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THE BATTLE FOR NATIONAL STEEL U.S. Steel plays union card in bidding war



Published: Thu, February 13, 2003 @ 12:00 a.m.



Steelworkers are playing a key role in deciding which company will get bankrupt National Steel.

PITTSBURGH (AP) -- U.S. Steel and the United Steelworkers of America agreed Monday to begin negotiations on a labor deal covering union workers at National Steel, a bankrupt company that is the target of a bidding war between two industry players.

An agreement covering National's 8,200 workers and about 12,000 union employees of U.S. Steel could give the nation's largest steel maker a leg up in a contest with AK Steel Corp. to take over National, which has been operating under bankruptcy protection since March.

Last week, a federal bankruptcy judge in Chicago named AK Steel of Middletown, Ohio, the lead bidder for National, a designation which could give it an edge in a bidding war.

But National also would retain the right to reject an AK Steel offer if a deal cannot be reached with the union by March 17 -- a difficult task given that AK Steel's relationship with the Steelworkers has been a rocky one.

Labor relationship

A lockout at the company's plant in Mansfield, Ohio, which began in September 1999 and ended two months ago, was marred by violence, including a fight between pickets and security guards.

By comparison, U.S. Steel, which is based in Pittsburgh, has had a "fairly good relationship" with the union in recent years, a U.S. Steel spokesman said.

As part of its agreement to negotiate with the union, U.S. Steel said it would suspend its previously announced sale of raw materials and transportation assets. The company announced in October a plan to spin off those assets in a $500 million deal with Apollo Management, a private equity firm in New York.

If a deal is reached covering National and U.S. Steel workers, the company may have to keep its coke plants in Gary, Ind., and Clairton, Pa., and its Minnesota iron ore operations, where there are union employees on the job.

Steelworkers President Leo Gerard said U.S. Steel management recognizes the importance of negotiating with the union.

"If that attitude continues, there is no reason that we cannot move forward quickly to put U.S. Steel in a position to acquire National Steel and continue the humane consolidation that the steel industry needs," Gerard said.

He said the union also will continue working with National Steel's management and creditors on a "stand-alone" plan of reorganization for the company.

Union stance on AK

The union said in a news release that it remains willing to enter discussions with AK Steel over National as soon as possible but expects that process to be "significantly more difficult." It said AK Steel has been unwilling to resolve issues from the lockout and cited "a long history of its difficult relations" with the union.

Alan McCoy, an AK Steel spokesman, declined to comment on U.S. Steel's negotiations but said his company has successfully negotiated 10 new labor contracts in the last 3 1/2 years, including four with United Steelworkers locals.

Bankruptcy Judge John H. Squires has set an April 7 hearing date on AK Steel's $925 million offer to purchase Mishawaka, Ind.-based National.

AK Steel revised its bid upward by $100 million after U.S. Steel proposed taking National Steel out of bankruptcy for $750 million and the assumption of $200 million in debt. AK Steel also offered to take on the debt.




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