'We're moving on'
By Thomas Gnau
Days after losing the fight to buy the assets of bankrupt
National Steel, AK Steel Corp. Chairman and Chief Executive Richard
Wardrop summed up his company’s position in three words Friday:
“We’re moving on.”
Wardrop on Friday offered his first widely heard public comments,
outside of written statements, on AK’s failed attempt to buy the
assets of bankrupt National.
“The National deal was never ‘do or die’ for AK,” Wardrop said in
a conference call with industry analysts.
He was referring to the assessment of one of those analysts, J.P.
Morgan’s Michael Gambardella.
Middletown-based AK offered $1.125 billion for National. But a
U.S. bankruptcy court in Chicago this week approved U.S. Steel’s
purchase of National’s assets for $850 million cash and the
assumption of $200 million in National’s debt.
U.S. Steel reached an agreement with the union representing 8,000
National workers, the United Steelworkers of America; AK did not.
But Wardrop rejected the notion that AK’s troubled relationship with
the USWA was decisive in failing to win National.
“From our perspective, that was all a lot of smoke screen,”
Wardrop said.
He suggested AK approached negotiations in its own way, quite
different from U.S. Steel’s approach.
“Our bid was always predicated on a healthy dose of cost
savings,” he said.
On U.S. Steel’s tentative pact with the USWA, Wardrop expressed
skepticism, saying, “We could not make economic sense of this kind
of agreement.”
At another point, Wardrop added: “We have never been a pattern
bargainer. We have always right-sized as we saw fit.”
When an analyst from Prudential Securities queried Wardrop on how
AK would have used National’s assets, Wardrop referred to what
company leaders have presented as their time-tested approach —
running “the daylights” out of facilities, but only where they feel
that makes sense.
“We would not be running all those facilities wide open, I would
tell you that,” Wardrop said. “And that was part of the problem.”
Whether U.S. Steel can achieve the cost “synergies” its leaders
say it can in two years after obtaining National’s assets remains to
be seen, Wardrop added. He questioned whether U.S. Steel will be
able to cut loose facilities or bring in contractors if the company
needs.
“The proof of the pudding will be in the tasting,” Wardrop said.
U.S. Steel spokesman John Armstrong said the contract allows his
company to engineer a 20 percent increase in productivity and puts
in place a “world-competitive cost structure.”
“That makes economic sense,” he said.
On the question of closing facilities, Armstrong said the company
bought them to operate. He declined to respond to Wardrop at length.
Wardrop also seemed to hint, without elaborating, that more
acquisition attempts may be in the offing for AK.
“There is no question that growth opportunities exist for AK
Steel yet,” he said.
He did not say whether AK will challenge U.S. Steel’s acquisition
of National’s assets in court, but AK Vice President of Public
Affairs Alan McCoy, asked about that question later Friday, referred
to Wardrop’s own words, saying the company is “moving on.”
Armstrong said he has seen no sign that AK will challenge the
purchase.
published 04/26/03
