Why Are These CEOs Smiling?

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"We have a lot of derring-do," says Busse, who with his co-founders has built the most profitable flat-rolled steel minimill in the nation, producing 2.2 million tons a year from its base in Butler, Ind. For years, the trio worked at Nucor, the North Carolina-based upstart that pioneered the use of minimills, highly efficient, low-cost factories that predominantly make steel out of scrap metal rather than iron ore and now account for close to half of all U.S. production. Though Steel Dynamics initially focused on producing the low-grade steel primarily used for construction, it has since expanded to more refined, and profitable, steel to use in auto manufacturing.

Steel Dynamics' sales of $469 million in the first three quarters of this year are down 13% from last year, and its just-announced third-quarter earnings of $2.1 million are 83% off last year's. But it did meet analysts' estimates at a time when rival Bethlehem Steel and many others have been filing for bankruptcy protection. Steel Dynamics' new plant in Whitley County, Ind., should make it an instant player in the structural- and rail-steel markets, with the capacity to produce up to 16% of the beams, pilings and reinforcements used to build U.S. bridges and high-rises. A nonunion shop, Steel Dynamics enjoys good relations between workers and management. Performance and bonus pay, including stock options and profit sharing, make up about half of production workers' annual salaries, which average $65,000.

--SOUTHWEST AIRLINES It may not be the biggest airline in the country, but Southwest is certainly the most profitable and best managed--boasting the most loyal workers and customers and the healthiest balance sheet. It has been profitable for 28 straight years, even over the past decade when the airline was growing capacity at 10% annually. "We manage in good times as if they're bad," says Gary Kelly, chief financial officer. While other carriers were already carrying lots of debt before the Sept. 11 terrorist attacks, Southwest had $1 billion in cash on hand. Competitors like United and American burned through $40 million a day during the skies shutdown, but Southwest lost just $13 million.

With a uniform fleet of 737s, one of the best on-time records in the business and low labor costs, Southwest routinely undercuts competitors' fares by a third or more. By avoiding both delay-ridden hub airports and costly online middlemen like Priceline and Orbitz, Southwest has continued to fly high. Is it any wonder that Southwest's stock market value is roughly the same as that of all its major rivals combined?

CEO James Parker hasn't laid off any of his 30,000 employees, has trimmed only 1% of his flights (compared with 20% for United and American) and has even added a new route. Southwest is the sixth largest airline worldwide, with almost 7% of the market, rising to perhaps 8.5% next year, which would put it ahead of Continental, according to Peter Walsh, head of global aviation at Mercer Management Consulting. Even more impressive, Southwest ranks No. 2 in the U.S. in total passengers, carrying about 15% of all travelers, just behind Delta, at 17%. By next year, Walsh thinks Southwest could be the No. 1 passenger carrier in the U.S.

The rest of the industry's belt tightening should help make that a reality. American's shutdown at Love Field in Dallas, U.S. Airways' cutbacks in Baltimore, Md., and Washington, Delta Express's trimmings in the Southeast and United's elimination of its West Coast shuttle all open up new opportunities--especially on long-haul and potentially even transcontinental flights--that Southwest is likely to seize. And Kelly, like executives at the other recession winners, is sure of the end result: "We will pick up some business."