Minutes from West End Open Board Meeting-California Steel Industries: Business Challenges

Tuesday, September 25, 2018

Open Board of Directors Meeting
3200 Inland Empire Blvd., First Floor Media Room
Ontario, CA 91764 



Present:  Deborah Barmack, Peter Barmack, Carole Beswick, Adam Eventov, Louis Goodwin, Mark Kaenel, John Mirau, Roman Nava, Brian Reider, Tomas Rice, Dan Roberts, Kristine Scott, Paul Shimoff and David VanVoorhis.

Guests: Nick Grooters, Peggy Hayes, Arnold San Miguel and Lee Searing. 

Announcements:  1) An Executive Committee meeting will be held on Tuesday, October 9, 2018 at 4:00 p.m. to discuss the 2019 advocacy trips.  Committee members will be contacted by e-mail later today. 2) Members were reminded that the reception recognizing the Strategic Growth Council and introducing Dr. Louise Bedsworth, the new Executive Director, will be held on Wednesday, October 3, 2018, at the New York Grill in Ontario.  Your response to the invitation is requested.


Member Dennis Cota has been appointed to a judgeship and is no longer with the firm Cota Cole Huber.  The firm requests Dan Roberts serve as the “member” representative and Karen Feld serve as the “alternate” representative.
M/S/P: Dan Roberts will serve as the primary representative and Karen Feld will serve as the alternate for the law firm of Cole Huber.

M/S/P: Minutes from September 18, 2018.

David VanVoorhis introduced Kyle Schulty, Assistant to the President, Special Projects, California Steel Industries.

California Steel Industries (CSI) has been operating since 1984 and is located on the site of the former Kaiser Steel Co. in Fontana, CA.  They are the leading producer of flat rolled steel and electric resistance welding pipe in the western United States producing over 2 million tons of steel. Examples of their products include guard rails, steel siding, roof decking, fencing, grating and HVAC ducting and components.  This privately held company has over 200 construction-based customers and employs over 1,000 people for their 24/7 operation.  To date over $1B has been invested in their facilities to maintain, modernize and add operations.

CSI has advanced manufacturing jobs such as machining, metal fabrication/welding, electrical and mechanical craft and industrial maintenance.  To help address their need for trained personnel, CSI partnered with Chaffey College and helped created InTech.  CSI contributed $2M to building renovation for this on-site industrial technical learning center which has provided development of skills to over 2,500 participants since it began in February 2016.

Some environmental regulations such as Cap & Trade and SCAQMD regulations are specific to California and are challenging in a competitive global steel market.  The steel industry is energy intensive, and CSI is the only in-state producer of hot rolled steel sheet.  Improvements in processing and equipment have reduced 60% of their greenhouse gas emissions from 1990 levels, but the process still creates 75% of their greenhouse gas emissions.  As a result, they have extremely high cap & trade costs here in California which puts them at a disadvantage compared to any other U.S. steel company.  CSI is one of the country’s most efficient steel companies, and they continue to invest in better equipment and techniques to reduce their environmental footprint.

The U.S. relies heavily on imported steel from exporters like Canada, Brazil, South Korea, Mexico, Russia, Turkey and Japan.  Eleventh-ranked China accounts for about two to three percent of U.S. steel imports.

President Trump has invoked Section 232 of the Trade Expansion Act. (passed in 1962).  The seldom-used measure allows the President to impose tariffs if he deems it necessary for national security.  The Secretary of Commerce is required to and completed the investigative findings in February recommending tariffs and/or quotas of imported steel to adjust the level of imports to allow the U. S. steel industry to achieve 80% operating rate.  CSI purchases of slab steel from Mexico and Japan are now subject to the 25% tariff.  However, a product exclusion can be granted if the article is not produced in the U.S. in a sufficient and reasonably available amount of satisfactory quality or if there is a specific national security consideration warranting an exclusion.  CSI has filed over 1,350 forms, with four additional 10-page reports.  The Department of Commerce is currently taking about five months to issue decision (from date of filing).

A Q & A period followed.

Meeting adjourned 8:30 a.m.