Barry Zekelman - Is this the beginning of a true American steel renaissance?

Barry Zekelman, executive chairman and CEO of Zekelman Industries, joins Lars to discuss the planned $15 billion steel mill in Iowa, its potential production and jobs, and what the investment could mean for American steel manufacturing.

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SPEAKER_00 0:16

Hey, welcome back to Lars Lars and Joe. It's a pleasure to be with you, and I'll be glad to get to your phone calls and emails in a moment. First, I want to talk to Barry Zecelman, who's executive chair and CEO of Zeckelman Industries, one of North America's leading steel manufacturers. Mr. Zeckelman, welcome to the program.

SPEAKER_01 0:33

Oh, thank you, Lars. Pleasure to be here.

SPEAKER_00 0:35

So when Donald Trump announces a $15 billion steel plant in Iowa, the largest ever built in the United States when it comes together, is that going to be competition for Zeckelman?

SPEAKER_01 0:45

Uh no, actually, we're a consumer of that steel. So, you know, we're we're looking for more suppliers. So they would make flat rolled steel. I don't know all the details of it, but we're the largest consumer of steel from these steel mills, the likes of Nucor and Nippon U.S. steel and uh steel dynamics, the mills like that, Cleveland Cliffs, etc.

SPEAKER_00 1:05

So you buy from them and then you manufacture all the you know sheet steel or the other kinds of products that people need made out of steel. Is that right?

SPEAKER_01 1:13

Yeah, no, no, no, we we take that sheet and we manufacture it in all different types of tubing, uh, used for construction, data centers now, skids for data centers, uh, the border fence, uh, we're supplying a lot to that, a lot of stadiums, bridges, highway signage, gym equipment, I mean trailers. It's everywhere. You just uh start to notice it when I point it out.

SPEAKER_00 1:34

So tell me this. Are we headed for an American renaissance in steel? Because shouldn't this be something where America leads the way anyway? And tell me why we ended up getting behind the curve on it.

SPEAKER_01 1:47

Yeah, that's it's a great question. First off, when you say are we headed for, we're already in it. I mean, I mean the companies that are on the ground here today in America have made tens of billions of dollars of investment and a lot of it on the back of uh President Trump's initiatives in 2018, putting in the 232 um uh tariffs and really enacting a long-term trade policy. You know, when when you make investments like this, they're not for a year or two, they're for decades. So you need to know that you're gonna have a market that is at least not gonna be hacked out from under you by dump steel from the likes of China and India and Taiwan and Korea. And now that we have a long-term vision, you know, these companies, including myself, I mean, we've invested about a billion and a half dollars over the last eight years in property, plant, and equipment, um, you know, we have a long-term horizon to invest. So, you know, the U.S. has a lot of tools that it could use that are quite frankly advantageous over the rest of the world. I mean, we have great iron ore, we have great natural gas costs, we have great electricity, we have great transportation uh uh and infrastructure. So, you know, making steel in the US is really um a great place to be. I mean, we make it more efficiently and cleaner than any other country in the world. I mean, the misnomer that labor is the big issue is really gone. You know, the the labor dollars per ton of steel are very, very small. So when the likes of China and Taiwan and Korea ship steel over to the U.S., they're actually paying more in ocean freight than the U.S. would spend in labor to produce that product. So the U.S. is extremely efficient. Where it where the problem that has happened to the US is you've had dump steel that entered into our country at lower than the manufacturing cost and really eroded the market. I mean, that's the Chinese MO, right? Rob, replicate, replace. Keep all their people busy. Yeah. Very important. You ruin an industry, Lars, and then you own it.

SPEAKER_00 3:44

So and and but tell me this how how is it that tough to spot the dump stuff and forbid it? I mean, don't we have arrangements through other things like WTO and others that I'm not necessarily crazy about? But but don't we have mechanisms by which we can say you're not allowed to dump your excess steel, your excess anything in our country to the detriment of our workers and our industries?

