Steel Summit 2024: Toe to toe with Barry Zekelman

Modular construction

One new element of the Chicago-based company, traditionally associated with pipe and tube, that gives an insight into how he conducts business is the foray into modular construction.

He saw it as as an opportunity to use more steel in construction in general.

“We want to put the most recycled product on Earth into these buildings and build them more robustly, and then provide the solution where labor is the problem,” Zekelman said.

“Every building was a snowflake. So we went in and standardized the product,” he quipped. He noted an attention to detail, measuring things like man hours per square foot, man hours per site, “compressing how much time the cement truck is there.”

“Now we’re putting up, you know, 360-unit developments in eight buildings, a clubhouse, in 14 months you’re renting,” he said.

At the end of the day, Zekelman said “he’s really providing an economical solution with a higher-quality product, faster to market and cheaper to build.”

M&A

Zekelman was asked about his comment to SMU over a year ago about wanting to own a steel mill.

“The reason I would love to own a steel mill is because most of the steel mills that are out there today have let me down for decades,” he said to audience laughter.

Recently, Zekelman Industries purchased a 5% stake in Canadian steelmaker Algoma. (The Sault Ste. Marie, Ontario-based company is currently in the midst of transferring its production from blast furnace to EAF.) This obviously led to question of what Zekelman’s move means?

“I think Algoma is largely through the most risk in the execution of their plan, like the fact they’re going to EAF, you got about 80% of the dollars spent,” he said. “I think the transition from BOF to EAF will be pretty seamless for them.”

Zekelman noted that Algoma is a supplier to him, “and I want to have a seat at the table for what might happen with them.”

As we’ve seen in the past, M&A can come pretty fast and from unexpected directions in the North American steel industry.

Mexico, trade, and tariffs

Zekelman has long been a critic of what he believes is the surge of Mexican steel imports into the US, especially conduit.

He had to close a California conduit facility in 2022, citing Mexican imports as a reason. This year he voiced his opinion on manufacturing moving from the US into Mexico.

“When you see manufacturing plants picking up and going to Mexico, they’re not doing it for the weather or for the tacos,” he said.

“They’re going there for one reason, wages, which means you’re stripping wages out of the US. You’re stripping the ability to take taxes, the tax revenue from that,” he added.

On the broader trade front, Zekelman said that a lot of import pricing doesn’t add up.

“You ship it across the ocean in carbon-belching ships that are emitting more CO2 than all the cars combined in the world, and sell it over here at 40% less than me?” he asked.

“That is subsidized. Somehow, the numbers don’t add up. The equation does not add up,” commented Zekelman.

“So I can’t compete against the government, so that’s why I take trade policy to it when I’m competing against governments, because I can’t,” Zekelman added. “But you want to go toe to toe with me, no problem. I’ll swing.”

The M-word

Addressing environmental concerns, Zekelman pointed out a few inconsistencies in where we place our attention, like the ban in many places on plastic straws.

“But we’re gonna bring in a ship from China, and we’re going to bring oil from Saudi Arabia, and from Iran and from Venezuela?” Zekelman asked rhetorically. “We are morons.”