Word: isg
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...stage for a new round of global consolidation in the industry. Last week, in a complicated $17.8 billion deal, Indian entrepreneur Lakshmi Mittal said he would merge his existing steel assets - the privately-held LNM Holdings and the publicly-traded Ispat International - with the U.S.-based International Steel Group (ISG). The deal, which must still gain regulatory approval, would create the world's biggest steel company, Mittal Steel, to be based in Rotterdam in the Netherlands, and help Mittal pursue his modest goal of making Mittal as synonymous with steel as Ford is with the motor car. The new company...
...Hoogovens. In order for steelmakers to wield sufficient clout, notes Tommy Trask, an analyst at Standard & Poor's, steel "needs to be as consolidated as the iron-ore suppliers or the end customers." Both Mittal and Wilbur Ross, the former investment banker and distressed investment specialist who helped create ISG, envisage a future where steel is dominated by as few as half a dozen multinational companies. "Because of the scale of the transaction," Ross told Time, "it will accelerate [the merger trend]. It's inevitable...
...risk. In a series of shrewd moves that netted him an estimated $22 billion fortune and the nickname "the Carnegie of Calcutta," Mittal, 54, has spent much of his career buying run-down steel facilities in far-flung locations like Romania and Kazakhstan and returning them to profitability. But ISG is a different animal. It was formed in 2002 from the guts of the bankrupt LTV steel business. Under the watchful eye of Ross, the firm, which employs 15,000 people, grew into one of the U.S.'s major steel producers by acquiring money-losers like Acme Steel and Bethlehem...
...return, thousands of laid-off workers were recalled at their old hourly rate. If they meet specific production targets, they get a bonus every two weeks. The system is working: ISG is now among the world's most efficient manufacturers of flat rolled steel for cars and appliances, producing it for about $348 a ton shipped--about 25% cheaper than French and Japanese steel. In the last six months of 2002, steelworkers at LTV collected average bonuses equal to seven weeks' pay. Now Ross is looking at union rules and wages in the tire and auto industries--both...
...boosts in their base pay often see those raises wiped out by cuts in health and retirement benefits. The biggest benefit rollbacks are in heavy industries like steel, in which many union contracts in the U.S. give foreign firms a 10%-to-20% edge in production costs, according to ISG's Ross. He says there is more health-care expense than steel expense embedded in the price of a typical car. In most countries, health-care costs are borne by taxpayers, and until the U.S. levels the playing field, perhaps with a "health-care surcharge," Ross maintains, virtually all large...