U. S. Steel CEO Dave Burritt on 360-Degree Safety Practices and the US STEEL Principles

Great to have David Barrett here today, CEO of U.S. Steel, one of the most loved workplaces. Welcome, David. So, David, I want to jump right into this, uh, wonderful strategy and mission of U.S. Steel that is just winning in terms of creating a most loved workplace, being the leader now and bringing back this strength of steel in the United States that you've been for so many years, one of the first in the United States. Tell me more about this strategy and mission around what you're doing, not only around being net carbon neutral by 2050, but around your strategy and mission itself.

Well, Lou, thank you so much for having us, and we are absolutely thrilled and delighted to be recognized as a most loved company. It means a lot. It's gratifying to all of our employees and especially to me. So thank you very much for that, that recognition. It means a lot to our company. You know, we've been around since 1901 and there are a lot of firsts with U.S. Steel. We're the first to have the market cap of $1 billion, first to have a board of directors, a code of conduct, an annual report, even invented the term safety first. So A lot has happened around U.S. Steel as one of the original iconic corporations. And here we are just celebrating on the New York Stock Exchange 120 years with all-time record profits, all-time record safety, quality, reliability. So it's been a fabulous run, and we like to attribute a lot of that to what our employees have been able to do and how they've risen up through this difficult pandemic time, the COVID time, and it's really helping us fulfill our mission. More specifically to the mission, we're a steel company, of course. We want profitable steel solutions for our people and now for the planet. That's a change, a transformational change for us, but we're very carbon intensive, we're capital intensive, and we have really formidable competitors. We've been around, you know, 120 years and we're gonna be around another 120 years. But that happens because of our people and the way they work together, the way they collaborate, and how we come together as a much stronger company. So again, thank you very much for having me, and we couldn't be more excited about the future. Clearly our best days are ahead.

Well, you're welcome, David. And you know, it's great to have you guys on specifically. I know because of what you just said about bringing people together to collaborate, to become those firsts and be those firsts, to continue the 100— another next 120, right? And to be strong. And in, in this economy and during COVID especially, uh, the strength of steel is definitely within you and in your employees. Tell me more about how that is inside of your company. What drives that kind of commitment and strength?

Well, you know, everything, every strategy starts with a view toward the customer. We always like to say, skate where the puck's headed. The customers inform you, but there has to be some fundamental principles. You know, we, again, one of the companies that had the first explicit code of conduct back in the day, early 1900s, it was called the Geary Principles. We've actually transformed that into what we call our STEEL principles, S-T-E-E-L, and those principles include safety first, trust and respect, environmental stewardship, excellence and accountability, and lawful and ethical business conduct. So those are guiding principles that are at our very core. And it's no surprise that with the company that invented the term safety first, we're an order of magnitude better than the competition and in a very dangerous environment, but one in which we take it extraordinarily seriously. And again, we're having all-time record safety this year, but we're not without challenges in that regard. We're expanding our safety to include what we call psychological safety. You know, Lou, I saw that you invented something called a 360-degree type survey. Well, we're doing 360-degree safety now where it also includes psychological safety. Often you think about safety in terms of just the factory environment. Well, now it's this inclusivity that, you know, the DEI, you know, the way we work to bring everybody where they have this strong sense of belonging. And that's the psychological thing that's in the factory as well as in the office. And I think it makes people relate better, especially when a big chunk of our work now is handled virtually. And you know that, you know, this pandemic, I often say not just to find something you like about it, but find something you love about this environment, 'cause we will find ways to work more effectively. And I can tell you this, our company is more connected through this virtual way of working than ever before. I think it starts with that, you know, that customer focus, but those strong steel principles, but also the way we work together on a regular basis. Now, 90% of our people are actually at the facilities, at the work, but if you're in the office, you're an accountant, you know, you're working treasury, tax, IT, procurement, and so on, you can work from wherever as long as your supervisor agrees. And we've been doing that since this whole pandemic helped. And I, I kind of wonder where were we before? Because I now have more interactions with customers, more interactions with suppliers. We're not jumping on a plane to go spend a half a day here and a half a day there. Instead, we're connecting immediately and we're actually getting more business.

It's incredible when you bring the world closer together through technology and through psychological safety, as you said, and we see around corners a lot More easily, right? Safety increases, productivity increases, you stay strong, you, you, what you had said is brilliant, really. It's doing the right thing.

