Nucor - Look Over Your Shoulder!

Over the past year we've been telling you how an alliance called the "Domestic Manufacturing Group" has been raising cain at NAM.  This group, led by steel company Nucor, are trying to blame everyone and everything except their own internal wasteful methods on why they aren’t competitive within the United States.   Nucor itself isn't exactly motherhood and apple pie,

Lately they’ve [Nucor] been pretty vocal about blaming China for a global oversupply of steel. But while they’re blaming China and advocating as part of the DMG, they are also partnering with Chinese steel maker Shougang Corporation to build a new steel plant in Australia. All those “blame China” comments and press releases must make for interesting partners meetings.

Similarly, Manufacturing News recently reported on the creation of the Alliance for American Manufacturing, founded by the management and union of U.S. Steel.

The purpose of the AAM is to review the dire straits of American manufacturing, the pressures we're under from foreign competitors who trade unfairly and to focus the intellectual piece of the advocacy on this problem.

But while these steel companies are busy whining and complaining and starting political advocacy groups, something interesting happened.  ThyssenKrupp AG, a German steelmaker, announced they are building a new $3.7 billion 2,700 worker steelmaking complex in Alabama.  Yes, Alabama is in the United States, not China.

ThyssenKrupp AG on Friday named north Mobile County as the home for its proposed $3.7 billion, 2,700-worker steelmaking complex, bringing a dramatic, pre-dawn conclusion to an intense competition between Alabama and Louisiana for one of the largest U.S. industrial projects in a decade.

Hmmm... I wonder who will create the demand, since Nucor and U.S. Steel are blaming their problems on a downturn in steel consumption coupled with dumping by Chinese companies.  ThyssenKrupp apparently uses different market analysis techniques.

ThyssenKrupp said the massive mill is designed to serve a fast-growing North American market for high-grade carbon and stainless steel, and the company set an aggressive timetable: full production in 2010.

And not only do they believe they can be competitive enough from Alabama (remember, that's not in China) to sell to the U.S., they also believe they can export to other countries.

The mill is designed to import and process crude steel slabs manufactured by ThyssenKrupp in Brazil. About 40 percent of its products will be shipped to automotive customers in the U.S., Canada and Mexico. The rest will be split among appliance and machinery manufacturers and the construction and utility industries.

Imagine that... it's cheaper for ThyssenKrupp to ship bulky crude steel to the U.S. and use energy-intensive processes in the U.S. than to process it with cheaper Brazilian energy and ship smaller volume final steel to the U.S..  Nucor and U.S. Steel are crying about lost jobs, but ThyssenKrupp is creating jobs (in Alabama, not China).

Work to clear the site will begin immediately, and construction could begin by late this year. To meet that schedule, the company expects to employ an army of 29,000 construction workers over the next 18 months. That's in addition to the mill's 2,700 permanent workers, who will earn between $50,000 and $65,000 annually. Another 38,000 to 50,000 spinoff jobs will be created over a 20-year period, the company said.

Don't look now Nucor, but you've been smacked.  Perhaps you should have invested some of those political advocacy dollars, not to mention the energy wasted with whining and complaining, into removing the waste from your processes.  You might have been able to add a few thousand jobs in Alabama.  Isn't that what you wanted to do?  Or is it?

Comments

[Mike]

Nucor used to be held up as an example of lean manufacutring. They were featured in some of the early lean success books. Now? Maybe things have changed, and maybe not. I think it is worth a deep look, maybe deeper than you give her, Kevin. I think the entire steel industry is worth some study.

[William Craft]

If you read the comments made by Nucors CEO, Dan Dimicco, you would notice that the problem is not with the competition here in the United States he feels that we can compete with anyone on a level playing field. It is when companies have to compete against governments that help by giving unfair advantages to their industries through subsidies and currency manipulation that free trade and competition are hurt. This affects everyone and not just the steel industry. The steel industry just has a louder voice and stonger postion in the economy to help get people to listen. Anyway, I agree with Mike you need to do more research and study into the subject before criticizing any industry.