Tuesday, September 22, 2015

Two Careers in Rolling Steel

Tapping a Blast Furnace, image from ArcelorMittal

Before he came to Blue City Cycles to work as a bike mechanic, Mike Okelman got 2 engineering degrees and worked at a steel mill in East Chicago –  home of the largest blast furnace in the Western Hemisphere in fact – where he made 4 times as much money as he ‘s making now.

Engineering is the kind of profession his parents wanted for him, and steel mills offer the kind of secure, well-paid jobs that have become hard to find.  But after 4 years in the mills, Mike says the work he does at the bike shop is more satisfying, and it also supports a more sustainable lifestyle.

Mike always knew he wanted to do something technical.  He had an idealistic admiration for American manufacturing and an abiding respect for the labor unions that made industry a source of good jobs. His parents wanted him to pursue a professional career, so he enrolled at University of Illinois Urbana Champaign to study mechanical engineering in 2002, and worked straight through his bachelors and his masters by 2008.

Back in 2005, he toyed with the idea of trying out an internship in the auto industry. “I was imagining working on energy efficiency and fuel cells,” he says, but GM’s presentation that year was all about the Hummer.  Instead, he found himself at a job fair talking to 2 guys from International Steel Group.  They had a table top model of a steel mill they’d probably last used to recruit new talent 25 years ago. “No one was talking to them,” Mike recalls.

Ladle of Steel
photo from NW Indiana Steel Heritage Museum photo gallery

2005 was an excellent year for steel makers worldwide, as economies boomed the mills couldn’t pour metal fast enough.  But American steel makers had been in decline for decades.  In 1967, the industry represented almost 5% of US manufacturing output; by 2001, it represented less than 1%, and the labor needs of the steelmaking process had dropped by a factor of 1,000.  Recruitment hadn’t been a priority for most mills in recent years, as evinced by that dusty table top model.  Plants that hadn’t shut down were still rearranging themselves to find a comfortable position.

International Steel Group had just purchased Acme Steel, a venerable Chicago company whose fortunes more or less tracked the local industry – starting in 1880, when Acme first opened as a maker of steel clasps and barbed staples. In the 19th Century, dozens of small makers of steel goods were embedded in Chicago neighborhoods.

Over decades they tended to combine into big vertically integrated operations that could smelt iron from ore, make coke from coal, turn iron into steel, cast it into blocks and roll it into finished materials. They also tended to precipitate on Chicago’s southern edge, by Calumet, where raw materials could be brought by the barge-full to their doorstep, and from where the beams, rails and pipe they produced could be shipped to all points of the country, if they weren’t absorbed into the construction of Chicago itself.

Acme opened a plant in Riverdale in 1918 as the Acme Steel Furnace Company.  Acme Steel employed 1,400 workers during the Great Depression, and by the 1950s ranked among the top 300 largest manufacturing companies in the nation. In 1964, it merged with Interlake Steel, itself a combination of Federal Furnace and the By Products Coke Company – they were located just across the Calumet River from Acme’s plant.  By the 1970s, Interlake Steel Group employed 3,500 in the Chicago area and posted annual sales of nearly $700 million, even though the American steel industry had already started its uneven descent.

Smoke Rising from the Indiana Harbor Works Plant
image from NW Indiana Steel Heritage Museum photo gallery

Steel making is dirty, dangerous and energy intensive, so maybe it’s natural that the industry should move to emerging economies less concerned with protecting their labor force and their environment.  When the steel industry first got started in the US, native born workers wouldn’t take those jobs, but the steel mills could staff themselves with immigrant labor.  The immigrants worked 12 hour days until late in the 1920s, and the unions didn’t get a foothold in the mills for another 10 years.

Decades later, when foreign competition gained ground with lower labor costs and government subsidies, the Americans still had the advantage of massive capacity in plants already built, but their calculations about whether to maintain or modernize them were getting more complex.

The big integrated mills weren’t just expensive to build, they were hugely expensive to operate.  Reheating a blast furnace after it’s cooled down costs a lot, both in energy and in stress on the equipment, so the blast furnaces would run continuously for years at a time.  Every 15 years or so they’d need to be overhauled, their insides gutted and relined with new refractory brick.  When the No. 7 furnace in East Chicago was overhauled in 2014 the operation took all summer and cost $70 million.