Right? Well, you know, Lou, on that, you know, this, one of the great successes I think we've had during this pandemic is how our employee resource groups have risen up. I mean, it's, it's been absolutely amazing. I think we have 7 7 groups now that actually help keep us connected during this. And they, they'll actually have seminars and bring in speakers and, and do this all virtually, and they can do it so much faster. And it's amazing to me how much people like this venue, like to reach out. And then we record it, we send out the clips, and we even have what we call our X app— X for the New York Stock Exchange symbol of, of U.S. Steel. That's like an internal Facebook, Twitter type of account where you can post things out there to let people know what's going on in the company with all of our ERGs or what's happening, you know, in the marketplace with our customers or our suppliers or what's happening in the world. So I think this communication has really been enhanced through this process. Now, I don't want to declare victory because this is a really tough environment. You know, it's been feast or famine through the whole history of our company. So we've had some real highs and some real lows, and we're trying to level those out. And I just say our best days are ahead, but there's gonna be a few bumps along the road. But when you keep your employees together and you focus on the employees, we call it the virtuous circle. The employees are the ones that do the work and make the difference. Focus on the employees, they take care of the customers, the customers take care of the stockholders, and the stockholders take care of the employees. And it ends up being, really this wonderful thing that when it works, it works extraordinarily well.

That question of when it works, right? And what are the conditions or environment that you facilitate, that you portray in the STEEL principles, that you see it working just extraordinarily well. When have you seen that working? Yeah.

Well, like I mentioned it with the ERGs and also with safety, we have regular ongoing meetings. In fact, we start our board meetings, every significant meeting with a safety briefing. We also are strong environmental stewards. That doesn't mean we don't have issues because in a carbon-intensive business, you're going to have issues. But what it does, I think there's this tone at the top But you really have to have the employees that actually believe in what you're doing, have this strong sense of purpose, is that their jobs matter. And you know what I, what I always say to our team is that you think of Maslow's hierarchy of needs, right, where you got self-actualization at the top. Well, our kind of business, a commodity type business that we differentiate, is foundational. You know, that's the safety and security. If you take away manufacturing and the things that hold up this structure of the world, everything falls apart. You know, I often joke I'm on Lockheed Martin's board, so I know what a scary world it is, you know. And so, you know, you could have a situation if you, you know, people playing in the Facebook, Twitter world, self-actualizing, everything going great, and then the bad guys pull out the weapons and all we can do is unfriend them on Facebook, you know. That's not a good place to be. You have to be able to do the foundational things extraordinarily well. And to us, that's our steel principles. And to, I think, the world, that's the manufacturing environment. You have to be able to build stuff and make stuff. And if you outsource that to others, you put yourself at risk because you cannot take care of your society.

And outsourcing too, you know, we're not keeping the culture. Together, right? The strength of the culture. And that's one of the things that keeps you strong is the STEEL principles within your environment so that we can trust each other more. We can understand each other more, create that safety, and truly define our own ethics, right? And into the future. Yeah.

So well said. You know, you mentioned trust, and we take that very seriously. You know, that's the T in the Steele Principles. And the way we think of it, in order to have strong trust, you have to have a foundation of integrity and honesty, right? And you can have no trust unless you have that. The other thing you have to have is you have to have capability. A person has to be able to do their job. You have to feel that what they do matters and they do it well, right? And then finally, and this is often hard because you can have high-integrity people that are highly capable, but then they're not aligned. So alignment with the mission of the company and most importantly, the values of the company. You know, we'll help develop people, we'll help make them better. But the one thing that will get you crossways in our culture is if you violate the STEEL principles. Those are cardinal rules for us because, you know, let's face it, if you violate those principles, it could be deadly to you. Especially in the safety front, the environmental front. So we take it very, very seriously. And when you take it seriously, you can trust one another and be more forgiving. Everybody makes mistakes. Everybody's going to screw something up. Frankly, I would say I do that very frequently, maybe at least every week, maybe every day. But we have to let people try. And try again and learn, create this learning environment, which gives them the opportunity to say, OK, that didn't work. Let me try something else that might work.

