But I think there is a more fundamental problem here. Most of the time, if you don't have a degree in 2023, you're screwed. Blue-collar jobs go where labor is cheap, and that isn't here.

Depends on the job. Trade jobs can't be outsourced, for example. We're not bringing crews from somewhere to hang drywall, pave roads or build houses. You can make 6 figures doing things like plumbing, HVAC and electrical work.

You don't need a 4 year degree from some college that makes you pay $100k+.

As for steel, the US shifted to a micromill model and as a result employment has plummeted:
St. Louis Fed (FRED): Employment for Manufacturing: Iron and Steel Mills and Ferroalloy Production (NAICS 3311) in the United States | FRED,

Production has generally been flat for a few decades
St. Louis Fed (FRED): Industrial Production: Manufacturing: Durable Goods: Raw Steel (NAICS = 3311,2pt.) | FRED,

Team Blue can't really do that. So they are losing the working class,

That's not why Team blue is losing the working class. Team blue is losing the working class for a number of reasons. Here's a very stilted article that manages to raise some points:
nytimes.com - Democrats election working class voters
And they tend to be more religious, more outwardly patriotic and more culturally conservative than college graduates.

Do the words "religious", "outwardly patriotic" and "culturally conservative" describe the democrats in any way?
Now throw in the issues of
*Crime
*Border security
*Inflation
*COVID restrictions that crushed small businesses and blue collar jobs

...and does it make sense? Sure does.

Over the last 5 decades who wins depends on what's on the ballot.

democrats win when domestic issues are on the ballot.
Republicans win when foreign policy is on the ballot.

Foreign policy writ large hasn't been on the ballot since Bush43 won in 2004. Every single election since then has been about more domestic items and as such the d's have done better...but as the democrats have shifted further to the left, they're leaving more and more folks behind.