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Mix-Ansicht- Das Ford Imperium löst sich auf, erster ist ein Stahlwerk - EM-financial, 30.10.2003, 21:30
Das Ford Imperium löst sich auf, erster ist ein Stahlwerk
-->Henry Ford's Steel Mill May Land in Russian Hands: Doron Levin
Oct. 30 (Bloomberg) -- Henry Ford never dreamed that Rouge Steel, which he built early in the last century to supply Ford assembly lines, might one day be bought in bankruptcy court by a Russian steelmaker.
That's just what could happen if OAO Severstal, Russia's No. 2 steelmaker, prevails with a non-binding letter of intent, submitted last week, to buy the assets of Dearborn, Michigan- based Rouge Industries Inc. Details of the offer weren't disclosed.
First, Severstal may have to outbid U.S. Steel Corp., which earlier discussed with Rouge the possibility of acquisition, or other steelmakers such as International Steel Group Inc., owned by Wilbur Ross, that have been gobbling failing steel mills throughout the Midwest.
With 20 percent excess capacity in the world steel industry, it's an uphill fight for Rouge to stay viable as a subsidiary of Severstal or any other steelmaker. Without cooperation from the union its prospects are nil.
Protective Tariffs
Rouge Industries filed for Chapter 11 bankruptcy protection a week ago, listing among its creditors, Ford Motor Co., $35.1 million; U.S. Steel, $8.5 million; and the city of Dearborn, $4.1 million.
For Severstal, which specializes in sheet steel for the Russian automotive industry, buying Rouge would mark its first penetration of the U.S. automotive market and a hopeful sign for burgeoning Russian capitalism. Severstal's entry in the U.S. has been made more difficult over the past 18 months by protective tariffs against foreign steel put into place by the Bush administration.
The administration is expected to decide shortly whether to withdraw the tariffs or continue them for another 18 months. The U.S. almost certainly faces retaliation from the European Union unless they are dropped.
``The purchase (of Rouge) would let us come to the U.S. market for a long time,'' Severstal's spokeswoman Olga Yezhova told Bloomberg News in a telephone interview from Cherepovets, Russia, where the company is based. ``Exports of Russian cold- rolled steel for cars to the U.S. face limits now.
William E. Hornberger, a Rouge spokesman, said, ``We first met Severstal people more than a year ago. We found them to be very knowledgable, very bright steel people.''
Cutbacks Expected
Rouge shares today are selling for only a few cents a share, consistent with the company's announcement that any recovery for equity holders is unlikely in the bankruptcy. In mid 1994, Rouge shares sold for nearly $35 and have dwindled ever since.
Severstal shares, by contrast, lately have risen to the neighborhood of 3,500 rubles ($117.32) per share, from about 600 rubles three years ago. The steelmaker also is bidding for 79 percent of the Hungarian steelmaker, Dunaferr Rt.
Whether Severstal or another steelmaker buys Rouge Steel's assets, employment prospects are gloomy for many of the 2,000 or so hourly workers represented by the United Auto Workers union. Typically the reorganization of steel mills under new owners has led to extensive firings, as well as curtailment of pension, health care and other benefits.
``Labor contracts in the steel industry were totally out of line with the reality of a changing world,'' said David Littmann, chief economist for Comerica Bank. ``It could have been the Koreans or anyone'' to buy Rouge, he said: ``The wave of the future is to declare bankruptcy to relieve yourself of astronomically uncompetitive costs.''
Ford Biggest Customer
Ford Motor, which has been closing auto plants and laying off workers in part because of uncompetitive union contracts, tried to keep Rouge in business. Ford, however, has its own problems, with huge financial losses and Toyota nibbling at its market share.
In 1989 Ford spun off the Rouge steel operations as a public company. Amid the collapse of steel prices, the steelmaker had posted losses from 1999 through 2002, totaling $329 million. In 2002 Ford lent Rouge $75 million.
Ford is Rouge's biggest customer. It buys 700,000 to 800,000 tons of steel annually, making Rouge one of the automaker's biggest steel suppliers.
Last month the UAW asked Ford, General Motors Corp. and DaimlerChrysler AG to buy steel at prices high enough to help Rouge avoid bankruptcy or a takeover by U.S. Steel. Apparently a bailout wasn't in the cards.
Tariffs Boomerang
The Bush tariffs were devised to help U.S.-based steelmakers compete against imports and win the political support of workers in Pennsylvania, Ohio, West Virginia and other steelmaking states.
Oddly, the tariffs not only weren't sufficient to keep Rouge out of bankruptcy, they've boomeranged in unanticipated fashion against Ford.
Ford's suppliers now are complaining that they can't take advantage of low steel prices -- such as those Severstal might be charging if it could import its products to the U.S. Ford, meantime, is hammering those same suppliers for lower parts prices so it can compete against foreign automakers.
The time has long since passed when Ford Motor can afford to be sentimental about where it buys its steel. If Henry Ford were around he might have made that point himself.
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