| This study examines the changes in the zinc smelting industry with the objective of determining what factors have had the greatest influence on the restructuring of the domestic industry. The analytical framework is to study the various factors of production. Changes in economic and political conditions can alter the comparative advantage arising from the ingredient elements of production, and thereby affect the competitiveness of existing plants.;Location theory identifies the important determinants of restructuring. The most important is the cost of zinc concentrate. As United States mine production declined and world concentrate markets tightened, U.S. custom smelters were not competitive for supplies with foreign smelters that had more accessible locations and lower costs. Energy and labor costs were also significant factors. Access to markets for zinc and byproducts, capital costs, and transportation had more ambiguous effects on the competitiveness of U.S. smelters. Government policies also had an impact on smelter competitiveness. Environmental regulations, trade barriers on the imports of concentrate, government stockpile activities, and price controls had detrimental effects either by increasing the costs of production at existing plants or by inhibiting investment in modernization or new capacity.;A firm by firm review of domestic smelting activity and a simple econometric model lend support to the conclusion that inefficient facilities and tougher competition for raw material supplies were the leading causes of industry restructuring.;An overview of the industry indicates some fundamental changes in the world market over the last 25 years. These include shifts in demand growth to new geographic markets and different products, increased smelting capacity in other nations, a shift in comparative advantage among smelting technologies, and increased competition in the world slab metal market. |
