Mark reutter: "wilbur ross is charles schwab without the charisma"


Copyright © 2005, American Metal Market, July 17, 2005

By Scott Robertson
Steel News Editor

PITTSBURGH -- A former reporter for the Baltimore Sun is attempting to shed some light on the dark past – and what he feels could be a cloudy future – of Sparrows Point, Md., and its once-mammoth steel plant.

Mark Reutter, business and law editor at the University of Illinois at Urbana-Champaign and an acclaimed freelance writer, is the author of Making Steel, a book subtitled “Sparrows Point and the Rise and Fall of American Industrial Might.” The book, originally published in 1988 but recently updated to include new information on the plant's recent transition to ownership by International Steel Group and Mittal Steel Co. NV, Rotterdam, chronicles the 118-year history of the steel behemoth, starting with its beginning in 1887 under Frederick Wood and continuing to its takeover earlier this year by Indian steel tycoon Lakshmi N. Mittal.

What was once the largest steel plant in the world became part of the world’s largest steel producer in April, when Mittal put the finishing touches on a multibillion-dollar merger of his U.S. holdings with those of ISG Inc., founded by Wall Street financier Wilbur Ross. ISG had acquired the assets of Bethlehem Steel Corp., including the Sparrows Point mill, out of bankruptcy in May 2003.

Reutter’s career includes a stint as a reporter with the Baltimore Sun during the 1970s. He had begun learning about Sparrows Point and the steel industry years before, but really got into the meat of the story during those days in the 70s. “At that time, the steel industry and Sparrows Point were booming,” he said. “I was working on a lot of stories, talking to union guys about some accidents that were happening in the plant at that time. That was when OSHA (Occupational Safety and Health Administration) finally made it possible to penetrate the veil of accidents and injuries that were occurring at large industrial complexes. Those kinds of figures had not been available to that point. That (availability of statistics) turned out to be one of the great benefits of OSHA.”

It also planted the seeds that would blossom into Making Steel.

Although he grew up in northern New Jersey, Reutter had family in Baltimore and he visited the area often. He recounts in the introduction to his book how, in 1967, at age 16 and fascinated by what he calls “the unlovely side of the tracks.”

“ I always have been interested in economic power and how it relates to people both at the top and bottom,” Reutter said. “I loved being a reporter and talking to the older reporters at the Sun and trying to weave all this information together.”

The book recounts numerous stories of the plant's successes and failures from former workers and executives and residents of Sparrows Point. Reutter was able to get his hands on Wood's papers, which yielded a great deal of historical information about the plant and how its culture is shaped even today.

“ There were many ways of life in the plant in its history. Each mill was different. The open hearth workers were different from the female tin floppers for more reasons than their gender,” Reutter said. “Sparrows Point was so huge at that time. It was a mile and a half from the coke ovens to the old cold mill. You had two different neighborhoods there with different ethnic groups.”

Reutter said his research revealed in Wood's papers that executives at the time felt African-American workers should work on the hot side of the mill. “The hot side was considered the black side. The executives felt that black workers would be better suited to stand the hot Maryland summers,” Reutter said. “Many of the working-class people who came to Baltimore – both black and white – migrated from the South. Wood’s managers preferred to have the black workers employed in the blast furnace. There was really no science to it. That's just the way they set it up.”

The book states clearly that in Reutter’s view, many of the former executives of Bethlehem Steel were guilty of placing profits before people, and effectively blames those executives for the economic failures of Sparrows Point.

As time has passed, Reutter has added to the book and now says he fears that Ross and Mittal ultimately will be proven guilty of many of the same offenses. “I do not believe that we are secure as a nation without a steel industry. There was a lot of financial maneuvering (by former executives) and a lot of money extracted from the industry that should have gone into new technology and remaining competitive,” Reutter said.

“ I think Wilbur Ross is (former Bethlehem Steel chairman) Charles Schwab without the charisma. I'm afraid that all of the consolidation that is taking place is going too far and will make the industry less competitive and more reactive.”

In Reutter’s view, the major battle facing the steel industry today is not low-priced imported steel. Rather, it is a relative inability to stave off competition from materials such as aluminum and plastics.

“ The key to the industry's success lies in lowering its costs and finding new markets. In 1957, the (Sparrows Point) mill was big and America reigned supreme. But there was a lot of hubris in that. Structural things were beginning to change for the worse,” he said. “Reynolds Metals out of Richmond, Va., got involved in the canning business and took away the beverage can market. The industry has in many cases lowered its cost structure. But they haven’t been as successful as they need to be in getting into new markets to replace what has been lost.”

The future of the plant now rests with Mittal, who has folded it into Chicago-based Mittal Steel USA, the North American arm of his steel company. Reutter casts a wary eye toward Lakshmi Mittal.

“ I am worried about Mittal. Foreign ownership (of U.S. steel mills) is a real problem. I have heard a lot of complaints from people within Mittal Steel about how the company is doing business. I am concerned about (the United States) losing control of its industry. There should have been some debate about that,” he said.

“ Wilbur Ross is looked at as someone who was a savior of the industry. The union bowed down to him, and he promised everyone he would be in it for the long haul. He was in it for three years. That's not very long. But all that rhetoric didn't really look into the pluses and minuses of what these deals meant. I really wonder what commitment Mittal will have to the domestic industry. The company has no ties here.”

The Ross-Mittal exchange is only part of the story that Reutter is trying to relate. His effort is directed toward telling the history of Sparrows Point, its rise and fall and role in the greater picture of North American manufacturing.

“ I am trying to tell the stories of the workers and their families as well as chronicle the plant and its role in manufacturing,” he said. “The approach I take is that you have to look at all of these things to understand the business. Men, machines, money, markets – they are all interwoven into the making of steel.”