Steel Stories - Forging What Comes Next with Dave Burritt, President and CEO, U. S. Steel

Well, thank you very much for having me.

Yeah, it was the Nippon US Steel deal.

It concluded in a very favorable way, especially for our workers and the communities where we live and work.

I think what we showed as a company is that when you assemble the right people that are committed to an important outcome, you get a good result. It wasn't an individual. It was groups of individuals that understood how important this deal really was for the workers and the communities, in addition of course to the stockholders, the customers, the suppliers. All these things combined. It was such a great deal that we felt confident it was going to succeed and I think that strengthened everyone's resolve to go the distance in spite of the fact that there were so many adversaries that made it difficult for us to move this thing forward as quickly as we would have liked.

The thing that really helps us at US Steel is we're grounded in our steel principles, our code of conduct: STEEL – Safety first, Trust and respect, Environmental stewardship, Excellence and accountability, and Lawful and ethical conduct. That's at our core. Every time we had our deal team meetings, I would start with why we're here and that we're the truth tellers. I remember people telling me at the time, 'Oh, it's so good that you're reminding us all of that.' The reality was I'd get quite angry and I have a tendency to emote about certain individuals or companies or characters that were trying to kill a great deal. But when I said that, it's always remind yourself what's important. That stood the test of time. As the truth tellers, when people would make up things about the deal, we could always ground ourselves in the truth. It carried us forward, especially when you get the right people on the bus headed in the right direction wanting the right outcome for the company and Nippon, as well as the communities, the workers, the stockholders, the customers, and the suppliers.

It comes back to our code, but you start with our fiduciary duties. We had a legal obligation to get the best deal for our stockholders. That's what we had to do. You can't have a code of conduct that doesn't respect the law. So we knew we had to do it. Nobody was walking around thinking, 'Oh, I hope we can sell the company.' We didn't want that to happen. But it became evident that we were going to be attacked by adversaries trying to kill the company and hurt our workers. That strengthened our resolve, not only from a legal standpoint but from an ethical standpoint, that we want to do the best for our workers and communities. I think getting this deal done proved that out. We have a remarkable deal with unprecedented levels of investment. We got $10.8 billion that we have to get done by the end of 2028, spent or committed, and a total of $14 billion. That is a remarkable amount for a company. It's like the dog caught the car. Now we have to get the things we worked so hard for, and it's a really good problem to have – to spend this money, upgrade our facilities, and improve the talent because with these new operations, there's going to be education and training for the workers. I'm more than excited about the future as a result of this deal.

Well, we again just told the truth. The reality is this ends up being a partnership. Yes, Nippon is the single stockholder of US Steel. But you see through all that and realize it's being run by US people. We're going to make sure the headquarters stay in Pennsylvania, that we respect the laws on trade, and that we do everything we can to run this business according to our code in a way that ensures the future of our company for our customers, suppliers, employees, and communities. It's really a beautiful thing.

Of course, you know. In fact, it's interesting because we're already celebrating a birthday – 125 years in the 250th year of this country. We planned it all out this way so it all lines up about the same time. Actually, a lot of this is circumstance, but we're celebrating pretty much every day as a result of getting the deal done because it is such a good thing for everyone.

No question about it, the talent that we're bringing in from Nippon to teach us how to make the best steel in the world. They are extraordinarily talented and they make steel that people in the United States have never made before, especially as we get into electrical steels and things like that. Bringing in what they call dispatchers or expats, to help us understand what needs to be done to upgrade our facilities, upgrade our talent, and create the best steel maker with world-leading capabilities. Those are the things that make the difference. Nippon has the deep pockets to make these levels of investment. We'd love to make these investments, but we did not have the balance sheet. It's all about capital allocation. You have so much money to spend and you have to put it in those assets that you believe will create the most value. They've experienced many of the issues we've had, they've spent money to improve, and they've brought talent in to improve. They've been through this before and now they're helping us succeed. So it's the technology they're bringing, the talent, the investment – all these things are wonderful for US Steel.

