In previous downturns we accepted that business would return to earlier levels at some time in the future. We think of this current downturn as being more transformative than any before but, is that really true?
The coal industry has experienced a transformative decline in its past and we may be able to learn from that experience.
Anthracite coal mining was the first truly commercial, large scale mining endeavor in the United States. The coal was difficult to burn and difficult to mine but the industry created and advanced both end user marketing and mining engineering to grow its annual production from a few hundred tons in 1823 to its peak production of 99 million tons in 1919.
When World War I ended in 1919, anthracite coal faced market pressures from many different areas: fuel oil replacement in home heating and loss of industrial and power generation markets to a rapidly mechanizing, and cheaper, bituminous coal industry. Except for temporary upturns in production during World War II, the decline of the anthracite industry was a constant.
Just as bituminous coal faces a permanent loss of power generation markets due to environmental regulation and legislation, anthracite faced its own permanent loss of markets from sweeping technology shifts, the greatest being the wide area distribution of electrical power for which anthracite coal was not competitive. It is not without irony that bituminous coal is losing the very market space which had been originally taken from anthracite.
If history can inform us of the future, then perhaps reading about the decline of the anthracite industry will help us formulate plans for addressing our own long-tail production decline.
The Face of Decline: The Pennsylvania Anthracite Region in the Twentieth Century: Dublin and Licht.
Amazon link: http://goo.gl/aLRF2J
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