"Improvements just didn't happen during my 14 years with U.S. Steel," says Raymond Fowler, one of the first rehired. "You knew that you could do things better, by combining two jobs, or by bringing in a machine, but you also knew it wouldn't be done. We've introduced major efficiencies." Fowler, whose father had headed a steel union local for more than 15 years, is unfazed by McDonald's non-union status. "In many ways," Fowler observes, "the union had become like the work rules -- self-serving and political."
Nonunion labor represents a significant saving for the company. While USWA steelworkers average around $23 an hour in salary and benefits, Houck's crew earns only about $8.50 an hour in direct wages, with fringes adding less than $3 more. And while union contracts called for 13-week vacations every fifth year, 4 weeks is the most a McDonald worker will enjoy. On the other side, however, Houck has instituted a profit-sharing plan, and has attempted to make his employees a part of what is happening. In the plant's early days he presided over beer-and-bullshit get-togethers at Austin's Lounge, today, he posts reports on every sales call he makes. When customers visit the plant, they are introduced to mill hands. "If I know the client has been having a problem with packaging, I'll leave him to rap with someone in the warehouse. Now my guy feels important. He knows that he's not just wrapping this stuff for the hell of it."
"We're building better product," says Fowler, "and the attitude is great -- it's a feeling of, yeah, we can do it."
There is apparently little his employees won't do for Houck. For 19 months, they worked a night shift to take advantage of lower electric rates; the $17,000-a-month savings made the difference, during the company's first year of operation, between a loss and a marginal profit. They are also ready to improvise or make do with what is available to help pull McDonald through. "Now, when they tell me they need $10,000 for a new widget, I tell them, 'Ah, come on, can't you do it for $5,000? Go beg, borrow, or steal an old part,' " says Houck.,And sometimes, under the cover of darkness, they do, slipping under the fence that technically separates their property from U.S. Steel's to scrounge a necessary part from an idle mill. "They get it done for $5,000," Houck says with a wink.
For its part, U.S. Steel has proven an understanding and supportive landlord. Possibly looking toward the day when it may lease or sell additional mills to Houck, it has itself done some bartering. "They had two diesel locomotives that they were going to scrap," says Houck. "1 told them, 'Let me have them. I'll use one to provide parts to rebuild the other. Then, when you need cars moved around, I'll do it for you.' " Now McDonald's Number 777, a handsome antique engine whose workaday gray is emblazoned with bright yellow, orange, and red stripes, sits in the warehouse; when he has a spare moment, Houck, long a model railroader, takes it out for a short spin. "It's one of the better perks," he admits.
The commitment and trust between Houck and his employees flow both ways. "I think Houck's a fair guy," says Paul Casey, who had put in 17 years as a bar shearman before U.S. Steel shut McDonald Works down. "I liked it before, but right now, there's a much closer feeling than there's ever been. We're all working for the same goals."
"It's changed," notes his co-worker, Josh Hooks, another recalled veteran. "Now what's best for the company is best for us, too."
When Houck walks the floor, the relationship between employer and employee shows; he gives them a thumbs-up sign of encouragement as he strides between stacks of cooling steel, and no one hesitates to stop him to ask about a pending order or some personal matter. One worker explains the problems he is having in financing a new car, and asks if the company can help. Not now, Houck explains, but he begins to mull the notion of a credit union.
The cooperation has paid off handsomely. Three years ago, McDonald Steel had no customers, no earnings, and, in the minds of many, no future. Today, Houck has managed to recover all of the 14" mill's 30 original customers, has started up the 8" mill, and, last fiscal year, shipped 33,000 tons of steel, earning profits of around $1 million on sales of $20 million. "That 5%," he observes, "is about as good as anybody ever gets in steel." With a lot of other mills operating at a loss, McDonald's margin looks even better by comparison. Houck has also invested in capital improvements -- the rebuilding of a furnace, a new IBM 36 computer for the office--and is now toying with the notion of opening more mills. He even has commissioned a study to determine the right time to buy the property from U.S. Steel. "My consultant thinks we ought to do it right now," he confides, his smile betraying both his pleasure and his disinclination to move so quickly. Big plans, like big steel, are best approached with caution in skinny-down times. "It may happen one-and-a-half years from now," he adds.
Beyond that year and a half? Houck leans back in his old U.S. Steel chair, and indulges what, for him, is a purely rhetorical question. "A full-blown minimill," he finally says. "An electric furnace and caster so that we could start from scrap and go to finished product." It is an expensive option, but one that would end his reliance on the seven outside steel suppliers he currently deals with. "It might be difficult to justify economically, but there's also a psychological significance, a certain romance about molten metal."
The skinny-down executive is, however, uncomfortable with grandiose possibilities. He keeps returning to the stark reality of the huge black-and-white photographs on the wall behind his desk, aerial views of two steel mills near Youngstown. They are his touchstones, his reminder of what is important and of what he hopes to achieve, and he points out detail after detail for his listener.
Two photographs: one of the Ohio Works -- which no longer exists -- and one of the McDonald Works -- which does.
