its commitment to its internal customers, Gerdau has obtained some remarkable results. For example, a group of Gerdau employees recently developed a proprietary system for manufacturing wide-flange steel beams resulting in a substantial cost savings for the company. Gerdau credits its training program, along with individual effort on the part of its employees, for this accomplishment. Overall, Gerdau's commitment to both its internal and external customers has produced impressive results, particularly as they relate to firm productivity and product quality. The company's daily absentee rate is less than 1%, and the average yearly turnover rate is only 5%. These rates are far lower than industry averages. These low rates provide for operations continuity. Partially as a result of this continuity, Gerdau produces steel at a lower cost per ton than its rivals. At Gerdau, it takes 1.4 hours to produce a ton of steel, as compared with an average of 2.4 hours per ton at other steel mini-mills. Gerdau was awarded the Japanese Industrial Standard Certification on its general structural steel products, becoming the only steel company outside Japan given that recognition. Similarly, Gerdau is the only steel company of its type to be certified by the American Institute of Mining, Metallurgical, and Petroleum Engineers to manufacture its products for nuclear applications. Discussion Questions 1. For a company like Gerdau Steel, why is a commitment to both its internal and external customers necessary? 2. As mentioned in the case, Gerdau periodically sends frontline employees on trips to visit the manufacturing sites of the company's customers. In your opinion, is this a justifiable expense? Why or why not? 3. Compare Gerdau's employee commitment to your current employer or a recent employer