- The Washington Times - Wednesday, December 5, 2001

PHILADELPHIA (AP) At least four of the country's largest steel companies are pressing the government and the United Steelworkers union to help bring about a consolidation of the domestic steel industry, officials of two of the companies said yesterday.
"Our vision is to develop a growth-oriented, world-competitive steel company with a global reach," said Thomas J. Usher, chairman of U.S. Steel's parent company, USX Corp.
"What I see coming out of it is a company that has the size and strength to compete in the global steel market of the future," said Robert S. Miller, chief executive of Bethlehem Steel, which filed for Chapter 11 bankruptcy protection on Oct. 15.
Mr. Miller said at least four companies have been involved in preliminary discussions, though he and U.S. Steel officials declined to identify other companies taking part.
Any consolidation would require a labor agreement allowing reduced employment costs, reduced operating costs, increased productivity and government help with health-benefit and pension costs that hamper the industry, U.S. Steel and Bethlehem Steel said.
At Bethlehem, for example, these include health care costs for 130,000 beneficiaries, made up of 13,000 active workers, 74,000 retirees and their dependents. Potential merger partners are reluctant to take on the so-called "legacy" costs.
U.S. Steel said implementation of steel-import restrictions favored by President Bush would be required if such a consolidation plan were to proceed. The U.S. International Trade Commission is scheduled to vote Friday on remedies it will recommend to the Bush administration to help companies recover from damage caused by low-priced imports.
Mr. Miller said it would take at least until the middle of 2002 to complete such a complex merger, resulting in a company with a capacity to produce about 30 million tons of steel a year.
That would far exceed the 17-million-plus-ton capacity of U.S. Steel, the top U.S. producer, though still dwarfed by the 50-million-ton capacity of the pending merger of France's Usinor, Luxembourg's Arbed and Spain's Aceralia to form the world's largest steel maker, Mr. Miller said.
U.S. Steel spokesman John Armstrong said the negotiations were in the form of "mostly confidential discussions."
"They are not far along at all in terms of their detail. It's a concept discussion," said Mr. Miller.
"The threshold question is government willingness to come to the party."
Unions would have to agree to more steel-industry job reductions to cut costs, with the trade-off being better job security, Mr. Miller said.
"We are confident that labor is supportive of this concept and is willing to come to the party," he said.
Mergers in the steel industry could raise antitrust issues, Mr. Miller acknowledged, though he said "we believe that … this would pass muster from an antitrust standpoint."
The companies have had discussions with key administration officials, including the Commerce and Treasury secretaries and trade officials, as well as at least a dozen senators and representatives from steel-producing states, said Mr. Miller, who as a top Chrysler executive in the 1980s helped secure a federal loan guarantee that kept the automaker in business.

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