Workin’ in the Mill

Apparently, Craig Bouchard has decided to build a new aluminum mill – in Ashland Kentucky. That’s something that ‘t doesn’t happen very often. In America, at least. Allysia Finley, over at The First Street Journal took a look at it following a story in the Wall Street Journal.

In April the CEO of Braidy Industries, Craig Bouchard, announced his company would build a $1.3 billion aluminum mill in Ashland, Ky., creating 550 jobs. Within the past few weeks, he has received 2,600 applications—many with heart-wrenching personal anecdotes.

Ashland, a small Appalachian town on the Ohio River, was once an industrial powerhouse. Fifty years ago, nearby coal mines churned out cheap energy and raw materials for steel production. But in recent decades the region has suffered a series of blows. In 1998 Ashland Oil relocated to the Cincinnati suburbs. Two years ago, AK Steellaid off 600 workers. Last year CSX Railroad cut 100 jobs due to reduced traffic from the coal mines. Unemployment in Greenup County stands at 8.9%.

Last month President Trump —who won the county with 71% of the vote—ordered an investigation into whether aluminum imports were jeopardizing national security. It’s a step toward the tariffs that protectionists hope will revive America’s Rust Belt. But the best hope for towns like Ashland is innovation and investment by men like Mr. Bouchard.

He’s the kind of businessman who might appear on a union hit list. The CEO cut his chops in derivatives trading before buying the scraps of a bankrupt Chicago steel company in 2003 with his brother James. Within five years, the Bouchard brothers had built their company, Esmark, into the nation’s fourth-largest steel conglomerate.

They sold it for $1.2 billion to the Russian steelmaker Severstal in 2008, shortly before the stock market and steel industry crashed. Thousands of workers subsequently lost their jobs. Mr. Bouchard blames the United Steelworkers. He had first tried to sell a partnership stake in Esmark to the Indian company Essar Steel. But the United Steelworkers sought to force a sale to Severstal, which the union perceived as more labor-friendly. Had the Essar deal been consummated, Mr. Bouchard says, “every one of those people would have their jobs today” because all of the company’s debt would have been paid off.

The episode soured him on organized labor, and it’s one reason he was determined to build his new aluminum plant in a right-to-work state, where workers can’t be compelled to join a union. Before choosing Ashland, he drew up a list of 24 potential sites. The logistics favored Ashland, and Kentucky offered $10 million in tax incentives as well as low-cost electricity. But Mr. Bouchard says he was prepared to build elsewhere had Kentucky’s Republican governor, Matt Bevin, not signed right-to-work legislation in January.

Pay at the plant, which is expected to be up and running in 2020, will start at $50,000 a year and average $70,000—about twice the median household income in Ashland. Workers will also have access to health insurance, fitness facilities and a day-care center.

There’s more at the WSJ link, although it is subscriber only. But there is enough here to draw some conclusions.

First, Ashland is a superb location, especially for heavy industry, on the Ohio River, only a few miles from an Interstate Highway, lots of railroad infrastructure, and lots of unemployed people, both a legacy from coal mining. Nor does it hurt, that the Kentucky government offered $10 million in tax incentives and cheap electricity (aluminum production takes a lot of electricity, I seem to remember).

And finally, Kentucky is a right-to-work state, and Bouchard, like so many of us, has been turned anti-union, by the unions, themselves. Many of us watched as the were the main actors in destroying many of the industries that dominated my childhood, primary steel, the big 3 automakers, and many others. Apparently including Bouchard’s Esmark Steel. Nor does he appear to be exactly planning on exploiting his workers, starting them at $50K, and averaging $70K, that’s a pretty decent living, and working conditions are no longer really a contract condition, they’re a government regulation. Yes, often a silly group of them.

One of the things that the unions used to kill enterprises, and why it is a very silly move anymore to buy a legacy business, are the defined benefit pension plan, Allysia says this.

The pension decisions of decades in the past are still weighing down American manufacturers today. Those decisions cannot all be blamed on unions; management too frequently took decisions concerning pension plans and funding which worked fine for the individual managers in the fifties and sixties, but are unsustainable today. Defined benefit plans are being replaced by 401(k) plans, and the like, plans which do not depend upon the company’s future contributions to those plans. The defined benefit plan, if not properly funded as the company moves along, is, in effect, paying retired personnel a wage for no longer working.

That’s correct, and a good deal of that was taking the easy way out, rather than fighting the union. And by the way, it is not only business, it’s the basic problem (besides corruption, of course) with government, in Chicago, in Detroit, in Illinois, in California, and pretty much anywhere that government employees have unionized, because politicians, being the weak-willed creatures they are, have almost always not funded the retirement systems as required (often the unions haven’t, either).

And that’s why smart people go for a 401k these days, which was originally designed for the self-employed. If you fund it yourself, it tends to get funded, if you depend on other people’s money, well people are subject to the temptation of shinier objects than taking care of those who used to work with them.

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About NEO
Lineman, Electrician, Industrial Control technician, Staking Engineer, Inspector, Quality Assurance Manager, Chief Operations Officer

2 Responses to Workin’ in the Mill

  1. the unit says:

    Humm…going to have health insurance, fitness facilities and a day-care center. Don’t forget the prayer room, built pointed in the correct Qibla direction.

    Like

    • NEO says:

      I doubt he’ll go that far, it is Kentucky, after all! 🙂

      Liked by 1 person

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