By the 1980s, more steel makers faced with maintaining old equipment were opting to reconfigure as “minimills.” They’d skip the costly process of reducing raw iron in the blast furnace, and focus on the latter stages of processing steel.  A minimill might have an electric arc furnace for melting steel scrap, another furnace for finessing the alloy’s chemical balance, and a continuous caster for extruding semi-finished goods.  To be cost effective, integrated mills need to put out at least 2 million tons of steel a year.  A minimill might put out 200 to 400 thousand tons a year, and the electric furnace could be started and stopped to meet changes in the marketplace in something closer to real time.

Relining Acme Steel's Former Blast Furnace

Acme Steel spun off from Interlake in 1986, unhitching itself from its blast furnace and the coke ovens on the other side of the Calumet.  By the early 1990s, it employed 1,200 workers, about the same number the old Acme Furnace employed at its Riverdale plant.  It was still using oxygen furnaces from the 1950s, but in the 1990s they invested in a continuous caster – a major modernization that would allow them to skip the intermediate step of casting molten metal into ingots first, before rolling it into sheets, bars or rods in a separate process.  The continuous caster extrudes metal through a track of rollers into long, semi-finished products.  Acme’s new caster was employed rolling out spools of pipe.

They never quite recovered the investment. Mike says it helped put the old Acme Steel out of business.  By 2001 they were in bankruptcy protection and finishing a phased shut down.  The next year, the shuttered plant was acquired by investors headed up by WL Ross.  Ross got his start as a bankruptcy adviser, he says he helped clean up the mess left by Mike Milken’s junk bond buyouts in the 1980s.

By the 2000s, he wanted to intervene more directly to turn troubled industries around. And there was clearly still money to be made in steel.  Competition is global and margins are slim, but world consumption was exploding.  The US was enjoying its housing boom and a new heyday for really big cars.  Emerging economies were racing toward the middle class, pushing up prices for commodities of all kinds, from metal to meat.

Ross’ investment fund first created International Steel Group to reorganize Pennsylvania Steel.  In 2002, ISG Riverdale reopened as a minimill employing 250 workers.  In 2005 the company merged with Ispat Inland Steel Company in East Chicago, and LMV, a holding company controlled by an Indian steel magnate, to form Mittal Steel USA.

Blast Furnaces of the old Acme Steel

That was also the year Mike took an internship at the ISG Riverdale plant.  He says it was different from a big, union shop. Which is not to say the workers at Riverside weren’t unionized.  They were a rough around the edges, but their roughness mainly expressed itself as hijinks.

They used to call him Monica (you know, because he was the intern); they once glued a little crown cut from a styrofoam coffee cup to the top of his helmet and called him to the shop floor to see how long before he figured out why everyone was chuckling.  But then when he broke his foot in an accident involving a radio flier wagon and a flight of stairs (not at work) the guys in the machine shop made him a little stick figure model to commemorate the incident.

Mike says the Riverside plant itself was almost quaint.  The carts and moveable equipment all still said “Acme” on them.  They didn’t melt their own iron anymore, it trundled over from Indiana in torpedo shaped rail cars, the big vessels of molten metal passing through residential neighborhoods, apparently without incident.  If it were to harden en route they’d never extract the iron from the car.

They made it into high alloy steel in oxygen furnaces that date back to the 1950s.  The whole room was coated in thick coat of kish – carbon particles exhaled as graphite dust by the steel as it's chemistry is refined.  Mike says it glitters in the air, it rains over everything, settling as a thick gray smudge.  The continuous caster was newer of course.  They used it to cast high alloy steel into spools of small pipe that would be used for making things like knives and golf clubs.

After graduation, when he took an engineering job at the former Inland Steel mill in East Chicago, their continuous caster would be turning out spools of pipe for oil pipelines and sheet metal for the auto industry -- materials for big industry and massive infrastructure projects.  A 3,100 acre integrated mill, the East Chicago plant, now known as ArcelorMittal Indiana Harbor, is the largest plant in North America.  It employs 4,900 workers and puts out 9.5 million tons of metal a year.

