Non-Union Big River Steel Employees Smelting Competitors Like U.S. Steel
If You Can’t Beat ’Em . . . Buy ’Em!’Union-Impaired Firm Acquires 49.9% Stake in Union-Free Competitor
Three months ago, the National Right to Work Newsletter
reported on the remarkable success of a five-year-old, union-free steel mill
located in Right to Work Arkansas.
Citing an August 2019 report for Forbes magazine by
business journalist Jonathan Ponciano, the Newsletter noted that the annual
cash flow per employee at the Big River Steel (BRS) Flex MillTM in
Osceola, Ark., is “a dumbfounding $557,000.”
That’s roughly nine times as great as the $61,000 cash flow
“per union-impaired employee” at troubled U.S. Steel (USS).
A large share of the cash generated as a consequence of
BRS’s extremely high productivity goes straight into the pockets of front-line
In 2018, according to Mr. Ponciano, the average BRS
production worker earned $129,000, including bonus pay, in a state where the
cost of living is 12% below the national average, according to the nonpartisan
Missouri Economic Research and Information Center.
“The future of American metal production is located” in
Right to Work states like Arkansas, concluded the report appearing on page
three of this publication’s October edition.
The managers of USS, headquartered in Pittsburgh, Pa.,
apparently agree. Soon after the October Newsletter went to press, they
announced their plan to acquire a 49.9% stake in BRS.
Inefficient Big Labor WorkRules Often Discourage FirmsFrom Making Investments
National Right to Work Committee Vice President Matthew Leen
explained that USS, whose production employees are subject to the monopoly
control of United Steelworkers (USW/AFL-CIO) union bosses on matters pertaining
to their jobs, has been struggling for decades, and its plight has recently
“Over just the three months that ended September 30, USS
lost $84 million, and sales plunged by 16% compared to the same quarter in
“A key problem for the company has been its heavy reliance
on older blast furnace technology.
“Its facilities are as a consequence only profitable when
they are operating at full capacity.
“And since the worldwide demand for steel is highly
cyclical, USS mills very frequently aren’t operating at full capacity, and
bleeding red ink.
“In theory, USS could set itself right by retooling its
mills in forced-unionism Pennsylvania and other historic USW stronghold states
to make them more flexible.
“In reality, however, employees hamstrung by
counterproductive USW and other union work rules are often unable to make a
successful switchover to new technology. Well aware of the pitfalls, companies
can and often do opt to invest in a new facility in a Right to Work state
instead of retooling an existing unionized operation.”
‘Manufacturing in GeneralHas Moved’ Away ‘From theInfluence of Labor Unions’
Reporting for the Pittsburgh Post-Gazette, the daily
newspaper for the metropolitan area where USS’s Mon Valley Works, Edgar
Thompson Works, and Clairton Coke Works are located, journalist Daniel Moore
offered a Pennsylvanian’s perspective on the BRS acquisition.
To offset the substantial borrowing costs it is incurring
due to its $700 million investment in BRS, USS is rolling back its previous
plans to spend $2 billion to refurbish aging plants, wrote Moore in an early
For example, previously announced 2020 expenditures of $400
million in the Mon Valley Works were being slashed by 50%.
Mr. Moore bluntly continued: “Manufacturing in general has moved . . . away from the influence of labor unions. . . . “Arkansas has a right-to-work law, which means any employee can opt out of joining and paying dues to a labor union.”
Next Stop For BRS:Right to Work Texas
Since the effective partnership with USS was announced, BRS
CEO David Stickler has reinforced the implicit message that his company regards
Right to Work protections for its front-line employees as critical for its
In a mid-October interview with S & P Global Platts
that only became public in November, Mr. Stickler said the company is “just now
aggressively ramping up efforts for a second flat-rolled mill” in Brownsville,
The Lone Star State has had relatively little flat-rolled
steel production until recently, but has had a Right to Work law on the books