Author says ISG buyers are no saviors of steel industry

Reutter claims deal merely lined a few pockets

Copyright © 2005, The Dundalk Eagle, March 3, 2005


By Joseph M. Giordano

Since the industrial heyday of World War II, it has been said that steel was the backbone of this country.

And like a chiropractor bearing bad news, author Mark Reutter says the "backbone" of America is broken with little hope of repair.

Reutter, a former Sun reporter who wrote Making Steel: Sparrows Point and the Rise and Ruin of American Industrial Might, hit eight locations in the past three weeks discussing the history of Sparrows Point and the fact that 40 percent of the nation's steelmaking industry is about to fall into the hands of a foreign investor.

"It's a sad irony," Reutter said after a Feb. 18 talk at the Steelworkers Hall on Dundalk Avenue. "Everyone was afraid of foreign steel. Now Sparrows Point will be owned by a foreign investor."

Other stops on his book tour included the Dundalk-Patapsco Neck Historical Society Museum and CCBC Dundalk.

On his Web site, makingsteel.com Reutter reported on the pending sale of the International Steel Group (ISG) - which bought the bankrupt Bethlehem Steel Corp. in 2003 - to Lakshmi Mittal, owner of a steel conglomerate based in the Netherlands.

On Oct. 25, ISG chief executive officer Wilbur Ross struck a deal with Mittal to sell ISG for $4.5 billion, according to Reutter's Web site (Reutter culled his information from sources like Fortune magazine and The Financial Times newspaper), thus sending ISG's stock value skyrocketing. By the day of the sale, Ross and the shareholders were about $545 million wealthier, Reutter reported.

"Wilbur Ross raped that company," Reutter said Friday from his office at the University of Illinois. "He promised to look after the steelworkers and save the industry. But all he did was come in and sell it off."

At one of his public talks, Reutter asked a current Sparrows Point steelworker whether any improvements had been made since ISG had taken over.

"He told me no," Reutter said. "Nothing has been done to improve Sparrows Point."

Indeed, back in December 2002, The Eagle reported that Ross and Bethlehem's then-CEO Robert "Steve" Miller Jr. promised the buyout deal would be viewed as a model for future labor contracts at some domestic steel companies. Miller said in an announcement after the $1.5 billion deal was complete, "with ISG [Beth Steel employees] will have a stronger corporate parent and a stronger deal between the [United Steelworkers of America] union."

Earlier last year, Ross began selling off his ISG holdings, according to Reutter's Web site, and pocketed about $700 million through his investment firm, W.L. Ross & Co.

"The steel industry could have been saved," Reutter told the 40 people who showed up at his first book-tour stop, at the former Patterson theater in Highlandtown on Feb. 10. "It needed to innovate and change - neither of which happened, and now it's stuck."

If the deal with Mittal, 48, goes through by the end of March, according to the Associated Press and Mittal's Web site, the family-owned Mittal Steel Co. NV would own 40 percent of America's flat-rolled steel and potentially cut 45,000 jobs worldwide over the next five years.

Mittal said in a Web-based interview with analysts on Feb. 23 that his company - which if combined with ISG could make $32 billion a year - would concentrate on expanding the company's growth in Eastern Europe, where the process of steelmaking is cheaper.

All this is happening under the noses of public officials, according to Reutter.

"[Three years ago,] local politicians came out in protest of foreign steel," Reutter said. "Where are they now that retirees have no benefits and the head of a foreign company is going to buy our industry?"

Reutter also lashed out at the Mittals' lavish lifestyle.

"In July, Mittal held a $55 million wedding for his daughter in France, and [he] owns a $105 million house in London," Reutter said, "while retired steelworkers have no benefits."

Reutter suggested at a few of the talks that workers band together for a massive lawsuit to win back their benefits.

"I'm by no means qualified to say what should be done," Reutter said. "But I think it's a property issue. Their property was stolen from them and they need to get it back."

After Reutter's earlier talk at the Steelworkers Hall on Feb. 15, retired ironworker Joe Lawrence was disgusted at what he heard.

"It's deplorable," Lawrence said. "I'm still fighting to get the money ISG owes me from the buyout."

Though he hasn't read Reutter's book, he was interested in the author's talk, which included a history of the plant.

During the tour, Reutter sold 200 copies of the book.

"I was impressed and very thankful to the community for buying and reading the book," Reutter said. "I had a great debate with a steelworker who had read the last chapter [about the demise of Beth Steel]."

During the exchange with the steelworker, Reutter told the man that the unions have to take the fight to the politicians.

"Steelworkers have always fought for their rights," Reutter said. "To win this fight for their benefits, they have to get that spirit back."