What universities can learn from a steel mill

March 12, 2010
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Steel Dynamics and Purdue University couldn’t be more different.

Steel Dynamics dumps scrap metal into huge buckets, melts it with intense jolts of electricity and squishes the resulting lava into bars and sheets. Hopefully at a profit.

Purdue discovers and educates. Some of its researchers even tinker with metallurgies used by companies like Steel Dynamics to make their profits. Others on its campuses teach students, while still others spread the information to the masses through its extension outreach. And don’t forget athletics.

But Purdue and other universities are now under the gun to cut costs—a gun that’s been pointing straight at the heads of manufacturers for decades. So, what, if anything, can universities learn from a company like Steel Dynamics, which must make money or perish?

One Steel Dynamics vice president thinks universities—any work place, for that matter—would see big changes by adopting a form of the profit sharing and bonuses that keep it competitive.

Glenn Pushis, who headed a Steel Dynamics mill west of Indianapolis at Pittsboro before being bumped up to heading the Fort Wayne company’s flat-rolled division, says nothing gets a person’s attention quite like their pay being tied to performance of the company.

While Pushis has a Purdue engineering degree, he’s quick to add that he has no further credentials to suggest improvements to a university. Still, he’s convinced that giving university employees at all levels incentives to cut costs would result in leaner institutions.

“Absolutely, it would,” he says. “It makes everyone think of it as their own company.”

Or university.

Pushis more than once has stumbled upon intense conversations between workers accusing each other of doing something bone-headed and denting everybody’s paychecks. More than half the $70,000 or so in average compensation of front-line workers is tied to profit sharing, stock options and bonuses.

Collegial? Not always. But effective.

What do you think? Universities are scrambling to cut costs as the state runs out of money. Purdue, for one, is looking to slash $67 million from its general fund of $800 million-plus. What should it do?

And how much waste is available for universities to cut? How far do they have to go before hitting muscle?
 

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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