Collectively, America’s big integrated mills still produce almost 90 million tons of steel annually, and have remained attractive acquisitions, even if no one is building new blast furnaces in the States anymore.  Inland Steel was acquired by ISPAT, another company controlled by the Mittal family, in 1998.  Ispat Inland became part of Mittal Steel USA in 2005.  Then, in 2007, Mittal Steel and Arcelor, the 2 biggest steel companies in the world, merged into one.

Indiana Harbor Ship Canal
image from NW Indiana Steel Heritage Museum Photo Gallery

When Mike came to work at the Indiana Harbor plant in the summer of 2008, world steel was still booming and the ArcelorMittal was on a buzz, calling meetings at their Indiana plant to announce all the great new benefits they’d be extending.  A few months later big banks were collapsing and all those new benefits were quietly dropped.

The steel industry has always cycled between boom years and catastrophe – by 2010, the industry was cautiously recovering, by 2013 it was declaring a rebound.  Back in 1999, the Chicago Tribune ran a feature on the steel industry that profiled Inland’s famous No. 7 furnace (built in 1980, 10 years into American steel’s decline) and the trends that had gone on to close two-thirds of the nation’s blast furnaces in the 20 year since it was built.

Workers were boasting to the reporter about the hellish working conditions, and about their deep attachment to their work, an attachment the reporter attributed to “the lore of the furnaces, and the psychological rush of harnessing raw – and potentially deadly – power to create something.”

The reporter observed that the process of steelmaking is basically unchanged from what it was a century ago, when Inland first opened the mill.  But engineers are still employed refining the process, partly because molten metal doesn’t readily submit to controlled study. Before computers, Mike says engineers would use water models to project how it would behave, because water has the same “kinematic viscosity,” it pours the same way.  Now they use computer modeling to study fluid flow, heat transfer, factors that might cause molds to break, or cause defects in the steel.  They’d test the latest equipment being pitched by vendors.

Steel mills use water applied with a system of nozzles for cooling.  One of Mike’s projects at the East Chicago plant was to investigate a new cooling system.  For a year, they took measurements, studied blue prints, consulted with nozzle makers and other engineers, and concluded the new system would have definite advantages – it was more flexible and could reach parts of the process that were particularly hard to access.  But in the end it was shelved as too expensive to implement.

The global financial meltdown did not help.  The Indiana Harbor Plant tightened its belt. Workers who could retire did so.  The company reassigned engineers, including Mike, to work as supervisors on the floor. That was technically a step down, though Mike says he liked the work more.  He hadn’t been drawn into the field by the promise of computer modeling. “I’m very hands on.  I want to build things…I want to be part of the process.”

On the floor there was lots of moving equipment and parts were always breaking, there were literal 
fires to put out.  Between castings, the supervisors and their crews would go over every part with a checklist, performing audits and writing maintenance reports.  The supervisor takes attendance, makes sure everyone’s appropriately deployed – and then inspects the quality of the steel as it rolls out from the of the caster.

Steel moving through a continuous caster
image from ArcelorMittal

The molten metal starts to cool as it passes through the casting machine, it forms a hardened skin, or sleeve, that allows it to move smoothly over a system of rollers that are working it into shape as it passes over them.  If the metal cools too fast or too slowly, it might break out of the sleeve and create big problems.  Or if a roller gets stuck, or mucked up with pieces of debris, it’ll leave tell tale imprints in the finished steel.

A ladle of molten metal can be worth a million dollars.  Mike says you’re taking chemical samples throughout the process to make sure the composition of the metal is right – if it’s not, you can sometimes fix it, but steel can also be “poisoned” by an excess of certain ingredients, like copper for instance.  And once it’s poured, if it doesn’t react the way it’s supposed to in the mold, it could spill over, or explode – like a lethal home baking project.

So the work was interesting, but the atmosphere was tense.  And that rash of retirements only widened an experience gap created by decades of industry consolidation. The floor was manned by a lot of guys with 30 or 40 years of experience, and a few new guys with 1 or 2 years.  It wasn’t easy to be a 27 year old, supervising salty workers in their 50s and 60s.  And there was nobody with 10 to 15 years who could remember how they were trained.  The old guys were often impatient to stop and answer questions, or to show the new guys what they knew.

