March 16, 2016

Longhi Confident U.S. Steel Will Rebound

“Our steel industry is in recession. There’s no doubt about that,” said U.S. Steel President and CEO Mario Longhi in his opening remarks at the Platts Steel Markets North America conference in Chicago this week. That recession has put a serious squeeze on steelmakers around the globe, including the company he oversees. U.S. Steel reported a loss of $1.5 billion in 2015.

Longhi’s company is in the midst of a multi-year effort to return to profitability, something it has been unable to manage since the downturn. Its Carnegie Way restructuring efforts produced $575 million in benefits in 2014 and another $800 million in 2015, but that has not been enough to overcome the recent challenges posed by low steel prices, high imports and uneven demand.

Further changes are in the works, he said, and nothing is beyond consideration. That includes possible divestitures of assets long-considered foundational to the company. He dismissed the notion of the steelmaker filing for bankruptcy protection. “We have enough liquidity to get through, certainly this year,” he said after his formal remarks.

For the first time in company history, U.S. Steel is not among the world’s 20 largest steel producers, a statistic that is of little concern to Longhi. “Pursuit of size is not what the Carnegie Way is all about. We’re likely to get smaller before we get bigger.” In fact, he said, a volume-driven mindset, rather than a profit-driven mindset, has been part of the problem in the past.

One crucial element to a more profitable U.S. Steel is improved demand for domestic steel. The company joined other U.S. producers in filing a trio of trade cases against foreign suppliers, which he thinks has helped spur the modest price increase seen since the start of the year.

Further trade action is possible, including filing for Section 201 relief, the beefiest of remedies available but one that demands the highest evidence of injury. The U.S. industry should have no trouble meeting the injury requirements, he said. “When you lose 40 percent of your volume, 45 percent of your price and you’re laying off thousands of people, how much worse does it have to get?”

One encouraging sign, he said, is how the domestic manufacturing industry seems to have the ear of people in government, both those already in Washington and ones on the campaign trail. “Our case is certainly grabbing the attention of people who can make a difference. The steel case is front and center at upper levels of the government.”
 

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Monday, October 23, 2017