Pumping Iron at Cliffs &
Associates
The Circored Iron Ore Reduction
Plant in Trinidad

09/2004-5041

This case was written by Christoph H. Loch, Professor of Technology Management at INSEAD, and
Christian Terwiesch, Associate Professor of Operations Management at the Wharton School, as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 2002 INSEAD-Wharton, France/USA. Revised Version, copyright © 2004 INSEAD-Wharton, France/USA.
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5041

“There are worse places in the world to be in December than Trinidad,” thought Ed Dowling, as he spotted the first white beaches from his seat on the Miami-Trinidad flight.
“Look, Steve, we are flying close by our plant,” he said to Steve Elmquist, pointing at a significant landmark on the coastline below them (see Exhibit 1).
Dowling was executive vice-president for operations at Cleveland Cliffs Inc., and Elmquist was the general manager of Cliffs and Associates Ltd. (CAL), which was co-owned by
Cleveland Cliffs and Lurgi Metallurgie GmbH, the German process technology company, following a recent joint venture. Neither had said much since starting their journey some eight hours before in Cleveland, Ohio, where they had reported to the board members of
Cleveland Cliffs on the status of the plant that lay just below them.
The purpose of the plant was to produce Direct Reduced Iron (DRI), a product of great importance to Electric Arc Furnace steel mills, often called “mini-mills”. Mini-mills used mostly scrap as their iron source, thus eliminating the initial process step (and the associated capital needs) of extracting iron from ore in the traditional integrated