It's so true with the testing environment, saying that it is OK to make mistakes and learn from them. I think back to the Westinghouse Waste Isolation Division in Carlsbad, New Mexico, and the devastation that had happened there. And then, you know, that was largely due to the fact that there wasn't psychological safety. They did not want to express and show potential failure. And then afterward, it was all about after-action review. It was all about coming together and saying, what if this happened? What will happen? And typically in these kinds of environments, people say, well, we have to do it, get it done, get it right, and that's it, you know, and we don't need to test things and make mistakes. Well, the truth is we do in order to learn from them and relearn. They have our own cases and see different situations and scenarios and think critically. And connect things systemically, because without that, we all can't be engineers of our own lives and our own products.

You know, Lou, that's such a great point. It makes me think about what we tell people all the time. And this is hard. And it's been a journey for us, continues to be a journey. What we like to say is, you know, we want you to try things, go ahead and fail, pick yourself up, try again. But when bad things happen, make the bad news travel fast. You know, I don't care. Wake me up in the middle of the night. If something is bad, I want to know about it. Foreshadow that you got challenges. Don't be surprised by it. But I'll tell you this. When good news happens, let's step back. Let's celebrate. Let's reward people. Let's recognize them. Like this, this last year, we were able to have great recognition for the team. You know, these are the things that are most gratifying to me when The team performs at extremely high levels, we reward them extremely high levels. So we've paid out record profit sharing and incentive paychecks. And by the way, normally we'd be playing these in like a February, March timeframe. The numbers were so good. What we said to the team is, you know what, how about happy holidays? And we paid them the checks on December 17th. So now that was a little bit of a surprise. Significant and unexpected surprise, but then we celebrated for a longer period of time and people had an opportunity to have this money early and spend time with their families. And it is, it was one of those things that you say, yeah, it's fun being a CEO and it's fun being able to recognize and reward your people for extraordinary work.

It's so gratifying when people see that.. And they're able to have that in their lives, affect their families, have it part of their culture. And you see it right before your eyes. And, you know, that can only happen, I believe, in the one culture, right? You know, as we see it, you see the culture happening, you see the helping of families. And, you know, we enable that good acting to happen, right? There's always bad actors, like you said, on Facebook, right? We have to block them out, literally, because they're bad actors. They're hurting the culture. And the Steele principles are definitive. When you, when you stick to them, you'll be rewarded. It's very simple. When you don't, well, you won't. And so you're, the strength of your culture is in this clarity of, and predictability of leadership, which is what every person wants is predictability. I see that in you.

People— this consistency, Lou, is really important. But, you know, we know it's great now. We're hitting on all cylinders. Everything's going fantastically well. But we don't know where Omicron is going. We know there's probably going to be contraction in the economy for a bit, but we'll bounce back. But, you know, it's— you know, communication is always the hardest thing we do, you know. And And let's face it, everybody can always find a way to be offended by something. But, you know, if people recognize that leadership and their colleagues are authentic and we put a lot of time in on being authentic, you know, we— you may not like what we have to say. You may not appreciate it. We're going to be as transparent as we legally can be and tell them, you know, just how it is. In fact, you know, this whole idea that we're always going to be stoic and we're not going to show emotion and And we're going to basically, you know, be never smile, never frown. That doesn't create the kind of environment that I want to be in. You know, I've always enjoyed the roller coaster ride. I like it when it's going up. But we know that bad things will happen and you have to be resilient and you have to respond. And when you're authentic with your team, you're transparent with your team, and you can tell them that, hey, there's some bad things that could happen here. You need to make sure you prepare yourself. We could be hitting a downturn in the economy. And the same token said, hey, it looks like some good years ahead for us. And as I say now, it feels like a supercycle. But, you know, I don't know the answer here. We can have the Federal Reserve take rates up too fast, or there could be geopolitical turmoil that creates— or basically, you know, a continuation of a pandemic that actually gets worse. You know, we're soon going to run out of the Greek alphabet. So I think this is probably going to be with us forever. But there's always something we have to deal with. And I think Employees and colleagues and others, if they know you're well-intended, you're working as hard as you can to treat them fairly and deliver for them, and, you know, everybody's going to make mistakes, but I think when people understand you're genuine, I think it goes a long way.

And that's part of the culture, isn't it? Right? Being genuine. And people want to be a part of this. The country depends on it. The United States depends on it. And it's, it's, uh, to me, I think of U.S. Steel and, and, uh, some of our really stable, stable organizations as integral to our economy, and you're one of them. So it's almost like, uh, thinking of being, you know, being, uh, patriotic almost to the Army, Navy, Air Force, Marines. I think of it the same way. Now, how are we going to keep I'm going to say it, Steel in America.

