AK Steel in Search of New Leadership
Sep. 19, 2003
MIDDLETOWN, Ohio (AP) _ In search of new leadership after parting company with its top two managers, AK Steel Corp. must now try to win concessions from its unions or consider alternatives such as putting itself up for sale, analysts said.
AK Steel's stock, already in a slump, fell more than 9 percent in trading Friday, a day after chief executive Richard Wardrop Jr. and president John G. Hritz resigned because of what the company said was a need for new leadership to address its challenges. The stock closed down 24 cents at $2.32 on the New York Stock Exchange.
Industry analyst Charles Bradford said AK Steel's pension and retiree benefit costs have forced the company to raise its steel prices above those of competitors. Bethlehem Steel and National Steel, which are now merged into other steelmakers, shed such costs by going through bankruptcy reorganization at the expense of cutting benefits to retirees who were longtime employees, Bradford said.
Wardrop had denounced such a course for AK Steel, and AK Steel still does not consider Chapter 11 bankruptcy reorganization as an option, spokesman Alan McCoy said Friday.
Wardrop also had recently told analysts and retirees that he would consider selling the company at the right price, but McCoy said the company would not comment on speculation about what it might do next.
AK Steel has not shown a profit in seven of the last eight quarters. Bradford said he thinks AK Steel can break even next year, although other analysts have predicted the company will lose money both this year and next.
``If the board is looking at that kind of a forecast, something has to be done _ and quick,'' Bradford said.
AK Steel asked union officials this summer to consider reworking the labor contract that runs through February 2006 for about 3,100 hourly workers at its Middletown Works mill. Contract concessions could make the company more attractive to prospective buyers.
The company's relationship with its unions is difficult, however.
In December, AK ended a bitter three-year lockout of a United Steelworkers of America local at its Mansfield Works in Ohio. Since then, the union and company have sparred over the pace at which AK Steel is recalling workers.
This spring, AK Steel tried and failed to buy National Steel out of bankruptcy reorganization. The Steelworkers opposed AK Steel's effort and supported U.S. Steel Corp., which won the competition for National Steel.
AK Steel still is fighting a lawsuit by the federal and Ohio governments over years of air, water and hazardous waste pollution at its plant in Middletown, the company's headquarters city where it is the dominant employer.
There are also allegations of racial harassment and intimidation at its Butler, Pa., mill. AK Steel has said it will not tolerate any such harassment in the workplace.
The company makes flat-rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing uses, as well as tubular steel products.
It has about 10,000 employees and operates steelmaking and finishing plants in Middletown, Coshocton, Mansfield, Walbridge and Zanesville in Ohio; Ashland, Ky.; Rockport, Ind.; and Butler, Pa.
The company also operates an industrial park on the Houston shipping channel in Texas and owns Douglas Dynamics, which makes snowplows and salt spreaders for medium-size trucks.
On the Net: http://www.aksteel.com