Cleveland-Cliffs Inc. (CLF) Earnings Call Transcript & Summary

Good afternoon. Welcome to Cleveland-Cliffs Press Conference taking place at Half Moon Industrial Complex in Weirton, West Virginia. Earlier today, Cleveland-Cliffs announced that it will establish a new state-of-the-art distribution transformer production plant in Weirton, West Virginia, investing $150 million and creating 600 jobs for skilled steelworkers of USW Local 2911. Cleveland-Cliffs welcomes West Virginia Governor, Jim Justice. Thank you, Governor. Delegate, Pat McGeehan; State Treasurer, Riley Moore and numerous other elected officials and community leaders that are here with us today. Our invited speakers will talk about this exciting announcement and the positive impact the plant will have on Weirton community and the surrounding region. I am pleased to introduce our first speaker, Lourenco Goncalves, Cleveland-Cliffs' Chairman, President and Chief Executive Officer. Lourenco will share with you his vision for this new plant and the significance of Cleveland-Cliffs stepping up to address the acute shortage of distribution transformers that is hampering economic growth in the United States. I will now turn it over to Lourenco. Lourenco?

Good afternoon, everyone. It's a great pleasure to be here with all of you, with Governor, Justice, all elected officials that have been working so hard to get our great Weirton plant going again, and that's what we're doing today. We are not going to produce tinplate here anymore. The tinplate users, they preferred to go with imported tinplate believing that they are making a very smart choice. Now they're also accounting that we would continue to subsidize them and make them print money out of the back of the workers here in Weirton, No, not under my watch. So we shut down the plant, but we did not abandon the workforce and then because of the workforce, we started thinking how can we intelligently put that workforce back to work to do something that's not only meaningful for Weirton and for the great state of West Virginia, but also for the United States of America. Well, We had an opportunity right in front of our very eyes. And I had this idea when I was with Jamie and Aaron, Jamie Sychak is the President of the Union, the UAW at our plant in Butler, Pennsylvania, Jamie. And Aaron is our General Manager of Butler Pennsylvania, the guy that runs the show over there on behalf of Cleveland-Cliffs. And he also does the same in Zanesville, Ohio with Eric, he's the President of the Union over there. So we had the idea when we were there in an event with Secretary of Energy, Jennifer Granholm and the USW, the UAW and the IAM, not 1 union, but 3 unions over there, celebrating that we had saved that plant. We changed the standards back to the real standard for transformers. And then we will have a runway to produce transformers in the United States. But it will take more plants to produce more transformers. We are short on transformers in this country right now. Look at Texas, one single storm and people are out of electricity. Now give a short fast forward when AI, Artificial Intelligence starts to take off is -- it's in the very early stages, but it's coming and it's coming soon. So when AI takes off, AI is not just -- it is a marvelous thing, but it's not just that, AI will increase the consumption of electricity in this country and worldwide, everywhere in the world, exponentially. So if you are short transformers, now we're going to be short transformers for a long, long, long time just because of AI. So this plant will be a good-sized plant. We're going to employ 600 workers, 600 USW represented workers right here from Weirton, West Virginia. This plant would not be possible without my partnership with the USW here in West Virginia, particularly with one man, a man that I have a lot of respect, a lot of friendship, I consider him part of my family. These guy is, Mark Glyptis. Unfortunately, Mark is battling a few things health wise, but like I told Mark yesterday, get yourself fixed fast because we need you right there at Weirton, with the guys, the boys and girls, the brothers and sisters, the USW represented workforce. This is be our first plant, not our last one. So be prepared for more. And with that, I will pass the microphone to my dear friend, Governor, Jim Justice of the Great State of West Virginia.