Yeah, I think that that's so very true. And we know that, you know, over time we have to be careful. This is where when we outsource, in fact, to China, we know the story there. They have 57% of the world's productive steel capacity. I mean, think about that number. That means they control a lot. And they came in, you know, taking the dirty steel, the ugly steel, and and providing that to themselves and also to the rest of the world, and then having giant subsidies. So eventually they move up and now they're making better steels. And eventually what happens when you do that, they take over the manufacturing base of countries. And that's why this self-sufficiency, that's why trade, fair trade, free trade is— nothing's ever free. So you need to make sure that everybody plays by the same rules. It's just like in sports. You can't, you know, I'm an old baseball player, so you can't give somebody, you know, 4 strikes and somebody else 2 strikes. Everybody gets 3, you know, and you play by those rules and then it works out very well. But you have to have enforcement of the rules, and sometimes that's hard with leadership. Enforcement is often the hardest thing with leadership to make sure that people are following the rules, and you do it in a way that makes sure that they they understand why those rules are important.

And the leveling of the playing fields that you're describing for the globe is so integral because, like you said, fair trade. And how is it that we are in the US creating amazing products that are better, really, if you look at the quality and the safety and the standards and the performance than other products, so objectively, not even subjectively, objectively and scientifically, you know, why is it that there is not that kind of fair trade? Well, we, we do need and we must have it, help from our government to ensure that our economy is strong. I strongly believe that, and I'll just say it outright, Dave, when I, I was a big proponent of the tariffs, I will say that, uh, and, uh, President Trump coming over and helping, um, and we need more of that in our economy, I will say that. And if people disagree with me, it's okay, uh, it will be psychologically safe here, um, and I do believe you did a great thing back then in helping to bring back U.S. Steel to a pro— to more prominence. And level the playing field so that you can enable your steel principles.

Yeah, no, Lou, that's, that's so well said, and it's, it's nice to know that you agree with, uh, the fair trade. And whether it be President Trump or President Biden, they both get it. They, they get how important the manufacturing base is. We have to be self-sufficient, and, and we can compete with, uh, anyone with this level playing field. And for years, we've been so bent on outsourcing the jobs and creating manufacturing environment elsewhere instead of focusing here and making sure that we can have a sustainable future. This is where I get really excited about the 2050 net zero, and U.S. Steel was the first U.S. steel company, American steel company, to set the goal of 2050, and we've joined Responsible Steel, which is an organization that certifies the carbon decarbonization of your facilities and making sure that you're following those rules. And we even came up with the very first branded green steel called VERDEX, which is 75% less carbon than previously. So we're making progress, but we get, you know, it's not easy. It's a long way to go. You know, when you talk about making steel with hydrogen, hydrogen and the new technology that's out there. This doesn't happen overnight, but we do make progressive steps. And this is where it gets into our strategy that, you know, we're going from a best of both to a best for all. Best of both is basically we have integrated mills at US Steel. These are steel mills that simplified basically saying we make steel by digging it out of the dirt. The mini mills then are the other types of steel companies. They make steel by being process experts. Integrated mills are product innovators because they can make the high-end steels, the specialty steel, the steels at the, the, the top, the advanced high-strength steels, lightweighted steels. And the, the mini mills are process experts. They can make steel very fast, but they can't do the high end. Well, What we're doing is taking the best of the integrated, best of the mini mill, and bringing them together. And then here in the last year, once we started digging deeply and again, we like to say skate where the puck's headed, even if you don't believe in climate change, you know, and I think that train's left the station and I could say early on I was a climate atheist because I didn't quite get it. But after studying, it's like, you know, okay, this is where we need to go. This is where our customers are headed. And so when you get that, you start thinking, What's our most important customer? Well, it's the planet. What could be more important than that? Guess what? I always talk about it as being a green strategy, and I mean money too, because you can be profitable. Again, we say profitable steel solutions for people and planet. You can be profitable and you can do the right things. The old Jim Collins, Good to Great. You know, genius of the and. You can be profitable and you could do what's right for your people, your customers. And, you know, all of this thing can come together very nice. It doesn't have to be the tyranny of the or where I can choose between profits or taking care of my people, profits or taking care of the environment. No, no, no, no. These things can be synergistic and you need to make sure you are creative and find the way It's gonna take a while. It's a BHAG, a big, hairy, audacious goal to get to 2050 net carbon neutral. And I'm an old guy and I keep telling people I'm gonna be sticking around because I wanna see that happen.