What's surprised me is how well the transformation is going. I'm an old guy, so I've been through a lot of transformations and they usually don't go this smoothly. Usually, they come in, reorganize, move a bunch of people around, and create an incredible amount of discomfort. But we have this high degree of trust. Morisan, who led this whole thing from the Nippon perspective, and I have become very close. We highlight the same thing: why didn't we find ourselves sooner? We should have found each other earlier because there's so much in common. They live by a code, safety is first – all these things are so common. They got 'Nippon' meaning Japan, and we got 'US Steel' in our name. There's so many commonalities. It's so important that we continue to work together. The transformation is better than any I've ever been associated with. The collegial nature, the focus on commonality, things that work together – it's really fabulous.

Sure. I always like to refer to the Stoic idea of amor fati – love of fate. Whatever happens, you just say good. That's what happened here. It was good that we had this extra time to work together, time for them to visit all our facilities, time for us to visit theirs, time for us to get to know one another. The transition started when we first met because it was such an incredible connection. We have morphed this thing and we're doing our best to turn the page. Let's face it, these adversaries – it's hard for me to turn the page. I'm doing my best. But when people try to kill your company, it's hard to forget. But we're in a good place and we need to move forward. The big task is what we call the main thing. The main thing is to make sure you keep the main thing. As Stephen Covey would say, for us it's to make sure we get this $14 billion spent on time, on budget, and by the book. By the book means according to our fiduciary duties to Nippon, to the Golden Share, to the federal government, to our workers – living by our code. We're very focused on that, but it is a daunting task. I tell people now to presume all the projects are bright red and flashing, that we're in trouble, because that inspires us to work harder, work smarter, and get things done. Usually with projects, they're all green, everything's good, and then you get to the last six months and go, 'Uh-oh, I didn't know about that.' We're starting with the end in mind and bringing it back to the present. We feel the pressure, we feel the heat. Fortunately, we had this long time to work together, so we understand the differences in our culture. There are language differences, a whole lot of differences. But when you have common goals, you have alignment, and that's a key ingredient to trust. Trust is three things: integrity – you have to work with people that are honest and capable – you have to make sure the partners you're lining up with are very capable. The third one's even harder: if we don't have goals that are congruent, it's a problem. We make sure we got the main thing and the improvements we have to make. When you keep the main thing the main thing, you build the trust, the capability, the integrity, the alignment. All those things come together very nicely. I think that's why we're doing as well as we are so far.

I do like to emote when things are less than good. But you do that amongst your leadership team and we understand what's real and what's not, what we'll say publicly versus internally. We can argue, we can debate, but then you come together and align on a common direction. We like to say people have an obligation to dissent and then actually come together once we've decided on the direction. Then we move forward together, lock step, arms together. That's where we are with Nippon under their leadership, to make us the best steel maker with world-leading capabilities.

Oh, it's fantastic for them. One of the reasons this got done is because of the mayors here in Pittsburgh and in the Mon Valley region who took the time to understand the deal. When you first heard that Nippon was going to be buying us, you might say, 'Oh great,' but once they understood it and talked to people like myself, they realized the benefits. When you create profitability through increased investment, that finds its way into the community. There will be tens of thousands of folks working on our sites, spending money in our community. It's a marvelous thing for the communities where we live and work. Also, because of these investments, we're more engaged than ever with people in the community. When people in the community stepped up for our deal, we feel an obligation to support this community in an even stronger way because they fought for what was right. The people that actually looked at this in a deep way understood it. All the major newspapers around the world – the New York Times, Wall Street Journal, Washington Post, USA Today, Financial Times – every one of those editorial boards said, 'This is a no-brainer. This should be done. It strengthens national security, economic security, job security, and creates jobs.' How can this not be a good thing? Everybody understood what was real. We just had a few difficult adversaries early on that made this troublesome because they either didn't take the time or they had other things they thought would work better for them, even though they didn't have the truth.

