Minutes from May 2, 2017 Open Board Meeting-Gerdau Steel

Tuesday, May 2, 2017

 Open Board of Directors Meeting

 San Bernardino Community College District
114 S. Del Rosa Drive
San Bernardino, CA 92408



Present: Deborah Barmack, Ken Coate, Kevin Dyerly, Louis Goodwin, Mark Kaenel, Lowell King, Temetry Lindsey, John Mirau, Dan Murphy, Roman Nava, Michael Rivera, Khalil Saba, Kristine Scott, Paul Shimoff and Ray Wolfe.

Guests: Adam Eventov, Lee Gardner, Robert Kniss, Sheriff McMahon and Todd Warden.

Announcements: 1) A reminder to Inland Action Committees that their issue papers for our state advocacy trip are now due.  Please forward them to the Inland Action staff as soon as possible.  Next week the issues will be discussed and priorities will be set by the membership present.

M/S/P: Minutes from April 25, 2017.

Ken Coate introduced Mark Olson, Vice President/General Manager of Gerdau Steel in Rancho Cucamonga.


Gerdau is a 116-year-old company founded in Brazil. Today Gerdau has operations in 14 countries around the world staffed by 45,000 employees.  In North America alone, they operate 16 mills and 130 related locations. One of these mills is their facility in Rancho Cucamonga.


In California, Gerdau employs more than 1,100 people at six locations (Rancho Cucamonga, San Bernardino, Santa Fe Springs, San Diego, Napa and Fairfield). The production of steel begins at their Rancho Cucamonga facility where they have 260 employees.  The steel mill and fabrication facility in San Bernardino employs an additional 100 employees.


The Rancho Cucamonga mill was acquired by Gerdau in Oct 2010 and today is the only Steel Mill that still melts steel in California. Gerdau is the largest supplier of seismic rebar for the California market.  They manufacture reinforcing steel, fabricate it for major construction projects, and install the rebar into those projects. Their rebar is critical for construction projects in California, and they’re the largest supplier of recycled seismic rebar in the US.  Their product reinforces new structures and makes them earthquake-resistant.


Gerdau is proud to be California’s largest recycler by recycling more than 440,000 tons of scrap metal each year. Approximately 95% of this scrap metal comes from within 75 miles of the facility (much from scraped cars and trucks).  Without the Rancho Cucamonga facility, the scrap steel would most likely be shipped to Asia (where they allow much higher emission’s) for refinement and processing, and then transported back again to be used in local building.  Gerdau’s recycling reduces the region’s carbon footprint by using recyclable materials to produce and deliver rebar to projects throughout California.


The challenges they face here in California are many. Tension initially brought on by a lack of accurate reporting of emissions to SCAQMD by the predecessor company, Gerdau has diligently worked to develop a good working relationship with SCAQMD and now has built trust and gained credibility.  To comply with California, the most stringent regulatory environment in nation, Gerdau looked to other countries like Sweden, Spain and Italy for clean steel manufacturing.  Gerdau is setting the industry standard for clean operations. They have a $23M investment here in California for a state-of-the-art pollution control system that will allow them to mitigate their impact on the community.  This investment positions them to be the cleanest steel manufacturing facility in North America.  Other serious challenges for steel competitiveness in California are the regulatory uncertainties and the extremely high energy and tax rates.  Many competitors are located in neighboring states and have a competitive advantage as they have substantially lower costs and regulation.  Arizona for example pays 50% or less for energy than California.


Gerdau has built solid relationships with their surrounding cities, community leaders and legislative leaders. Their West Coast commercial team includes an inside and external sales team that is building the Gerdau brand by advertising in Sacramento and Southern California in addition to sponsoring events throughout the state.  They are working to educate state and local procurement agencies such as SBCTA, RCTC, OCTA, SCAG, Metrolink and High Speed Rail Authority.


Gerdau sees themselves as full partners in the effort to cut carbon emissions. The “Buy Clean California” legislation (AB 262) authored by Assembly members Rob Bonta, D-Oakland, and Susan Eggman, D-Stockton, and co-authored by Assemblyman Marc Steinorth, R-Rancho Cucamonga would further advance that partnership. Gerdau has created a broad coalition of support which includes environmental groups, labor, and manufacturing to participate in legislative solutions to level the playing field with competitors.  Infrastructure spending – from road building to courthouse construction – typically includes the cost of large quantities of steel, cement, asphalt and other materials. Manufacturers who operate the most polluting plants, and charge less for their products, have an advantage over manufacturers who have invested in reducing their pollution.  AB 262 Buy Clean California calls for state officials to spend taxpayer dollars on infrastructure supplies that are consistent with the States globally recognized climate change goals.  The Buy Clean approach allows California to help clean businesses and industries maintain their position as strong, global leaders on climate action and create additional motivation for suppliers to reduce their climate pollution.


AB 262 passed both the Accountability and Natural Resources Committees and is headed to Appropriations.


A Q & A period followed.


Meeting adjourned at 8:31 a.m.