form United States Steel Corporation is the largest such industrial takeover to date. Carnegie is also remembered for his drastic cost-cutting measures and is partly responsible for the events that shaped the labor force in the iron industry in America. His payment schedule for instance was racially informed. He paid Slavs, Russians, and Italians $12 per week, native-born whites got $22 per week, and Irish and Scots got $16 per week.

His steelworks were also said to have been in deplorable conditions. In addition, in his early days as an employer, he is said to have single-handedly fallen the giant steelworkers union, the Amalgamated Association of Iron and Steel Workers. Some of his tactics include hiring strikebreakers and spies, blacklisting workers who were thought to be capable of causing trouble, and maintaining the twelve-hour day. His business dealings in today’s world would be considered unethical and immoral (Heilbroner).

Carnegie’s other strategy is what is now known as vertical integration. This is where a company’s suppliers, or main suppliers are acquired or owned by the company to reduce the company’s operating costs. In essence, vertical integration is restricted in some economies today as a non-competitive behavior. By acquiring raw material suppliers like Homestead Works Company, Carnegie was able to produce steel at lower costs and transport it cheaply to the buyers which made his prices very low while his smaller competitors had higher production prices and consequently higher prices. Eventually, these competitors went bankrupt or sold to him (Heilbroner).