- The Washington Times - Tuesday, April 22, 2003

The U.S. steel industry is consolidating, taking advantage of a break from foreign competition since President Bush in March 2002 threw up barriers to protect the domestic market, according to steel industry officials.
A bankruptcy court this week is expected to approve International Steel Group's purchase of bankrupt Bethlehem Steel, and U.S. Steel won an auction to acquire the assets of another bankrupt company, National Steel.
The moves mark a possible turnaround for an industry that since 1997 has seen 37 companies declare bankruptcy and 54,000 steelworkers lose jobs, according to figures from the United Steelworkers of America, a trade union.
Low-priced foreign steel and high costs of maintaining pensions for retired workers were putting U.S. steel makers out of business.
One of the industry's low points came in December 2001 when Cleveland-based LTV Corp., at the time the fourth-biggest steel maker in the United States, went bankrupt and shut down.
With LTV and other companies no longer producing, steel prices began to climb. President Bush's March 2002 decision to raise tariffs as high as 30 percent on imported steel contributed to an across-the-board spike in prices and helped stronger companies position themselves for takeovers, according to industry sources.
Unions, seeing the possibility of mills shutting down for good, compromised in labor negotiations, allowing better terms for the takeovers.
And the government stepped in to help with so-called "legacy costs," picking up the tab on pensions for retired workers at the bankrupt companies.
Cleveland-based International Steel Group (ISG), formed last spring to take over LTV, added Illinois-based Acme Steel Co. to its portfolio in the fall.
Charlotte-based Nucor bought up Alabama-based competitors Birmingham Steel and Trico Steel.
A bankruptcy court in Chicago yesterday approved U.S. Steel's $1.05 billion acquisition of National Steel.
ISG's $1.5 billion acquisition of Bethlehem will be considered by a U.S. bankruptcy court today and, if approved, completed April 30.
"In the last year, these are monumental changes for this industry," said Robert Johns, director of marketing for Nucor's sheet-metal group.
The president's program of tariffs and international negotiations to reduce the world steel supply gave companies the will to consolidate, Mr. Johns said.
It also helped give them the money. U.S. Steel, for example, lost more than $400 million in 2001 and $61 million in the first quarter of 2002, said Thomas Usher, the company's CEO, last month at a hearing on Capitol Hill. But the company reported positive operating income totaling $189 million during the last three quarters of 2002, he said.
With time and continued consolidation, there is no question "the domestic steel industry will be much stronger and more competitive," Mr. Usher said.
The downside has been higher prices for companies that consume steel.
One study by the Consuming Industries Trade Action Coalition said that 200,000 Americans lost their jobs to higher steel prices in 2002.

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