Okay. Now I want you to really listen okay. First of all, I've known this gentleman in a long time. And he is the real deal. Not only is he your President and CEO, but he absolutely has one thing that you just can't go out and get anywhere. He's got passion. He's got love and he's got caring for his employees. And we can say what we want, but really and truly, this tariff situation that absolutely just slammed the door, slammed the door on this incredible plant and 900 workers -- at the end of the day, you hate to say it, but too many American companies today just move on. That's all that there is to it. I can tell you the conversations that we've had together, and it was really genuinely, really bothering this man and bothering this man because he cares and he loves, That's all there is to it. Lourenco is a good man, and it's a good company. Now let's just think for a second. We celebrate today, you should be so enthusiastic as unflat believable. That's all there is to it. We've all worked together. And also we've pulled the road together, we've done exactly what we should do. And with unbelievable pride, the State of West Virginia is participating to the tune. We just got it approved, just got it through our EDA folks, just got it done, just -- and really and truly, I apologize for being late. But let me tell you what we did. We left the EDA meeting to go to the airport to fly to Wheeling, and to be here and not with plenty of time. And then they told us that the plane had some fuse or something like that and the plane can't fly. We've jumped in the car and started driving this way thinking that we'll have the plane, fly and pick us up somewhere along the way. And we drove 30 miles up I-77 or I-79 heading towards Clarksburg and then they called and said, we got the plane fixed, we turned around and went back to the plane and got on the plane and got here. So I am telling you, I'm telling you that for one reason, and that's just this. That's what Lourenco would have done. Absolutely, all the conversations that we've had together, all the knowledge that I have of Cleveland-Cliffs, all of the good stuff, the good stuff that we're talking about right here is why we're here. Now with all of that being said, let me just add one more thing, and that's just this. Not only are we going to celebrate having 600 workers here when we were absolutely devastated beyond belief. And not only are we going to celebrate the quality of their jobs, the manufacturing jobs and who knows where this will lead us that it could lead even to something bigger and better and on and on and on. And not only is all that happening in the Northern Panhandle in Weirton town and I've told this story a bunch of times, you just have to listen to it. But I can remember in 1962 watching the state tournament between Beckley and Weirton and Fritz Williams was playing at Weirton as a sophomore in some way, somehow Beckley came back for a 15-point deficit with 6 minutes and change to go into game and won the game. And then I can remember back in the semifinals, Weirton in 1964 were playing Beckley again because I was living in Beckley. I grew up in Beckley. Just a little kid that love basketball and loved our high school. With all that being said, in 1964, I'm at the basketball tournament and Beckley is playing Weirton, and Weirton is -- now Fritz Williams is a senior and it's 1964, and I can hear just like it was yesterday, the crowd chanting, we remember '62, you'll remember '64. And believe me be, they put it on Beckley, you think they didn't. But I tell you this, you have an incredible community, today is an incredible day, but I want to end with just 1 last thing. I said this at the EDA this morning. Forever, forever, I don't understand why in the nation, we don't have a national energy strategy, an energy program, we don't have anything. We just absolutely stumble all over ourselves and it's the very reason that I decided to run for the Senate. But all that aside, when President Trump was in office, I was right in his office, and I was telling him just this, "you're going to build transformers here that is going to help our electric grid beyond belief, you can't get transformers today." In all honesty, the backlog is years and we're all dependent upon the Chinas and whomever it may be. It's crazy. It's crazy in America. But really and truly your build-out and what you're going to do is not only great for Weirton and not only great for 600 people and all that business but it's unbelievable for this nation. Think about this just 1 second, and then I'll let you go. And that is just this is today as electricity expands and expands and expands and our need does, first and foremost, in my world, I think, wholeheartedly that we can't do without coal. And we can't do without natural gas. And for those people that believe we can, are crazy. They're completely crazy in my book. But with that being said, now just think about this just a second. What if -- there was multiple natural gas pipelines that we're crossing at a junction point somewhere. God forbid, there's a bridge coming from the Midwest and everything is transporting coal from the Midwest or in the West to the East Coast. We absolutely, and what I was talking to President Trump about 7 years ago, it was all about saving the Eastern coal fields because just think about this if we were to awake into this. We mine seams that are this high. In Wyoming, they're mining 80-foot seams with a dragline. And in Illinois, they're mining 20-foot seams, and we're trying to compete they couldn't find a way to move that coal from the west to us, but now they can do it, but just think that junction point I'm talking about. What if a bomb were placed on that junction point and it was the dead middle of the winter. What if the same day that there's a bomb placed on that bridge coming from the Midwest? What's going to happen if we have lost the Eastern coal fields. What's going to happen? And it parallels this through and through. You can't put coal in a truck in Wyoming and delivered to Florida Power & Light. You can't do that. But you can put coal in the truck in the Eastern coal fields in Kentucky and Virginia and West Virginia and take it to Duke Power and keep us going. Now with all that said, really, the bottom line to what I'm saying is just this. If Lourenco, the great people at Cliffs, they great unions, all the people that if we don't step up and step up right now, what happens, what happens to us in electricity issues, whether it be AI or whatever it may be. It's the same thing almost. You're depending on China. You're depending on people that could be mortal enemies to us. Absolutely, I commend you in every way, Lourenco and all of you. So at the end of the day, really celebrate today. Today, you're putting a stake in the sand for Weirton and these 600 folks and our unions and all the different things that you're doing, yay, yay, today, you're putting a stake in the sand for America. God bless each and every one of you. Thank you for having me.