AI is the future. It's not coming. It's here. It's now. If you're not already using AI, you're probably being left behind. We say to people: use AI and you'll make sure you have a secure future. If you ignore AI and don't want to learn it, you will be left behind. We're not going to have anybody that's using AI be left behind. I hear all the time that it's going to eliminate all these jobs. Well, it's going to create a lot of jobs – different jobs, better jobs, safer jobs. I go back to my old days when we first came out with spreadsheets. As an old accountant, I thought, 'Oh my gosh, these spreadsheets, Lotus 123. I was a guru at Lotus 123.' It saved us so much time, made us so much more efficient. Instead of doing a roll-up on budgets with a 10-key adding machine and paper spreadsheets, you could do thousands of calculations. Through those thousands of calculations, you could dig deeper into aspects of the business to help make it better. That's what AI does. I see it in my personal life. I get my blood tests, put them into AI, and it gives me the best explanation. Now I'm more ready to talk with the doctor about the results. But it's not just that. If you're planning a trip with your family, why not have AI look at what you're planning and give you suggestions? If you're building something at home or working on a project with your school, use AI to help you understand it. If people start using it on a personal basis, their eyes open up and they go, 'Oh, I see an application here at work.' For us with our big capex spend, AI is right in the heart of that. Without AI, you can't do something this complex. There are too many interdependencies that rely on one another. You just can't rely on the technology we have today – digitization or spreadsheets – to construct a billion-dollar project. You have to have AI point you in the right direction. It's not perfect, but it's a lot better than it was two years ago when it would start hallucinating. Even then, it was more accurate than not. You've got to use AI. If you're not using AI, you'll be left behind. But you don't have to worry about losing your job at US Steel because of AI, because it is the future and it's going to make your job better, safer, stronger, bigger.

Are these kids today, you know?

Let's face it, when you have language differences and many of the people have never worked in the United States before, we provide support to help them get integrated. They get invited to events, and there's more we can do. We don't want the Nippon people just meeting with Nippon people, or US Steel people just meeting with US Steel people. So we have employee resource groups that create environments where they can go to a Penguins event, a Steelers event, or a Pirates event here in Pennsylvania. In Indiana, you've got the same kind of thing. You pick a facility – Great Lakes, Granite City, Arkansas, Alabama – every one of them has programs that are engaged in the community. When we engage with Nippon and make them partners with us, it goes better. Language skills have to improve. If you're doing business in the USA, you really have to have impeccable English so people understand what's going on. Culturally in the United States, we're a lot more outspoken, very frank. That's not the tendency in Nippon, but you're doing business here in the US. So we're getting people speaking up more and being more frank. I like to say loud voices help make the best choices. So be respectful, but tell people what's going on. People are understanding what it's like to work here. We've gotten to know each other over a period of time. Now, here it is a year, the anniversary of the deal, and we had a lot of the dispatchers join us by the end of last year. They're understanding what the US culture is like and I think they're fitting into that. Also, we need to be respectful of their culture. You don't expect people to change who they are. They need to keep who they are because they bring technology, expertise, and a way of doing business that is longer-term. The advantage of what we have now, as basically a private company, is that we don't have these investor calls every quarter. We can be very focused on making sure we get this $10.8 billion spent on budget, on time, by the book. Before, we would have had to take a bunch of time explaining to investors. Now we have one investor that spends a lot of time, but they're completely on our side, giving us evaluations on an ongoing basis. We have to make sure we're following the way they run business because when we do that, we're both going to win.

It's a good point. I think what they saw is an opportunity in what I call the best market in the world, which is the US market. From their perspective, demographically, they're not having increases in population, which constrains GDP growth. So they were looking for other opportunities to grow, and the United States was a great opportunity. When we ran the process, they started looking at the business. They saw our footprint, the acumen of our commercial teams, the acumen of our workers. They liked it. They liked not just what was at Big River, but also what was at the integrated mill. This re-industrialization is something I haven't talked with them a lot about, but more importantly, it was the footprint we had and the connections we had with customers, suppliers – the full value chain – that attracted them. We have talented workers in place. They don't have to do a greenfield site and start pulling people together. They have leadership that knows what's going on, cascaded through the whole company, and workers that know what their jobs are. What we've been missing is the investments. Now that we have the investments and the technology they bring, the expertise they bring, this is a great marriage. Our best days are clearly ahead. We used to just say we're going to get better, and we were getting better. Now we say we're getting better and bigger. That growth formula is there. It's going to be a lot of work, but the payoff never ends. We're always going to be investing, but this big input of investment and transfer of technology is unprecedented in the steel industry in the United States.

I think they'll look at us as the true leader in the USA. Let's face it, we're not the leader in the USA right now. We have Nucor and Steel Dynamics. They're the ones to beat. They're extraordinarily well-run companies with lots of cash flow and lots of investment. They're the ones we have to compete with. With these investments, I'd like to think we'd be the best steel maker in the United States with world-leading capabilities because of what we're doing right here, right now, with the workers we have and the more workers that will grow with more job creation.

Hey, thanks.