US Steel Shows Off Restructuring Plan
As part of the three-year effort, US Steel said is asking the United Steelworkers of America to give it a cheaper labor contract.
The point of the big show was to convince administration officials that the giant steelmaker was doing its part to make the most out of a grace period offered by sweeping steel tariffs imposed in March, according to the Wall Street Journal.
To bolster their case for imposition of the tariffs, steel company officials blamed in large part competition from cheap imports for the industry-wide ailments that have propelled 30 US steelmakers into seeking bankruptcy court protection during the past five years.
President Bush told industry officials that he expected such presentations on corporate restructuring at the six-month and one-year tariff anniversaries. If officials don’t get what they want in the industry reports, the administration has said it would halt the tariffs.
Out of Public Eye
According to the Journal, steel executives are keeping most of the details of their discussions and progress reports with the Bush administration private to avoid tipping off competitors or drawing antitrust charges. But US Steel, Pittsburgh, issued a statement that provided an overview of its approach.
US Steel chief executive and president Thomas Usher told the Bush administration the tariffs have been in effect for only six months and more time is needed to ensure enough breathing room for restructuring.
US Steel said it plans to take out $10 of cost from each ton of steel during each of the next three years. It also said that it is already on track to achieve the first $10 reduction this year. Usher said the company needs to establish a progressive labor agreement with the USWA to provide a meaningful reduction in operating costs, the Journal story said.
Marco Trbovich, spokesman for USWA, told the WSJ, “I think that it is instructive that they have met their current goal of $10 a ton under the current labor agreement.” He also said the union is willing to work with all steelmakers on restructuring, but the union was unwilling to allow the restructuring to fall completely on the backs of workers. “
Since the tariffs, the steel industry has shown some progress in restructuring.
According to the WSJ, Steel Dynamics Inc., Nucor Corp. and International Steel Group all have announced plans to buy other steel companies. Bethlehem Steel Corp., which has cut back capacity, is looking for a partner, as is National Steel Corp., but they need to first shed crippling legacy costs – the money paid to retirees to cover pensions and health care.
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