Amid all the gloom and doom about the future of America's steel industry, one positive ray of light shines forth: the "mini-mills."
Nucor Corp., for instance--the tenth largest steel maker in the country--boasts of state-of-the-art technology, competes successfully for foreign imports, makes money for its stockholders and has neither laid off nor fired a single employe, says its president, F. Kenneth Iverson.
His comments contrasted sharply with descriptions of the rest of the steel industry at recent hearings on industrial policy by the House Banking Committee's subcommittee on economic stabilization.
United States Steel Corp. Vice President Thomas C. Graham, for instance, said the industry lost $2.8 billion in steel operations in 1982, with the deficits continuing this year as the industry is running at less than 60 percent of capacity.
Domestic steel shipments last year stood at 61.5 million tons, the lowest level since the 1930s, added John J. Sheehan, legislative director of the United Steelworkers of America. He said employment has dropped from 400,000 in 1974 to 200,000 today, and most of the 150,000 steelworkers currently laid off will never go back to their old jobs.
But Iverson's company, based on Charlotte, N.C., is part of the small segment of the American steel industry that is prospering. It runs seven mini-mills in four states, so named because they produce between 250,000 and 600,000 tons a year and are aimed at specific markets within a 400-mile radius of their plants. By contrast, a major integrated mill is not considered economically viable if it doesn't produce at least 1 million tons a year.
Mini-mills produce special products at the low end of the steel line--neither the high priced alloys nor the huge slabs and plates that can come out of the country's gigantic integrated mills.
But the mini-mills modernized early, in contrast with the rest of the industry. Iverson said all his company's mills use the efficient, high-yield continuous casting process, while industry-wide, only one-fourth of all steel production employs that technology. By contrast, 80 percent of Japanese steel is done with continuous casting.
Besides continuous casting, mini-mills use the highly efficient electric furnaces fed by recycled scrap steel.
Joseph C. Wyman, a steel analyst with Wall Street's Shearson/American Express, pointed to "a complacency on the part of American steel management in adopting new technology" over the past two decades as well as "ever high demands for its share of the economic pie" by the labor unions.
"Thus, while the effect of the high value of the dollar dictated the most rapid adoption or development of new technology and modernization on the part of labor in order to stem the inroads of imports, the industry in fact existed in a world of its own dreams in which the technological achievements of its overseas competitors had little place," Wyman told the subcommittee.
Besides using modern technology, most of the mini-mills--which make up about one-third of the industry--are non-union. But Iverson said wages and fringes at Nucor--including incentive pay, which can equal or top base salaries--is close to top union scale. In 1981, a good year, take-home pay for most hourly workers averaged $30,000 or more a year while the high-skilled steel workers known as "melters" made as much as $40,000.
Last year, wages were down 15 percent for hourly workers, but under Nucor's "share-the-pain" plan, supervisors took a 35 percent to 40 percent pay cut and executives made 50 percent less.
But no Nucor employe was laid off last year, the worst for the steel industry since the Great Depression. The company, moreover, has made profits in every quarter since it built its first mill in 1970, averaging 20 percent return on stockholders' equity over the past five years.
Iverson said Nucor's seven mills, with an annual capacity of close to 2 million tons, compete easily with foreign suppliers, whose prices generally run $100 to $200 less per ton than most American-made steel. "We love to compete against the foreigners. Our biggest competition is other mini-mills," Iverson said in an interview.
The key, he said, is productivity. The newest Japanese mills produce 700 tons to 1,000 tons per employe a year--twice that of most U.S. companies. Iverson said his company averaged 850 tons per employe a year in 1980. He expects it to increase soon to 1,000 tons a worker.