Chaparral Steel; Gordon Forward mini mill competition strategy

No — $30 a ton. Gordon Forward, who started one of the electric-furnace steel companies, started a mini-mill in 1975. Everybody said: how can you compete with the Japanese and their big integrated mills, $5 billion plants? Well, first of all, it only cost him $250 million to build his mini-mill. Sure, it only produced one-fifth or one-tenth as much, but the capital cost was less than one-tenth — it was about 5%. It couldn't produce the full range of products that the integrated mills could. But he used to say, "If we can keep our labor cost below $30 a ton, we don't care if the Koreans pay their employees nothing, we can compete in the American market." Because it cost the Koreans $30 to ship their steel over here, and their only competitive advantage was labor cost. [Forward] is a graduate of MIT, this department; he's retired up in Vancouver now, Canadian by background.