The Wall Street Journal - 02.10.2019

THE WALL STREET JOURNAL. ** Wednesday, October 2, 2019 |B3

steel from melting iron ore in

a coal-fired blast furnace, is

one of the highest-cost steel

producers in the U.S. Execu-

tives are attempting to lower

production costs with invest-

ments in a new rolling line at

its Mon Valley Works near

Pittsburgh and the construc-

tion of an electric furnace at

its mill in Fairfield, Ala.

“Big River helps us get

where we’re going faster,” U.S.

Steel Chief Executive David

Burritt said Tuesday on a con-

ference call.

Big River, backed by Koch

Minerals LLC, makes high-

strength, lightweight sheet

steel for the automotive indus-

try, a market that U.S. Steel

has invested in heavily to

counter a trend toward using

aluminum in auto bodies.

The integration of Big River

would pose a significant chal-

lenge for executives at U.S.

Steel, which has struggled with

acquisitions made over the

past 15 years. The Pittsburgh-

based company has a union-

ized workforce and reputation

for a bulky management struc-

ture, whereas Big River isn’t

unionized and is regarded as

having a nimble management

team.

Mr. Burritt said in an inter-

view that Big River’s manage-

ment team will remain in

place. He said U.S. Steel’s large

presence in the steel industry

will help Big River’s business

development in the coming

years as U.S. Steel moves to-

ward full ownership.

Big River began operating

just as the U.S. steel market

began rebounding. Tariffs im-

posed on imported steel in

March 2018 drove prices

higher, prompting domestic

steel producers to embark on

plant expansions slated to add

more than 10 million tons of

flat-rolled steel to the domes-

tic market.

Prices have fallen sharply in

the past year, though, as man-

ufacturers’ demand for steel

waned, making it more diffi-

cult for U.S. Steel to make a

profit with its high-cost struc-

ture and pushing it to pursue a

lower-cost partner.

Big River is doubling capac-

ity of its Osceola mill along the

Mississippi River to 3.3 million

tons of steel a year. Mr. Burritt

said Big River will extend U.S.

Steel’s reach into the South

and Southwest regions, where

Steel Dynamics and Nucor

have been expanding.

Mr. Burritt said U.S. Steel

will continue with the upgrade

of the rolling mill at Mon Val-

ley Works that is expected to

cost at least $1 billion. As a re-

sult of the Big River deal, the

steelmaker said it is scaling

back about $250 million in im-

provements at its mills that

were part of a $2 billion asset-

revitalization strategy launched

two years ago and that is now

nearly 60% completed.

U.S. Steel Corp. said it

would acquire a stake in Big

River Steel , forging a partner-

ship with a lower-cost rival

that has threatened its core

business.

U.S. Steel agreed to pay

$700 million in cash for a

49.9% stake in Arkansas-based

Big River, with an option to

take full ownership within four

years. Big River, which began

operating in 2017, gives U.S.

Steel access to the technology

and know-how for producing

sheet steel by melting scrap in

an electric furnace.

Big River’s mill in Osceola,

Ark., is one of the newest and

most efficient in the U.S. The

deal is expected to help U.S.

Steel compete against such ri-

vals as Nucor Corp. and Steel

Dynamics Inc. that use electric

furnaces to turn scrap steel

into new product.

U.S. Steel, which makes

BYBOBTITA

U.S. Steel Bids for Efficiency

By Investing in Young Rival

The agreement involves paying $700 million for a nearly 50% stake in Big River Steel. The industrial giant’s plant in Illinois.

JEFF ROBERSON/ASSOCIATED PRESS

Juul is combining its scien-

tific and clinical affairs with

regulatory affairs under Mr.

Murillo.

Mr. Murillo understands

well the FDA application pro-

cess that Juul must navigate

and will help the company

work with regulators and pol-

icy makers to earn their trust,

Mr. Crosthwaite said in a

statement.

“We invite an open dia-

logue, will listen to others and

will be responsive to their

concerns,” Mr. Crosthwaite

added.

Blamed for a surge in vap-

ing among young people, Juul

is the subject of several inves-

tigations, including a criminal

probe by federal prosecutors

in California, The Wall Street

Journal recently reported. The

San Francisco-based company

also faces investigations by

the FDA, the Federal Trade

Commission and several state

attorneys general into its mar-

keting practices.

Juul has tried over the past

year to position itself as a re-

sponsible actor.

The company overhauled its

marketing, halted retail-store

sales of its fruity-flavored

products that are appealing to

young people and introduced

an electronic age-verification

system to curb illegal sales to

minors.

But Juul’s deal with Altria,

and its intense White House

lobbying, angered officials at

the FDA.

A lawyer by training, Mr.

Murillo joined Altria in 1995.

He led the tobacco giant’s e-

cigarette business, Nu Mark,

before Altria pulled its e-ciga-

rettes off the market as part

of its deal with Juul.

Mr. Murillo also developed

regulatory strategies for a

heat-not-burn tobacco device

called IQOS that Altria is

launching in the U.S. with

partner Philip Morris Inter-

national Inc.

Juul Labs Inc. is bringing
over a second high-ranking ex-
ecutive from Marlboro maker
Altria Group Inc. as the vap-
ing startup attempts to repair
its damaged relationship with
regulators amid a rise in teen
vaping.
Joe Murillo, who headed
regulatory affairs for Altria
and previously ran the tobacco
company’s e-cigarette busi-
ness, is now Juul’s chief regu-
latory officer, according to an
internal memo sent Tuesday
to staff.
Most important, the 24-

year Altria veteran will shep-
herd the applications that Juul
must submit by May to the
Food and Drug Administration
for any products it wants to
keep on the market beyond
that point.
Mr. Murillo is the first big
hire made by Juul’s new chief
executive, K.C. Crosthwaite,
who himself moved over from
Altria last week to take the
helm of the startup. Juul faces
a proposed U.S. ban on most
of its products and cited the
need to focus on regulatory
matters for the leadership
shift.
Altria last year invested
$12.8 billion for a 35% stake in
Juul. The deal gave the to-
bacco company seats on Juul’s
board that are pending an an-
titrust review.
Mr. Crosthwaite last week
told his new staff that his ap-
pointment wasn’t a sign that
the Marlboro maker was tak-
ing over.

BYJENNIFERMALONEY

Juul Taps Altria

Executive to Lead

Regulatory Efforts

Joe Murillo is the

first big hire made

bythestartup’snew

chief executive.

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prestigious listees!

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CARNEGIE MELLON UNIVERSITY

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CHIEF EXECUTIVE OFFICER

INNOVATIVE HEALTHCARE GRP.

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PROF. EMERITUS OF HISTORY

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EMPLOY. RIGHTS & LABOR LAW

PRIVATE PRACTICE

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GASTROENTEROLOGIST (RET.)

COLUMBIA, BASSETT HOSPITAL

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DIMASCIO & ASSOCIATES LLP

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EYE SPECIALISTS ASSOC. PC

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CAPREIT INC.

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