Carnegie Steel: 94% Utilization
Why Andrew Carnegie kept his blast furnaces running when competitors stopped — and how that built the world
United States Steel became the world's largest steel maker by understanding that blast furnaces are capital intensive time machines. When Andrew Carnegie built his Edgar Thompson mill in 1875, he paid $2 million for equipment. The furnace ran continuously for 15 years before replacement. Daily throughput had to reach full capacity or the fixed cost became prohibitive. If the furnace produced 500 tons per day at capacity with 4,000 in daily depreciation, every day below capacity was losing money that required infinite future days to recover. Carnegie obsessed over capacity utilization. He targeted 94%, when demand slowed, he cut prices to keep the furnace running.
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