Thank you, Governor. Thank you. All right. So we do have Mike Vitello, on behalf of the USW Local 2911. He's going to say some -- a few words come on up, Mike.

Good afternoon. I'm Mike Vitello here on behalf of President Local 2911, President, Mark Glyptis, who with regrets, is unable to attend today. I'm here to read Mark's formal remarks. Before I do that, I bring greetings and well wishes from our International Union President, Dave McCall, who could not be with us due to prior commitments. I am extremely thankful to my friend and partner, Lourenco Goncalves, for his opportunity to bring back workers to produce transformers here in Weirton. To Governor Justice, we are very appreciative not only of your support but the support of the state of West Virginia to help us make announcements possible today. To my friend state Treasurer, Riley Moore, I am very thankful for your support. To Delegate Pat McGeehan, a very special thanks for many years of friendship and support, without your efforts we would not be here today. The failure of our government to protect our ability to continue to produce tin in Weirton, resulted in the idling of Weirton plant and the loss is close to 1,000 good paying jobs with benefits. Cleveland-Cliffs and Lourenco never gave up on their workers, their family or the Weirton community. On behalf of myself, our workers and many retirees, I am very proud and thankful for our relationship with the United Steelworkers of America, Cleveland-Cliffs, especially Lourenco the state of West Virginia, our relationship helps this event possible today. I am excited for this new opportunity to produce much-needed transformers which are vital to our national economy and energy efficiency to our country. It is gratified that we are producing transformers made by America or made in America, American workers and in this very building here today. I am looking forward to the challenge to make this new venture successful. Our local union officers, along with Lourenco and Cleveland-Cliffs' management are strongly committed to cooperate in making this facility the most productive and efficient operation possible. United Steelworkers Local 2911 is thrilled to be a part of this announcement and welcome this plant to Weirton, where the steel workers are best in the business. We are thankful to all those who stood up for us during this time, including the senators who could not be here today, Senator Manchin, Senator Capito, Senator Brown from Ohio. And as a result of their assistance, good paying steelworker jobs will be back where they belong in the Ohio Valley. In closing, in my 50 plus years of service, which includes over 30 years as local president, I have never encountered a more honorable, truthful and passionate partner than Lourenco Goncalves, I wish I could be here today to express my gratitude to him and all he has done. U.S. Senator, Joe Manchin and Senator Shelley Capito of West Virginia, Senator Sherrod Brown of Ohio were not able to attend today. However, each of the senators have provided statements of their support for today's announcement. Our next 3 speakers are from each of the Senators staff, and they will be sharing statements behalf of Manchin, Capito and Brown. I would like to invite to the podium Andrew Robinson from U.S. Senator, Joe Manchin staff.

