Steel may be old, but Asia helps makes it a hot commodity here

Late in 2007, containers of raw steel began leaving Nucor Seattle for buyers in Taiwan and Indonesia as the city's only steel mill began exporting steel to Asia.

It is a small amount. Perhaps more significant, Canada, a tariff-free market, takes 30 percent of the plant's output. The Seattle plant is operating its melt shop five days a week in three shifts — and is asking the pollution-control authorities to allow it to add a fourth shift and operate 24/7.

We are used to booming aircraft and software — but steel is old.

Think of it as recycling. The feedstock for the Seattle plant begins as steel cans tossed into a thousand recycling bins. It begins also as junkyard cars, derelict appliances and tangles of old reinforcing bar torn from demolished buildings. Call it scrap. At the plant in West Seattle, the old steel is grabbed by giant magnets and plunked into an electric-arc furnace to be reborn as youthful steel. All the steel made here is this recycled kind.

It should be expensive. Land is expensive. Labor is expensive. The plant is old: It was built in 1905.

Back then, America was the world's low-cost steel producer. More recently, East Asia has been. More than half the steel in the world comes from China, Japan, South Korea and Taiwan. Ships are the world's low-cost transportation, and have long been bringing Asian steel to every major port on tidewater. Asian competition is why all the other steel mills on tidewater in the western United States or Canada are gone. Nucor Seattle is the only one left.

How has it survived? Sometimes with difficulty. In the 1980s, when the plant was locally owned, workers took 20 percent pay cuts. The plant long had cheap electric power. In this decade, it was given a special rate by City Light. Not anymore. For the past year it has been paying the standard rate for large users.

A surplus of scrap is a part of the formula. Not being full of steel mills, the region has more scrap than it needs. Nucor bids against buyers from Asia.

Energy-saving is another constant. Nucor Seattle's use of electric power per ton of steel is at half the U.S. industry average.

The plant's new manager, Matt Lyons, 43, remembers the Seattle operation in 1987, when he first went to work for it. It had a nut-and-bolt plant that was running on pre-World War II machines. The owners hadn't kept the plant up to date, and it died.

Nucor Seattle has been an early adopter, but never the first adopter, of process-control technology to cut electricity costs. It aggressively trains workers in making the best use of its machines.

Labor is part of the formula. I note from a 1991 Seattle Times story that the operation had 550 employees. Today, with more labor-saving technology, it employs 290. In the old days, workers were represented by the Steelworkers Union; as Nucor, the plant is nonunion. Being nonunion, Lyons says, "is part of our culture" — speaking of Nucor, the North Carolina company that has spread steel minimills across America.

Non-union does not mean cheap. According to Lyons, in 2006, the average Nucor Seattle worker earned $86,000 in cash, two-thirds of it as bonus payments, and some of it as contributions to tax-sheltered retirement accounts. Workers also have benefits. Recent turnover has been 1 percent a year.

At those costs, the mill has to be efficient — and it is. In China, Lyons says, some plants work 7 to 8 man-hours to produce a ton of steel; at Nucor Seattle, it's 0.8 man-hours per ton.

Those are the internal things. Add to that a boom in Asia and the plunge in the U.S. dollar.

Business won't always be this good. But in order to make hay when the sun shines, you have to prepare the ground. Nucor did.

Next time when somebody says industry is dying in America, think of Nucor Seattle. Imagine the gall of these people, shipping steel to Asia.

Bruce Ramsey's column appears regularly on editorial pages of The Times. His e-mail address is seattletimes.com">bramsey@seattletimes.com; for a podcast Q&A with the author, go to Opinion at seattletimes.com