Bethlehem, British Steel call off venture

November 12, 1991|By Jonathan P. Hicks | Jonathan P. Hicks,New York Times News Service PPHC IjB

Bethlehem Steel Corp. said yesterday that it had ended talks to establish a joint venture with British Steel PLC to develop and market structural steel products. The companies said that they had been unable to reach a labor agreement with the United Steelworkers union.

Under the proposal, British Steel, the world's fourth-largest steelmaker, would have become joint owner of Bethlehem's structural and rail steel business, which is the market leader in the United States.

British Steel would have helped modernize the operations at Bethlehem and Steelton, Pa., with the installation of machinery such as electric furnaces and continuous casters.

The collapse of the talks is seen as a blow to Bethlehem, the nation's second-largest steelmaker, in its efforts to modernize and improve efficiency. It is the only major steelmaker in the United States that has not established a joint venture agreement with a foreign steel producer.

Demand has slackened for Bethlehem's structural and rail products as smaller "mini-mill" steel companies have entered the market.

The deal is also seen as a loss for British Steel. The agreement to produce a modern plant would have given British Steel a strong presence in the North American market. The company, which has strength in the structural steel market in Europe, would have gained an important foothold in the United States.

Structural steel refers primarily to the large steel beams used in construction and bridges.

Last month, Bethlehem said that it and British Steel had decided the venture was feasible if the Steelworkers' union would agree to the changes in manpower levels, work practices and incentive programs.

But at a news conference yesterday to announce the company's latest earnings, Sir Robert Scholey, British Steel's chairman, and Brian Moffat, its chief executive, said that very little progress had been made on that front.

Mr. Moffat said that the companies and the union remained far apart on changes that he thought were necessary if the proposed venture was to be competitive with "the very best competition" -- mini-mill steel producers such as Nucor Corp. and Chaparral Steel Co.

Officials of the Steelworkers' union could not be reached for comment yesterday.

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