Friday, May 23, 2003
Merging West Virginia steelmakers isn't as easy as it sounds, an official says.
WEIRTON, W.Va. (AP) -- Every so often, someone floats the idea: Two scrappy but now bankrupt West Virginia steelmakers should surrender their independence and become a single, stronger company.
An Ohio congressman has raised the issue again, suggesting a merger of Wheeling-Pittsburgh Steel and Weirton Steel on Monday only hours after Weirton Steel filed for Chapter 11 bankruptcy protection.
Wheeling-Pitt, which has five plants in eastern Ohio, has been operating under bankruptcy protection since November 2000.
"I believe it is in the interests of all parties involved -- and most especially for the thousands of steel workers whose livelihoods are at stake -- for the management and unions of Wheeling-Pitt and Weirton to finally come together and begin formal talks," said Rep. Bob Ney, R-Ohio.
A merger is the key to two small, independent companies' surviving in a rapidly changing industry, said Ney, of St. Clairsville.
Difficulties with merging
Such a partnership "is not as easy as it sounds," Weirton Steel spokesman Gregg Warren said Tuesday.
"We have talked to our legislators. We appreciate their concern, and we will continue to call on them for help," he said. "We understand their comments, but we live the day-to-day, the finances. ... It's not as easy as it sounds to do it."
Though the companies have discussed a merger as recently as last year, no talks are under way now. Nor could they resume until one emerges from bankruptcy, Warren said.
Both companies produce galvanized tin and hot- and cold-rolled steel.
Combining tin operations could benefit both companies "so there are some synergies there," Warren said.
"There is a nice fit there," he said. "And you're so close together -- less than five miles apart."
But there are different management approaches, corporate structures and labor unions to contend with, Warren said.
Reorganization OK'd
On Tuesday, a federal bankruptcy judge in Youngstown told Wheeling-Pitt it could proceed with its reorganization plan, sending it to creditors for approval.
Wheeling-Pitt, which is negotiating concessions with the United Steelworkers of America, faces a June 30 deadline to emerge from bankruptcy and claim a $250 million federally guaranteed loan package.
"Even if they come out, it's not a guarantee the companies will get together or even talk," Warren said.
Although the two CEOs, Weirton Steel's John Walker and Wheeling-Pitt's Jim Bradley, are friends who frequently discuss business, both are focused on keeping their companies independent players as long as possible.
Wheeling-Pitt "would do whatever is in the best interests of its workers and steelmaking in the upper Ohio Valley," spokesman Jim Kosowski said Tuesday.
"To that end, we are currently focusing our attention on issues that need to be resolved in order to allow this company to emerge from bankruptcy as a competitive steelmaker."