DURING the 1980s, if you drove through Chicago's Southeast side or along Pittsburgh's Monongahela River, you could see first hand the saddest symbol of American industrial decline.
There, in the shadow of what had been the world's largest steel industry, lay the remnants of mills, shuttered or razed - the economic rubble of a war that few seemed to care about and even fewer understood.
Blitzkrieged by imports and shackled with its own outdated technology and labor rules, the industry was a rusty anachronism. Ten years later, it is back - with a vengeance.
``The US steel industry is as competitive as it has ever been in 30 years,'' says Robert Weidner, director of investor relations at Inland Steel Company in Chicago.
``The industry's back,'' adds John Jacobson, head of his own steel-consulting firm in Philadelphia. But ``it may not be the same industry.''
In a decade's time, US steelmakers have:
* Closed outmoded plants. As an industry, steelmaking capacity is down one-fifth. Some of the largest companies have cut even more: The LTV Corporation, down 50 percent since 1984; USX Corporation, down 40 percent; Bethlehem Steel Corporation, down 31 percent.
* Slashed payrolls. In 1983, the industry employed 243,800 people; last year, 127,200.
* Invested heavily in new technology. Inland, for example, has spent $1.5 billion on modernization from 1988 through last year. LTV, in the throes of bankruptcy until a year ago, has invested $2.3 billion in new facilities and processes since 1986.
The result? Productivity has soared. In 1982, it took 10.1 man-hours for US steelmakers to make and ship a ton of steel. Last year, that was down to 4.6 man-hours. US steel companies are now among the lowest-cost producers in the world.
But the outlook for the industry is probably rosier than it should be. Exchange rates are a big factor behind the industry's rebound. In 1984, it took nearly 240 Japanese yen to equal one dollar. Imports flooded the US. Today, it takes only about 100 yen to buy a dollar - a huge change in the competitive tide.
``Clearly, the biggest difference is the change in currency values,'' says Charles Bradford, a steel analyst at UBS Securities in New York. ``Ten or so years ago, Japanese wages were half that of the US in terms of dollars. Now, they're higher than the US.''
What happens when exchange rates swing the other way?
A study by the Economic Strategy Institute entitled, ``Can the Phoenix Survive?,'' suggests that US steelmakers will not be able to continue their strong performance without strong US trade-law protections. The industry lost $6 billion during the recent recession, and foreign dumping of steel - exporting at prices below full costs - continues. The US needs stiff trade sanctions to combat foreign dumping and protectionism, the study concludes.
Other analysts say that outlook is too gloomy. ``It's a crock,'' says Mr. Bradford, referring to the study's conclusion. ``Not only are the steel companies more competitive, so are their customers.'' With a strong US market, domestic steelmakers should profit whatever happens to current US trade legislation.
The key for steel and other US manufacturers is to keep up the momentum, competitiveness experts agree. ``To say: `American industry is back!' makes it sound as if the problem is over,'' says Daniel Burton, president of the Council on Competitiveness, a Washington nonprofit group. ``Japan will come back.''
The next wave of Japanese competition may not come from Japan itself, he adds. ``It may come back through Taiwan, through Singapore, through China, through Malaysia.'' It's in those and other Far East countries that Japanese companies are building new plants to take advantage of low labor rates.
Happily for US steelmakers, low labor costs abroad pack less of a competitive punch than they used to. The companies have boosted productivity so much that it costs them far less to pay workers to produce a ton of steel than it once did. Although American steel companies spent $8.8 billion for labor last year, according to the American Iron and Steel Institute, that was $1.9 billion less than in 1984.
American minimills - plants that use electric furnaces to make steel from scrap - are even more competitive, Bradford says. The amount they pay their people to make a ton of steel is less than the shipping costs to import it.
Like foreign competitors, the minimills have kept the pressure on traditional steel companies to change. And they are changing. LTV's newest facility is a steel casting-and-rolling complex that, using minimill techniques, integrates three processes into one.
There are signs that, after a decade of sprinting, American steelmakers are slowing down. Inland Steel says its main goal for the next two to three years is to make money off its existing plants rather than investing in new or refurbished ones. But analysts concede that it is a good time for these companies to repair the balance sheets.
``There's a time to sow and there's a time to reap; they should be in the reaping stage,'' Mr. Jacobson says. The big difference between this period and a decade ago, he adds, is US industry's changed outlook. In the 1970s and early '80s, ``there was a complacency and certainly a sense ... that things were chugging along OK,'' he says. ``They're wide awake now.''