Is super steel a super deal?

The nation's biggest steelmaker, U.S. Steel, is looking to get bigger. A lot bigger.
Some analysts seem to think that being bigger is the only way a steel company can compete in the world market these days.
Maybe. But the Mahoning Valley has seen its share of consolidations over the years. It has seen big steel companies pulled into mergers to make even bigger steel companies, and the results have not been impressive.
Past or prologue: Just yesterday in this space we talked about LTV Corp., which in the '70s and '80s consumed in one way or another Republic Steel Corp., Youngstown Sheet & amp; Tube Co. and Jones & amp; Laughlin Steel Corp. LTV was once the nation's second largest steel company; now it's bankrupt.
Just getting bigger is not a recipe for success.
In U.S. Steel's case, it is talking about consolidating with Wheeling Pittsburgh Steel and Bethlehem Steel. There's also a separate deal being negotiated between U.S. Steel and Japanese steelmaker NKK Corp. whereby U.S. Steel would buy NKK's American subsidiary, National Steel Corp.
"Our vision is to develop a growth-oriented, world-competitive steel company with a global reach," says Thomas J. Usher, chairman of U.S. Steel's parent USX Corp. Pittsburgh-based USX describes itself as two separate businesses, a major worldwide producer of oil and natural gas and the nation's largest producer of steel products.
The competition: Still, U.S. Steel has "only" a 17-million-ton capacity, which, if all the mergers went through, would grow to about 30 million tons. Those are impressive domestic numbers, but are dwarfed in comparison to the pending merger of France's Usinor, Luxembourg's Arbed and Spain's Aceralia, which would form the world's largest steelmaker with a capacity of 50 million tons.
There are some other big numbers involved in a proposed U.S. Steel merger: billions of dollars in unfunded pension liabilities by companies that are in bankruptcy, such as Bethlehem. A plan has been proposed whereby financially sound U.S. Steel would take control of all the smaller companies' plants and assume the pension obligations of all current workers. Responsibility for the pension and health costs of the retirees of the ailing firms, would be assumed by the federal government.
Congress and the Bush administration are going to have to take a very careful look at the implications of creating a huge integrated steel company and at shifting pension costs from individual companies to the federal government.