Diversity Can Temper Industry's Downturns; Steel Dynamics, for one, built a lucrative sideline making long-length rails.(INDUSTRY SNAPSHOT)(INDUSTRY TRENDS)

Byline: JED GRAHAM

When Steel Dynamics decided to spend $275 million to open a structural steel mill in Columbia, Ind., it threw in an extra $40 million to outfit it for rail production as well.

The company got two product lines for nearly the price of one -- and it brought a new capability to produce long-length rail to the North American market.

Up until now, rail produced in the U.S. has come as long as only 80 feet, but Steel Dynamics will be able to make it three to four times as long.

That's a big advantage, since welds are typically the failure point in rail, says Fred Warner, head of investor relations at Steel Dynamics. And since longer rails require fewer welds and less maintenance, customers are eager for the product.

Annual consumption for rail is about 900,000 tons. "We think we ought to be able to get a third of the market," Warner said. "The orientation of the company is to grow. We like to find opportunities and take advantage of them."

While Steel Dynamics, which opened its first mill in 1996 and has been profitable every year since, is smaller and more nimble than its big-steel brethren, the industry has taken a more entrepreneurial tilt the past few years. Having suffered through a brutal shakeout in the most recent downturn, even the biggest players realize they need to be agile to succeed over the long haul.