Cambio Técnico Y Localización En La Siderurgia Española Integrada, 1882-1936
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Universidad Carlos ifi de Madrid Departamento de Historia Económica e Instituciones Tesis Doctoral Cambio técnico y localización en la siderurgia española integrada, 1882-1936 Autor Stefan Hoüpt 1. Directr: Pedro Fraile Balbmn AbnI 1998 Table of Contents Acknowledgementsiii Introductiony Chapter 1. Spain’s competitivity in iron and steel production, 1885-1927 A. Introduction1 B. Cost price — international price comparisons6 C. Coal as a deterniining factor14 Appendix A. Coal prices at Baracaldo & Sestao and pithead prices for steam coal26 Appendix B. Foreign coal and coke factory price at Sestao and Baracaldo, 1886-190127 Appendices C. Price data and data references28 Chapter 2. Innovation and technical change affecting modem steel mills, 1880-1950 A. Introduction37 B. Blast furnace iron-processing39 C. Bessemer converters49 D. Open-hearth furnaces55 E. Cogging and finishing milis61 Chapter 3. Investment and innovation in Spain’s modern steel mills. Part 1: Primary transformation A. Introduction69 B. Iron processing70 C. Blast flirnaces in Baracaldo78 D. Blast furnaces in Sestao80 E. Baracaldo steel converters84 F. Baracaldo Siemens hearths90 G. Sestao steel processing90 H. Changes in steel98 1. Conclusions99 Chapter 4. Investment and innovation in Spain’s modern steel milis. Part II: Sales products A. Introduction104 B.Data104 C. The methodology105 D. Discussion of results114 E. Conclusions136 Appendix D. Baracaldo regression results 139 Appendix E. Sestao regression results170 Chapter 5. The location of Spanish integrated steel milis, 1880-1936 A. Introduction202 B. Location theory203 C. The model211 D. Numerical results218 E. Discussion of results220 Appendix F. Weberian location algorithm231 Appendix G. Map with simulation coordinates237 References238 Acknowledgements 1 would like to acknowledge the financial help from the Spanish Ministry of Education and Science —Beca de Formación de Personal Investigador—, and the departments of economics and economic history of Universidad Carlos III and Saint Louis University for part time research and lecturing jobs. Both my own family and my in-laws have helped to smooth average income to make this dissertation viable. 1 am greatly indebted the persons that have provided their time and effort to help me to recollect or discard the data available for my tesis: Pedro Fraile my thesis supervisor, Adolfo Carrión and José María Alcorta at Altos Hornos de Vizcaya in Baracaldo, Javier Gancedo at Ensidesa in Avilés, Ana Goas from the interlibrary loan office at Carlos III, the library staff of the Escuela de Minas de Madrid, and the Biblioteca Histórica del Banco Bilbao-Vizcaya. 1 also want to thank for Quico Riera helping me with processing some of the data and Juan Carlos Rojo for the hours of archives we passed together. 1 have received important stimulus from some of the persons who shared the doctorate program at Carlos III: Fidel Castro, Eduardo Luis Giménez, Luis Puch, Eva Senra. In the ABD phase Daniel Díaz has provided a constant think-tank and resource support. Alan Dye has been line-setting in many analytical aspects of my thesis. A number of scholars have been determinant in my academic preparation: Pedro Fraile, my thesis supervisor, Leandro Prados de la Escosura and Gabriel Tortella in my area of specialization; Emilio Cerdá, Miguel Delgado, Alvaro Escribano, Toni Espasa, Carlos Hervés, Daniel Peña for quantative methods, and Javier Díaz and Manuel Santos in econornic theory. Forums and persons have corrected sorne of my misperceptions and shortcomings: foremost Pedro Fraile, the economic history seminar at Universidad Carlos III, the III Encuentro de Jovenes Investigadores in Galicia, the European Economic History Summer School on Technology and Growth Accounting in Florence and the helpful comments and corrections 1 have received from members of my area: Juan Carmona, Agustín Llona, Elena Martínez, Isabel Sanz, James Simpson, Antonio Tena and Richard Sicotte. For Ana, David and Inés ... more than words can ever say. 111 INTRODUCTION Scholars from a large variety of fields have contributed to the analysis of the iron and steel industry since the use of stone coal in blast fumace technology opened the way for mass production until the present day. Given the Promethean nature of this industry -----providing raw materials for machinery, tools, vehicles, devices and structures used by others industries— it has been assigned a top position both in development plans and developmental analysis al! throughout the twentieth century. Many chemical and physical processes involved in the processing of iron to Steel and other alloys were not fiilly understood until well into the 2Oth century. As a direct consequence