SPEAKER_01 4:09

Yeah, well, we do. But the but this the the systems are antiquated, and the the the way for them to take effect takes too long, you know. So let's say my product is is subjected to dump steel coming in from China. I've got to file, I've got to prove injury over an 18 or 24 month period. I've got to file a case, uh, I've got to spend millions of dollars. And then during that time frame, they're still hacking away and eroding our market and destroying, destroying my longevity and our workers' jobs. So the systems need to be refined. And that's where President Trump came in with 232 and put the duties on to give a level the playing field type of type of atmosphere. And you see what's happened. The U.S. steel industry is thriving. I mean, they're making huge investments. Um, you know, I think to date, almost $50 billion by the primary steel makers. You see companies like myself now making investments because we know we have great quality steel here and uh and and and a long time horizon. So you see manufacturing booming. I mean, this is this is definitely exactly what you wanted to happen. So to see us are making an announcement like that. I mean, the devil's in the details. It's a massive project. Um, there's still funding to be had. There's a lot of things to do to make that happen. Um, you know, I get a little bit skeptical with something that that big because you, you know, I've I've I've heard things like that before, but you know, it's gonna take time and we got to see if it's uh it's a reality. But I'm but I'm sure President Trump, being the great businessman he is, has probably put some teeth into it and let's make sure that Esther comes to the party. But you know, we still import steel, so we need more domestic production to displace it. And quite frankly, um, as we onshore more parts being made here, I mean, the the big thing that people don't realize is there's about 70 million tons of steel that come into the U.S. every year through indirect imports. That means products made of steel. What we really want are companies to come back here and use American steel to make those products and displace those imports. That's where real jobs are, right? It takes about a half a man hour per ton to make steel at the primary steelmaker level. Yet when you go downstream, you're adding 10, 12, 15, 20 hours per ton to make products made from steel at very high-paying jobs with healthcare benefits and uh and 401ks and jobs that are of 75, 80, 100 grand a year. So, you know, this is the renaissance of manufacturing here and why everyone wants to be in America. I mean, if you want to come into the amusement park, pay the ticket and be here, and you can play and ride the ride. And it's great.

SPEAKER_00 6:45

Mr. Zach Zuckerman, help me understand something, because I've been wondering about this ever since the Nippon deal was announced, and they said, we're gonna come in and take U.S. deal. And people say, we shouldn't let a foreign company do that. And said, well, where were those where were the American bidders? Well, I guess there was one bidder, but their bid was paltry by comparison to what Nippon said. They said, we'll buy it, we'll pump a bunch of money into it, we're not gonna lay anybody off who's currently working there now. It sounded like the best deal. Why weren't more American companies seeing that promise and jumping into that one?

SPEAKER_01 7:15

Well, I I mean there's a lot behind that curtain there. I mean, I'm I'm the largest single consumer of steel uh in North America. I mean, we buy more than General Motors. So, you know, um I know a lot of what went on behind the scenes. And um, um, you know, it it look, it's a great company. It needed some needed some work on their older, more legacy steel making. They had great um new steel making in in um in in Arkansas in their Big River one and then their Big River Two. And Nippon saw the writing on the wall. They said, look, we know if we want to be in the U.S. long term, we've got to be there. For the record, Lars, I'm a Canadian. Um, I still reside in Canada. I started my company in Canada. I have one plant here and 17 in the U.S. So, you know, I I guess technically I'm a foreigner-owning companies in the U.S. Look what I've done, created 3,500 jobs.

SPEAKER_00 8:06

So tell me you live in Alberta and you're gonna live in the 51st state.

SPEAKER_01 8:11

You know, I don't live in Alberta. I live in Ontario. I live right across the river from Detroit. And uh, you know, I I mean they call me a American, right? So you you know, I'm uh I'm very Americanized and and I love America uh you know you know as much as I love uh as I love Canada, and I hope hopefully the two countries can can make amends and be be great brothers again, you know.

SPEAKER_00 8:31

So it'd be one of the things I used to I used to have a Canadian a young lady who was a Canadian and uh she was a green card holder, and we called her a Canalian. Uh so show but that's because we we talked about immigration news. Mr. Zeckelman, it's a pleasure to have you on the program. We'll look forward to having you back. Thank you.

SPEAKER_01 8:46

Yeah, thank you, Lars. All the best.

SPEAKER_00 8:48

Take care. Thank you, sir. That is Barry Zeckelman, the head of Zeckelman Industries, the biggest consumer of steel in the United States of America, and you're listening to the Lars Larson show.