Steel Mills

Guest Opinion in Response to Big River Steel / Nucor Article

March 31, 2014

Last week Steel Market Update published an article from one of our contributing writers, David Phelps who was the former president of the American Institute for International Steel (AIIS). The article was about Big River Steel and Nucor. You can link to the original article by clicking here. One of our readers had strong opinions about the article and has allowed Steel Market Update to reproduce their letter to the editor on the subject:

I’m writing to comment on David Phelps’ article from last week. I see that the article was introduced as being “written by contributing writer David Phelps…” and that the “article contains the viewpoint of Mr. Phelps…” However, I feel that the brief article contains such strong opinions that it does a disservice to your publication and to the role of information and education provider that “SMU” generally provides so well. The article should have been set aside as an editorial more clearly. I have been a fan of David’s through the years as he took on some of the domestic steel interests and their sometimes overly aggressive attempts to restrict imports that threatened their market. But I think that the verbal and written abuse David received from Dan DiMicco over the years may have affected David’s usually clear thinking and that the opportunity to get in multiple digs towards Nucor was too good for him to pass up.

So if he uses phrases like “it is beyond debate” to squelch potential disagreement with his position then I suppose I can also to say that it is beyond debate that:

– The US does not need additional steelmaking capacity. I suppose that if someone wants to finance a new mill with private investors’ money, then that’s a choice they’re free to make and they can benefit or suffer from the corresponding success of failure of the new facility. But using taxpayer dollars in any way to help this project isn’t, in my opinion, a good use of said dollars.

– Ken Iverson’s stated position that he wasn’t afraid of competition was a good position for a low cost maker of vanilla grades and types of steel to make. In those early days Nucor was competing with the higher, fixed cost mills on the easiest and most commodity oriented steels and Nucor had no established position to defend. The weaker the established mills got, the better off Nucor was as the established mills then abandoned the manufacturing of items that Nucor made at lower cost. When Nucor, through organic growth and acquisition, became one of the 3 largest steel producers in the country, it no longer made sense to say, “we’ll compete with anyone, bring ‘em on!” Nucor has a very established position to defend now and it makes total sense for them to not want Arkansas to offer tax incentives to compete with them.

– It’s poor journalism and insulting to say that Nucor “whined”, to use the word “irony” or “ironically” 4 times within 15 sentences, to state that they’ve fallen so “far from the ideals of its founder”, to say that they ally themselves with environmental wackos, etc., etc.. etc.

– If John Correnti were to be appointed head of US Steel, Arcelor Mittal or even Nucor, I think he would also be decrying unfair competition from abroad or from Big River. The only reason he appears to be the “true successor” to Iverson as David anoints him is that for Correnti now, as it was true for Iverson 30 years ago, having no established position means it makes perfect sense to say, “my new mill is needed”, “my new mill won’t hurt anyone”, “my new mill is deserving of government support”, etc.

In closing, David’s article drips with anger for Nucor and obvious happiness at their discomfort and defeat. It belongs in a section of your newsletter clearly titled “guest opinion”.

Steel Market Update believes those within the industry are entitled to varying opinions and viewpoints and we welcome the free flow of information and ideas. We understand that many have strong opinions about Big River Steel and the need (or lack thereof) for another steel mill. There are also strong opinions about Nucor (and other mills) desire to limit competition (or unfair competition) in their marketplace. We welcome your thoughts, suggestions and opinions as we expect Big River Steel and foreign imports for that matter, will be hot button topics in the months to come. You can send comments to: info@SteelMarketUpdate.com.