The modernization of equipment, a strong labor force and an interest in the environment were required to allow Geneva Steel to compete within the global market.
Joe Cannon, chief executive officer of the Utah County steel mill, told students and business professionals at Utah State University recently that he was a novice in the steel business when he bought the floundering plant.Cannon played a leading role in purchasing Geneva Steel from USX Corporation in 1987. He spoke of the history and revolution of the mill following the largest steel strike in history in 1986.
"When we bought the mill, I didn't know a thing about mining steel," Cannon said. "I didn't know much about business, either. The truth is, we got involved because we were worried about the economic impact on the state."
Cannon said Geneva Steel generates one percent of personal income in Utah, more than any other business.
In 1987, the steel mill had the same equipment it did when it was created during World War II. U.S. Steel estimated it would cost $1 billion to modernize the mill.
"We discovered we hadn't bought a steel mill, but we had bought the rights to build a steel mill," he said.
But in the process of modernization, Geneva Steel has grown tremendously and is competing in a $50-million market. This was accomplished at one-third of U.S. Steel's estimated cost, Cannon added.
How did the steel company effect its turnaround? Through a necessity to keep it alive and through a commitment by its employees, according to Cannon.
"The plant was primitive, but it had important assets," he said. One asset was an unusual work force that averaged one year of college education.
Using an idea that originated with General Electric, Geneva Steel introduced employee meetings to allow workers to discuss company problems. At the basic level employees try to resolve problems together, he said. What is not resolved then goes to the next level, and problems are discussed with the plant's management.
Any problems not resolved are discussed at a plantwide meeting with top management officials.
He also said employees responded well to an incentive program he called a "performance dividend plan." Top management established a goal to increase steel production from 1.3 million tons to 2.5 million tons per year. Specific goals are still posted daily, and employees receive a percentage-based pay increase according to their performance.
The plan has been well-received, Cannon told the audience.
"But to do it, everybody has to work together," he said. "We also facilitated communication throughout the entire plant by installing a fiber-optic network. If you're going to make 2.5 million tons of steel per year, you have to have communication."
Another vital asset Geneva Steel has acquired through its modernization is equipment that allows the mill to produce steel in a 24-hour period.
"It's the only one of its kind in the world," Cannon said.