The ground shook from the percussion of a low-frequency boom after 200 tons of molten steel mixed with scrap metal at a massive U.S. Steel Corp. mill near Pittsburgh. It’s the same kind of explosive chemical reaction that’s been rocking the site since Andrew Carnegie built the plant 145 years ago—an investment that set him along a path from middling railroad manager to world’s richest man. Back then, Carnegie Steel Co.’s Edgar Thomson plant was state-of-the-art. It mass-produced the metal at lower costs than nearby competitors, and upgrades in the 1880s and 1890s left rivals scrambling to keep up. When J. Pierpont Morgan successfully merged a collection of assets with Carnegie in 1901 to create U.S. Steel, Edgar Thomson became the crown jewel of the new company. But U.S. Steel’s once dominant position in American manufacturing through much of the 20th century has been eroded by cheap imports and the emergence of domestic rivals like Nucor Corp., which use electric-arc furnaces to melt recycled metal rather than forges fueled by coal-based coke that process iron ore. After reporting losses in seven of the past eight fiscal years, Pittsburgh-based U.S. Steel was forced to close plants and delay many improvements. Even as the outlook began to improve in 2017—prices nearly doubled from a 2015 low as the government restricted imports, inventories fell and the economy began to pick up—the failure to revitalize aging facilities was choking earnings. In April, the company announced a huge multiyear plan to get its assets back in top shape, before disclosing in July that the price tag would be $1.2 billion. The cost and scope of the plan stunned investors. “It’s not crazy to be investing in blast-furnace assets right now, but it’s just sort of a shame that they’re having to invest in a big maintenance program right now when this is prime time to be making money,” said Lee McMillan, an analyst at Clarksons Platou Securities Inc. in New York. “They’ve just been so relentlessly focused on cost cutting that some people believe maybe they under-invested in their assets over the past few years.” Century-Old Assets Workers at the Edgar Thomson plant—part of a larger complex known as Mon Valley Works—stride across layers of dark soot and breathe air that tastes of metal the minute they enter the building. It’s so unkempt and busy that a visitor would be hard-pressed to figure out where the company invested $2 million recently to upgrade the facility, one of many century-old assets that require a lot of spending on upkeep. The question for investors is whether U.S. Steel has left too much too late, with maintenance costs eroding the benefits of a market rebound. From 2006 to 2011, the company spent an average of $50.93 per ton shipped on capital expenditures, according to data compiled by Bloomberg. From 2012 through 2016, that investment had plunged 26 percent to $37.85. In April, the company cut its profit forecast and said it would embark on an unprecedented revitalization of key assets. On the day of the announcement, the shares plunged 27 percent, the most since at least 1991. From 2017 to 2020, U.S. Steel plans to spend $200 million improving blast furnaces, $400 million on steel-making applications, $300 million on hot-strip mills and $300 million on cold rolling and coating. That’s more expensive and will take longer than many analysts had expected. While the company raised $439 million selling shares in August 2016 to cover some of the cost, that’s about a third of the total bill. Leadership Change The strategy already has cost former Chief Executive Officer Mario Longhi his job. In May, less than a month after the share plunge, he was replaced by David Burritt, who had been chief operating officer and is pushing ahead with the same spending plan. “When we get very focused on revitalizing our assets and we give our people the money to spend in those areas, we see the benefits through the rest of the year and into the future,” Burritt said on a conference call with analysts. Investors had expected a U.S. Steel rebound in 2017. Before the revitalization plan was disclosed, the shares had quintupled from the historic lows of early 2016, when the company reported a quarterly loss of almost $1 billion and said it faced significant headwinds. The outlook changed when the government levied trade duties on imported steel from countries including China, whose shipments to the U.S. fell to a five-year low. Donald Trump’s surprise victory in the November presidential election was a boon to the domestic steel industry. He campaigned on an America-first trade policy and pledged $1 trillion in infrastructure spending. The S&P Supercomposite Steel Sub Industry Index of 13 U.S. companies is up 26 percent from a year earlier. ‘Poses Challenges’ The gains were short-lived. U.S. Steel shares have yet to recover from the plunge in April and are down 19 percent this year—despite eight straight gains amid reports the company may sell its Slovak unit. And imports from China, which fell the past two years, are up 6.7 percent in 2017 as the government failed to follow through on threats to boost tariffs. “Where are their competitors going to be when this revitalization program is done?” Novid Rassouli, an analyst at Cowan & Co., said in a telephone interview. “No one is stopping for them to get their assets back to where they want them, so I think that poses challenges for them.” Burritt helped to soothe the concerns of some analysts in July with a detailed explanation of plans for eight major upgrade projects this year, as well as the benefits of increased production and profitability once the work was completed. The company also maintained its guidance for adjusted earnings before interest, taxes, depreciation and amortization. ‘Very Volatile’ “This whole theory that some people have out there that U.S. Steel has grossly underinvested for years and the place is falling apart and they’ll have to reinvest every penny here on out to get back on equal footing with their competitors is a stretch,” said Michael Gambardella, a steel analyst at JPMorgan Chase & Co. in New York. “It’s just a very volatile sector.” There’s also still a strong possibility that Trump will pass tariffs, quotas or a mix of both on steel imports, which would provide a major boost to U.S. Steel and other domestic producers, Gambardella said. U.S. Steel still has an advantage over mini mills in supplying higher-purity steel preferred by automakers. These products sell at higher profit margins than rebar produced from recycled metal by Nucor and Steel Dynamics Inc. for use for construction and infrastructure, though those companies are working to improve quality to expand their market share. “It’s a very pivotal moment in U.S. Steel’s life as a company here, and execution is key,” Cowan’s Rassouli said. “There’s been a fair amount of investor confidence that’s been eroded, so it’s a long journey to build that back. It takes a lifetime to build trust, and one second to lose it.”