Feds’ Ruling on Electrical Steel Benefits UAW, Steelworkers Union

Aided by the Biden Admin., the UAW further ensures it has a significant role in the emerging electric-vehicle industry as the Department of Energy (DOE) moves to implement new rules for the unique steel used in making electric motors and the transformers critical to EV chargers.

Roughly 95% of the electrical steel, or grain-oriented electrical steel (GOES) and non-grain-oriented steel (NGOES) made in the U.S. comes from two plants operated by Cleveland-Cliffs. One is in Butler, PA, where the UAW represents more than 1,100 employees, and the second is in Zanesville, OH, where 170 employees are members of the United Steelworkers union.

Electrical steel, also referred to as silicon steel, is an iron-silicon alloy known for its good magnetic characteristics. It is valued for its reduced energy loss and increased magnetic permeability compared to plain carbon steel. Non-grain-oriented electrical steel is used in rotating equipment, for example, electric motors, generators and over-frequency and high-frequency converters. 

The new DOE rule kills off a proposal that would have required the use of amorphous steel, which is a metallic glass made by pouring molten alloy onto a rotating wheel that is more efficient when used in transformers across the U.S. But amorphous steel is made in only small quantities in the U.S., according to the Alliance for American Manufacturing, which lobbied for the new DOE rules as did the UAW and Democratic allies in Congress.

Most amorphous steel is produced offshore, which would expose U.S. electrical grids to dependence on foreign suppliers, the Alliance for American Manufacturing says.

Distribution transformers convert high-voltage electricity from power generation sources to levels safe enough to be utilized by homes and businesses such as EV chargers. The Cleveland- Cliffs plants in Pennsylvania (pictured, below) and Ohio also make the special, thinly rolled steel used in electric motors and generators.

Over 60 million distribution transformers are mounted on utility poles and pads across the U.S. – operating 24 hours a day, 365 days a year and remaining in use for many decades. Improving their efficiency will reduce wasted energy on the power grid and provide significant energy savings to the country, the DOE says.

While the initial proposal would shift 95% of the market to specifications calling for an amorphous alloy, according to the DOE, under the new final rule about 75% of the market will be able to achieve the standards with the GOES steel made in Ohio and Pennsylvania.

“The final rule also extends the compliance timeline from three years to five years,” the DOE says in a statement. “These changes are responsive to stakeholder concerns about the feasibility challenges presented by the proposed efficiency levels, including the magnitude of anticipated workforce reskilling.”

Over 30 years, the new standards still promote efficiency and are expected to save Americans over $14 billion in energy costs, while also reducing 85 million metric tons of dangerous carbon dioxide emissions – equivalent to the combined annual emissions of 11 million homes, the agency adds.

Utility companies responsible for the transformers would delay the modernization of the nation’s electrical grid by requiring amorphous steel. “This rule would impose unnecessary cost burdens and further delay the delivery of such critical products,” a broad coalition of electric companies and other stakeholders wrote in a December 2023 letter to the DOE.

However, the Appliance Standards Awareness Project (ASAP), which advocates for tighter regulations to reduce the emissions contributing to global warming, says the new DOE standards will significantly reduce energy waste but miss the opportunity of far larger savings. 

The final standards save only one-third as much energy as standards at the DOE’s proposed levels would have, according to ASAP. By setting weaker final standards, the agency sacrificed about $18 billion in additional savings, it claims.

“These standards significantly reduce energy waste, but they leave much bigger savings on the table. Passing up the savings that could have been achieved has a real cost for consumers, businesses and the climate,” says Andrew deLaski, executive director of ASAP.

The new DOE standards, however, represent a victory for blue-collar workers in politically sensitive eastern Ohio and western Pennsylvania.

“It has been a very long and trying year for Local 3303 and our plant,” says Jamie Sychak, president of UAW Local 3303 in Butler, who appears in the video below. “At the outset of this rule, we faced a plant closure. As they say, that which does not kill us makes us stronger, and we’re a testament to that. We fought to protect our jobs, our plant and our community. And today, we won.”

Adds UAW Region 9 Director Daniel Vicente: “Labor and management don’t always see eye to eye – like all relationships, disagreements exist. But when it comes to protecting American jobs and producing U.S.-made electrical steel for our critical infrastructure, UAW and Cleveland-Cliffs stand shoulder to shoulder.”

Cleveland-Cliffs also declares victory in the tug-of-war over the electric-steel standards.

“We are grateful that the U.S. Department of Energy was open to the feedback provided by Cleveland-Cliffs and our clientele of transformer manufacturers and adopted major changes to the originally proposed transformer efficiency rule,” says Chairman, President and CEO Lourenco Goncalves. “The final rule ensures Cliffs’ ability to continue producing highly efficient GOES in the United States.

“Once this rule is enacted, we expect to actually see an increase in demand for our GOES, opening the possibility of future investments and expansion of our plants in Butler and Zanesville.”