When LTV Steel threw in the towel this week, it didn't come as a shock to most people -- even among its employees. But still there are some surprises, and those surprises may make this less than an open and shut case for the U.S. Bankruptcy Court in Youngstown.
One issue that deserves the court's closest attention is LTV's plan to cold-idle its coke plant in Warren. Shutting the plant down cold would cause tens of millions of dollars in damage and would render the plant virtually useless to a buyer.
Since the court's responsibility is to provide the highest return on assets for the company's creditors, it has every reason to ask who wins and who loses if LTV is allowed to do things its way.
State of flux: The steel industry is in an amazing state of flux. U.S. companies have been damaged -- some destroyed -- by unfair foreign trade that only now is getting the attention it deserves in Washington.
Meanwhile, on Wall Street, LTV's competitors saw their stocks rise as investors anticipated larger market shares, once the third-largest domestic producer of steel is gone.
And internationally, Europe will now boast the world's largest steelmaker, with an agreement reached this week between France's Usinor, Luxembourg's Arbed and Spain's Aceralia. The new company will have an annual revenue of $30 billion and the capacity to produce 46 million metric tons of crude steel a year.
When LTV filed for bankruptcy reorganization in January, a Wall Street Journal columnist blithely observed that the nation had too many steel companies as it was and would be better off without LTV. The other day, JP Morgan analyst Michael Gambardella called the impending shutdown of LTV mills in Ohio, Indiana and Illinois "the most positive steel event in the past 20 years."
We don't buy into the idea that if you cull a few aging dinosaurs from the steel industry herd, those that remain will be better off. Eventually the herd is winnowed down to one or two huge dinosaurs that can crush anything small that comes along, but may not be fast enough to move against a competing behemoth from, say, Europe.
Local families: And that is to say nothing about the 200 families in Warren that would be affected by the coke oven shut down or the thousands of worker who will lose their jobs in other cities and states.
For the moment, however, that is a question of national policy, not one for the bankruptcy court. We would simply urge the bankruptcy court to take a hard look at whether LTV's rush to judgment is necessary.