A steel company executive who is slated to become co-chairman of the world's largest steel maker when a merger is completed early next year is urging the United States to restructure its steel industry. Efforts are underway to try to make deep cuts in production in the suffering global steel business.
The Financial Times newspaper quotes Joseph Kinsch, head of the Luxembourg steel company, Arbed, as calling for the restructuring of the U.S. steel industry.
He says that most steel makers will back moves to cut the amount of steel on world markets, and he says it is necessary for the United States to put its own steel industry in more competitive shape by facilitating mergers.
The newspaper quotes Mr. Kinsch as saying the outlook for profits in the steel industry is among the worst he can recall in his 40 years in the business.
Luxembourg's Arbed, France's Usinor and Aceralia of Spain announced this week that they are merging to form the world's largest steel maker, which formally starts operations in February. The new company has not yet been named.
Mr. Kinsch will take over in February as co-chairman of the new company, sharing the position with Usinor's Francis Mer. The arrangement will last until April 2004, when the two men will retire and a single chairman will be appointed.
Usinor shareholders will own about 54 percent of the new company, Arbed 24 percent and Aceralia 22 percent. Aceralia is already partially owned by Arbed, which has management control.
Mr. Kinsch said the new company would be ready to make cuts in production as part of global efforts to reduce excess capacity in the steel industry. However, he says the extent of the cuts will depend on what competitors are willing to do. Mr. Kinsch did not say how many of the new firm's 110,000 workers could lose their jobs.
The European Commission on Wednesday cleared the proposed merger to create the new company. It will have an annual output of around 45 million tons, far ahead of the current industry leader, Japan's Nippon Steel with 28 million tons. The new company is expected to have annual sales of some $26 billion.