April 4, 2025
“Foreman says these jobs are going boys and they ain’t coming back.” - Bruce Springsteen
My classmates and I were just at the start of our junior year of high school when “Black Monday” (e.g., September 19, 1977), occurred. Our hometown of Youngstown, Ohio was one of the first of many predominantly one industry cities and towns in the industrial Midwest that were part and parcel of the demise of what became known as ‘the Rust Belt.’ Since then, the metropolitan area and the city of Youngstown in particular, has experienced a decades-long decline in manufacturing, employment and population. I have embedded a link from Wikipedia that chronicles the rise and fall of the Youngstown’s steel industry in an endnote.i In a second endnote, I have included some stats about the U.S. and global steel industry.ii
In retrospect, the demise of the mills is not surprising. All of the mills were built before World War II and many before WW I. Newer mills built in places like Chicago were vastly more efficient. Newer technologies required far less labor and much shorter production times to make steel. Adding to that, Youngstown’s once abundant resources were largely depleted, and we were ‘landlocked.’ We weren’t on the Great Lakes or major rivers as was the case for mills in Chicago, Cleveland and Pittsburgh. In addition, ‘the market’ (e.g., companies that used steel) had increasingly opened up in states that were relatively far away. Those well-paying steel mill jobs did in fact go and they never came back. The demise of ‘Big Steel’ is a recurring story since the dawning of the industrial revolution. New methods are developed that make older means of production obsolete. This process lies at the heart of centuries of productivity gains that have enabled aggregate increased standards of living and very real improvements in GDP. While technological change brings forth broad improvements (e.g., we no longer have half the population in agriculture) there are inevitably disruptions that adversely affect communities and the people who reside in them. Technological innovation produces winners and losers.iii
The demise of Youngstown’s steel mills taught me valuable lessons that I incorporate into our investment approach. You know our mantra – we diversify in order to help ensure that all of our investment eggs are not in one basket and to help ensure we always have meaningful ownership of whatever performs best in the short, intermediate and most importantly, long term. Disruptions while often hard to predict are to be expected. Leadership changes are common as is the demise of once well-thought of formerly titan companies and industries. Broad ownership of diversified portfolios will inevitably include ownership of stocks and industries that lose all or most of their value. The good news is that over decades, those losses are greatly offset by the growth in the stocks and industries that increase in value 10, 20 or more-fold. Importantly, those favorable results have been earned by investors who stay invested even in times of uncertainty. Attempts at market timing can produce vastly different results. The S&P 500 has lost roughly 50% of its value three times since 1972. Inopportune purchases and sales can also lead to life altering losses for those who only invest when markets have performed exceedingly well and then sell when the opposite is true.
In summary, industries, economies and markets are dynamic. Changes in leadership are to be expected, but are often hard to predict. Investors who buy and hold will no doubt experience disconcerting declines, but time is an ally of long-term, committed investors. Diversification tends to reduce what can be unsettling declines in value along the way.
W. Richard Jones, CFA
Partner, Harmony Wealth Partners
i https://en.wikipedia.org/wiki/Economy_of_Youngstown,_Ohio
ii 
iii When it comes to capitalism, the name of the game is to reduce labor costs per unit of output. Productivity gains do precisely that and are the key to lowering the cost of the things we consume (e.g., to lowering the rate of inflation). The first way to achieve lower cost per unit of output is to move production to much cheaper sources of labor. Jobs and production that were initially prevalent in England moved to New England then to the Midwest and then South and then south of the border. The other opportunity for productivity gains is to develop more efficient equipment and processes. A modern tractor connected to satellites enables a farmer to increase output per acre with little or no labor. That is vastly different than when agriculture was highly dependent upon labor. Even with ‘onshoring,’ the high labor content jobs (e.g. inefficient manufacturing processes) aren't coming back to the steel industry. There are simply much less labor-intensive ways to do things than was the case with Youngstown’s antiquated mills.
Opinions expressed in the attached article are those of the author/speaker and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Past performance is no guarantee of future results.
