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Growing up in the shadow of Bethlehem Steel Corp. and hearing his father discuss the business inspired Bethlehem native Jarrod Poveromo ’03 to focus on the steel industry and related policy in an intensive year-long study.
“My father is a worldwide consultant in the steel industry and had worked for Bethlehem Steel from the early ’70s until the early ’90s,” he says. “I had the opportunity to grow up in Bethlehem and see all the radical changes going on around me and hear my father speak of them.”
A double major in A.B. engineering and economics & business, Poveromo completed the project in pursuit of departmental honors in both. His advisers were Christopher Ruebeck, assistant professor of economics & business, and David Veshosky, associate professor of civil and environmental engineering and chair of the A.B. engineering program.
Poveromo focused primarily on protectionist policy measures and their effect on the ailing United States steel industry. He concluded that policies haven’t provided enough of the right incentives to bolster the industry to the point of not needing protection.
“Both market conditions and several integrated firms’ conditions would make even a proper policy fail,” says the student of his analysis.
Poveromo describes the steel industry as strong and thriving before a 1959 strike of the United Steelworkers union. After that, imports began to gain momentum, rising from 1.2 percent in 1957 to 13.8 percent in 1970, and the industry sought government protection. Still, imported steel hit 26.4 percent of the U.S. market in 1998.
Poveromo says he enjoyed working with Ruebeck and Veshosky, who “motivated me and made me think of new, interesting things that could go into my thesis. I enjoyed the challenge and opportunity to work with them.”
Ruebeck says Poveromo was “very thorough in his consideration of the available research on the subject.”
He notes that the student couldn’t find support in his research for a steel industry of its former size.
“Thus, supporting the industry’s capacity was not an appropriate policy, but nor was any policy which supported expansion of the industry,” Ruebeck says. “What we need is a scaled-down production capacity, given the many producers that have entered the worldwide market since the 1950s.”
Ruebeck believes downsizing and addressing retirees’ pension and health care costs should be the primary policy goal of any steel industry policy, with a secondary goal of improving the efficiency of plants or replacing them.
“The market was sending U.S. firms the right signals, but the government got in the way,” he comments.
Poveromo presented work on the impacts of foreign direct investment on protectionism policy in the U.S. steel and automobile industries last year at Lafayette’s Globalization Symposium. He also had the opportunity to experience the professional world first-hand during a January externship with George Jenkins ’74, a member of Lafayette’s Board of Trustees and general partner and chief operating officer of Apax Partners, Inc., a leading international private equity investment group in New York City. Jenkins is also a member of the firm’s managing executive committee.