You will make it there. I know you will make it there. I know US Steel will make it there. It's extraordinary. And at first, what I heard about Verdicts is extraordinary and what you're doing for carbon net neutral. And I really love what you said about President Biden gets it. He gets it. And you are also providing the new within the United States by going carbon net neutral, having a 2050 goal, and aggressively going toward that goal and acknowledging needs very, very strongly. I want to ask you just a question. What do you see as the next that you would say, "I really want this to happen in the next year for help and to, or a resource or something to move forward," or do you have a really want to have or a call out to the world or your employees, something that you wish for?

Well, you know, the first and foremost for me is, I mean, we live safety first. So what I want is my employees to be safe. I want our environment to be safe. You know, the foundational steel principles. Are for everything for us. But I do think there's a special area for us at U.S. Steel, and this is in the innovation space. I think, frankly, we do it better than anybody. We have an X, again, XG3, U.S. Steel Generation 3 type steel. And I'll just tell you a story, the kind of innovation and the kinds of things that our teams can do. You know, typically when I meet with a customer or supplier, you know how it is with big companies, it takes a long time to get to the right person. And often I'm dealing with procurement people, not the CEO. But during the COVID world, we looked at it differently. And so, I started reaching out and started interviewing CEOs. And one of the really good success stories was with the CEO of Norfolk Southern. We arranged for a 30-minute interview. We asked him a little bit about his company, what's going on with the economy and COVID, what's working, what's not. What could go better? And it led us into a discussion about advanced high-strength steel. And I said, would it be good if, you know, since we've done a lot of work with the autos, could we do something with rail? Would that be something you think we could hook our engineers up together? And he said, yeah, that would be great. And this is unbelievable. Our engineers then meet with their engineers. Their engineers call up Greenbrier, who designs the gondola rail cars. And 6 months later, we sold 26,000 tons of Vertex steel, the green steel, to these guys. Lighter weight, taking 15,200 pounds off of each railcar. It's cheaper for them and we get higher margins for that business. So, I mean, it's that type of thing I want for our team where we have an idea, we get at the right level of the organization and we can innovate quickly. In 6 months, we can take an idea and turn it into reality for our customers. And then have a big celebration when we're all successful.

So that said so much right there. So it's basically said more CEO interviews. Definitely.

It's really odd because for me to get a meeting with the CEO as a company that deals in the commodity business, it's hard because they want me to talk to the procurement folks because it's like low cost, right? That's the negotiation piece instead of, wait a minute, let's think differently together. Let our engineers collaborate. We've got advanced high-strength steel that's lightweight, you know, that's environmentally friendly. How about just having a dialogue on that? And when you start at the right level of the company and then they engage people, you know, set that right tone, then it becomes— that's when the magic happens because we have the engineers that want to do this stuff. They just need to be connected with the right people. So anyway, I've got a lot to do. To support my employees because I know they can turn ideas into realities very quickly.

And those great ideas happen with you, other CEOs. Instead of procurement, it's you and other CEOs. Have that discussion. Know the network. Bring the network in. Have them collaborate. Enable the outcome. And you've had new innovations. And that's, it's a wonderful ideology, isn't it? Collaborate, give psychological safety. Enable the network and you have something great that you can iterate and make into something even better.

Yeah. And it sounds so simple. And I just, you know, there's one of those things like, why wasn't I doing this 10 years ago? Why were we fighting through organization structures, you know, and having dinners and going to events and orchestrating? In 30 minutes, we just set up a deal that delivered in 6 months. You know, it's It's a different way of thinking. And again, you find something you love about this pandemic. There are opportunities for us, for our people, and that doesn't mean it's not going to be hard. You got to be resilient, but there's always a way forward that we can find a way to get profitable solutions for our customers and take care of the environment and most importantly, take care of our employees.

Outstanding, Dave Barrett. So what a What a treat today to talk with you. Thank you so much for joining me today.

You know, I really appreciate the time with you. I looked at your background and all the work that you've done. You have a really wonderful way of inviting people in. And, you know, it's great to feel the love, I have to say, because you get me excited and I can't wait to get back to work here and see what else we can make happen. So thanks so very much for having me.

Welcome, Dave. Thanks for joining us.