He recalls there were a lot of strong egos, a lot of communication accomplished by in your face shouting matches – a method encouraged by the physical intensity of the mill, which is basically a huge open air warehouse.  It’s freezing in winter, or sweltering when they’re pouring steel.

“You can easily kill yourself.  You’re not always sure what you should or shouldn’t do,” Mike recalls.  There’s molten metal, poisonous gases and explosive steam.  “Mistakes are either life threatening or they cost a lot of money.”

There were several guys who died while he was at East Chicago plant.  One guy got crushed by a leg of a gantry crane; another was crushed in a truck-rail collision.  One of the supervisors was killed by a sudden steam explosion; a senior supervisor he knew succumbed abruptly to mesothelioma -- he woke up one morning and he couldn’t breathe, they rushed him to the hospital and he was dead before afternoon.

The mills needed to be staffed around the clock, and they were short staffed, so everyone was logging in long hours. The long hours meant that Mike was making good money, and also that he had no outside life, so he wasn’t spending any of it. He paid off all his student loans, and then he started socking as much as he could in retirement account. And then, after 4 years, he had enough.

Inside the Shed
image from NW Indiana Steel Heritage photo gallery
“I got to the point I realized it was important to me to respect and like the people I work with,” which was not the overriding atmosphere at the mill.

Now, he jokes that he uses more of the skills he’d hoped to use as an engineer working at the bike shop.  It’s certainly a hands-on job – with a lot less housekeeping and filing of reports.  The mechanics each have an area of unofficial specialty based on their favorite kind of bikes.  Owen Lloyd, one of the shop's owners, gets any English tourers or racers that come in the door.  “Owen’s an English three speed kind of guy,” Mike’s a Japanese road bike kind of guy himself.

Even customer service never approaches the stress of the mill.  A lot of Blue City Cycles’ customers are in the service industry, they’ll do the mechanics little favors, like bringing donuts to the shop.

Some customers won’t bring their bikes in for service until they’re completely unrideable, they make for entertaining stories -- like the guy who came in with a flat that he’d kept riding even as the inner tube was forced out of the tire and wrapped around the rear gears, he rode it until the wheel wouldn’t turn anymore.

Then there’s the customer who had her bike in for brake adjustments a few times, and then came back one day to buy the tools and cables to do the repair herself.  “We love that,” Mike says “We were like give us a call if you have any trouble…”

Feel good stories aside, you’d expect the most significant drawback to Mike’s career change would be the effect on his financial well being .  His earnings have been greatly reduced.  Probably part of the reason he can swing it is because he’s not raising kids right now.

But the bike shop also helps sustain him in indirect ways. Because it effectively ties all of them in with a community -- of customers, and of owners and employees of the neighboring businesses .  They’re embedded into the neighborhood; it’s quality of life benefit that spills over in immeasurable, but material ways.

The clearest example is Mike’s apartment.  It’s just few blocks from the shop; he pays a very reasonable rent.  He leases it from the girlfriend of the owner of a business across the street.  It’s an apartment that’s been in her family for many years, so she probably doesn’t have to bring in big rents, she rents the other apartment to one of her boyfriend’s employees.

Trying to live on a bike mechanic’s wages would be very different in Logan Square, where DNAInfo just reported a developer’s plans to build 500 square foot “micro apartments” with rents starting at $1,200 a month.

Logan Square renters are paying a lot for their neighborhood’s amenities – it is better stocked with hip restaurants, boutiques and bars -- and for the street vibe that comes with them.  Bridgeport has a street vibe too.  It’s not based on cool-factor or cache, it’s the vibe you get from running into 5 people you know between the coffee shop and the drug store, and Mike thrives on that.

He lived in Humboldt Park near Logan Square before he worked at Blue City Cycles, he says it felt more transient, people live in an apartment for a few years and then they’re gone.  There were plenty of neat restaurants and neat little bars.  “I’m the target demographic for a lot of that,” he says but he thinks there’s something a little artificial about them, like they’re decorated new to imitate the kind of quirky, run-down color you find at a place like Bernice’s. “Why not just go to Bernice’s?” The beer costs half of much.  And you might swap some stories with Mike Okelman there.