of this, production blue-prints were embodied to a much higher extent in human capital than in the mill equipment. Iron masters rotated frequently and determined best practice on a trail and error basis. The nature of this industry produced a vast amount of technical literature as a means of transmitting empirical observation and furthering scientific understanding of man’s dominancee over the brute forces of nature —mixing earth, wind and fire to produce the key resource for a system of mass distribution and mass production. The first noteworthy history of the industry dates back to the forties. Duncan Burn’s The economic history of steelmaking (1940) gives a British centered assessment of the industry’s progress and performance and develops the paradigm for most later economic history research: finding the origins of Britain’s climacteric —both in this industry and in industry as a whole. Burn (1940) assessed the failure to integrate into larger steel plants in (Ireat Britain and the lag in developing the basic steelmaking process as the sources of industrial decline. Within a span of three years T.H Burnham and G.O. Hoskins commended themselves specifically to this end: to “finding the signifcant factors iii the decline of the industry” presenting their 1943 Iron and Steel in Britain, 1870-1 930. Measurement and comparison, especially on an aggregate leve! seemed to pose very limited restrictions and both studies provide a vast amount of quantitative information. The steel industry was among the pioneers of cost-accounting, steel was a fairly homogeneous product and lobbies, carteis and steel associations liad promoted the recoilection of statistical information on prices, quantities, tariffs, productivity, etc. early on. Burnham and Hoskins (1943) mark the research agenda for most future work. They distinguish inevitable causes of Britain’s decline, such as lacking resource endowment for the ‘Burnham and Hoskins (1943), p. 17. y to-be-dominant basic open hearth techniques, high tariffs and dumpin practices applied by rival countries, the overvaluation of the pound iii post World War 1 and the relative increase in British transport cost. Among the avoidable causes of decline they quote the belated use of native phosphoric ore deposits, the sniall scale of British installations, their low throughput and productivity, the lack of standardization and the lag in vertical and horizontal integration. Perhaps their most provocative conclusion is blaming weak entrepreneurship —the lack of vision, initiative and self-esteem, necessary to maintain Britain iii a leadership position. This hypothesis was to be retaken again and again in historiography. The first to reexamine the question were J.C. Taplin and W. Taplin in their 1962 History of the British steel industry, a more descriptive story of the industry sprinkled with biographies of the more important innovators, H. Bessemer, W. Siemens, S. Gilchrist Thomas, etc. and a detailed assessment both by time periods and by sectors and firms. In 1964 they were followed by P. Temin’s Iron and steel in l9th century America —the success story based on similar factors as those explaining decline: economies of scale; vertical integration; product, process and input innovations. But Temin (1966) had developed an alternative way of explaining decline: the ‘demand hypothesis’ —the slow growth of British demand as the source of its decline— and regression analysis as a method for testing cost efficiency —a method to be retaken by later analyses—. He heid both slow growth of domestic markets and closing foreign markets, which made replacement of capital stock unprofitable, responsible for decline. For Temin it was aging capital stock which was to causing lower efficiency. Ten years later, the tradition of comprehensive histories of the industry was to be broken by two major contributions specifically reexaniining the original paradigm. D.N. McCloskey’s contribution in 1973 reviewed Economic maturity and entrepreneurial decline [in] British ¡ron and steel, 1870-1913. McCloskey (1973) fornid that reduced domestic markets limited British steel industry’s growth. McCloskey carne to deny entrepreneurial failure by showing that productivity was as high as iii Germany and US and that differences iii productivity growth could be explained by Great Britain’s head start. Accordingly lags in adopting technologies were due to site specific obstacles and entrepreneurs adopted techniques as soon as these obstacles were overcome. McCloskey’s ‘productivity hypothesis’ —whereby Britain’s decline was explained by the lack of supply side changes— was based on the analysis of “entrepreneurial performance in the industry [...] the industry’s market structure, the growth vi of it demand, its choice of technique and its productivity relative to competitors abroad2.”