Chaparral Steel / Gordon Forward — mini-mill labor economics

Gordon Forward (MIT alum, retired Chaparral CEO) on the $30/ton trans-ocean shipping cost as the threshold for U.S. mini-mill competitiveness against any overseas producer, regardless of foreign labor rates. Forward also promoting "micro mills" beyond the mini-mill scale.

The simple answer is labor rates. Gordon Forward, who is actually a graduate of this department, was CEO of a mini-mill; he's retired now, he's a Canadian but he's living in Southern California. He looked at the Koreans, who were making steel in the 1970s, and the Chinese, and the Japanese, but they had higher labor rates. The Koreans were the low-cost steel producer at the time in the 1970s. It costs $30 a ton to ship steel across the ocean — steel or anything else. The labor rate to go across the Pacific Ocean or the Atlantic Ocean is approximately $30 a ton. So Forward used to say, if he could get the labor costs to making steel in the United States below $30 a ton, he didn't care if they paid their laborers nothing overseas, he could still compete in selling steel in the United States.