Good afternoon, and thank you for allowing me to be here with you today. So Senator Manchin regrets he couldn't be here with us to celebrate this monumental announcement. But with the senator's regrets, I get the benefit and the honor to be here to speak to you on behalf of our United States Senator, Joe Manchin. First, I'd like to express thank yous to all those involved on behalf of Senator Manchin, of course, Mike, a great introduction there, and we hate that Mark Glyptis couldn't be here with us today to celebrate, but I know he's here with us, and he's watching online. I'm sure he's cheering us all on from getting recuperator and getting back to work. First off, Lourenco, we can't thank you enough for your dedicated and constant fight to keep good paying jobs right here in Weirton, West Virginia. We have West Virginia Treasurer, Riley Moore. Thank you for your steadfast commitment and your work to put these jobs back here in Weirton. The United Steelworkers of course, thank every single one of you here with us today. And in the state of West Virginia and Delegate Pat McGeehan, this is one of those good examples of when all of government works together with our partners in labor, our partners in the corporate side. It all comes together as we have done here today. You know Senator Manchin, will never stop fighting to make a fair workplace and marketplace for West Virginians because he knows when West Virginians are giving a fair opportunity, they will always win because they're the hardest working people in the country. Now as we work through the tin mill issues and those kind of things, the Senator will constantly keep fighting. But we're here today for this monumental announcement that we get to be here because we -- Senator Brown, Senator Manchin were here and made a fighting effort to make sure that these -- this type of transformer was not stopped from being in the marketplace and making sure opportunities for these transformers are available for years to come. And looking forward, Senator Manchin, will be here to see you all flourish, see this company flourish, see this plant flourish. And as Mike said, one of the most efficient, clean and fast operating plants in the world. So with that, I thank you on behalf of Senator Manchin, thank all of you for your hard work today. And with that, I'll introduce my colleague, Jessicah Cross from Senator Capito's office.

Hi. Good afternoon. Thank you so much for having us. Unfortunately, the Senator couldn't be here to join you today, but I have a short greeting on her behalf. Greetings from United States Senator, Shelley Moore Capito. After some challenging times, today is a very encouraging day in Weirton. I am thrilled that progress is being made to preserve and expand the most talented workforce in the nation. This repurposing will help the families and region impact by the recent closure and help us transform. The potential for hundreds of jobs over time is certainly worth celebrating. I applaud the leadership of Governor Justice and State and municipal officials along with Cleveland-Cliffs, who I have stood with on behalf of the workers and families of Weirton. It is an honor to serve all of you in the United States Senate. Sincerely, Shelley Moore Capito, United States Senator. I'd now like to welcome Kaleb Knowlton, sorry, from Senator Brown's office.

Hi, everyone. My name is Kaleb Knowlton. I'm the Appalachian Regional Representative for U.S. Senator Sherrod Brown. It's great to be here with you all today. Unfortunately, the senator isn't able to be here, but I do have a letter to share with you all on his behalf. Dear friends, congratulations as you celebrate the announcement of a new electrical transformer manufacturing facility in Weirton, West Virginia. This is a great day for the Ohio Valley. When I toured the Weirton tin mill back in September of last year with Senator Manchin, I saw firsthand just how talented and dedicated these workers are. They could compete with anyone if given a fair shot. We repeatedly made clear to the International Trade Commission that they needed to enforce our trade laws and give the steel workers here a fair shake. Unfortunately, they did not. Steel production stopped and 900 hard-working men and women of the United Steelworkers lost their jobs. The plant should never have been idled. The International Trade Commission and its weak trade enforcement failed the workers here and the community on both sides of the river. Thankfully, the story doesn't end there. All year, we've worked with Cliffs' leadership, the USW and with this community to imagine a new future for this facility. United States Department of Energy was at the same time, trying to enact a misguided electrical transformer rule that threatens steelworker jobs and could have idled 2 other Cliffs facilities, one in Zanesville, Ohio and one in Butler, Pennsylvania where they produce electrical steel. I took on to Biden administration to fix that flawed electrical transformer regulation that would have devastated U.S. electrical steel manufacturers. We won and because we won we're able to stand here today alongside the United Steelworkers and Cleveland-Cliffs to announce that 600 union steelworker jobs are coming back to the Ohio Valley to build electrical transformers out of union-made steel. Thank you to Cleveland-Cliffs for your investments in this project and for your commitment to these workers and the community. And thank you to the members of United Steelworkers for your grit, your resilience and your solidarity fighting to keep the rich history of steelmaking woven into the fabric of the Ohio Valley and the present and for the future. I'll never stop fighting for all of you for the dignity of work and against bad trade and energy policies that sell out our workers. Congratulations again. I can't wait to see this facility in action and workers back on the job. Sincerely, Sherrod Brown, United States Senator. Thank you. I would now like to introduce Riley Moore, the State Treasurer of West Virginia.