Beth Steel's local unit has new chief Johnson is named president of division at Sparrows Point

Management changes

Rally is planned to protest dumping of steel by other nations

October 29, 1998|By William Patalon III | William Patalon III,SUN STAFF Bloomberg News contributed to this article.

Bethlehem Steel Corp. named Sparrows Point insider Carl W. Johnson as president of its Baltimore-based division yesterday.

Johnson's appointment is the result of several management changes announced on the same day the company reported that third-quarter profit dropped 8.6 percent, coming in slightly lower than Wall Street expectations.

Johnson, who is vice president of operations for the local steelmaking facility, will succeed Duane R. Dunham as president of the Sparrows Point Division on Jan. 1.

Dunham is being tapped to replace David P. Post, senior vice president and chief commercial officer, who will retire Dec. 31 after more than 42 years with the company. As of Jan. 1, Dunham will move into the revised position of executive vice president of commercial and business development, a corporate staff job in Bethlehem, Pa., that will involve him heavily in strategic planning.

Johnson joined Bethlehem Steel in 1963 as part of a company training program and worked in a number of supervisory positions before he was transferred to Sparrows Point in 1988 as a manager of maintenance and technical services.

In his current position, Johnson was one of the key players in Sparrows Point's embrace of a production philosophy known as Throughput-based Manufacturing.

The theory is designed to help companies identify bottlenecks in their factories and to maximize output by removing the obstacle or redefining the company's strategy so that the obstacle is no longer an issue. The production theory has had a large and positive impact at Sparrows Point.

"He's a good man, well-versed" in the issues Sparrows Point faces, said company spokesman Ted Baldwin. "We feel it's a vote of confidence in the people of Sparrows Point" that the company's leaders chose Dunham's successor from within that facility's ranks.

In its earnings report, Bethlehem Steel said it earned $37 million, or 21 cents per share, on sales of $1.14 billion, for the three months that ended Sept. 30.

That compares with net income of $41 million, or 27 cents per share, on sales of $1.11 billion for the same three months the year before.

Bethlehem said income from operations was essentially flat. It noted that lower costs from exiting underperforming businesses and lower pension expenses in the quarter were essentially offset by lower steel prices that it blamed on competition from cheap foreign steel.

The 21 cents per share was three pennies less than the consensus estimate of 13 analysts assembled by Zacks Investment Research.

"Given that we are the low-cost, highest-quality competitor we cannot and will not be the dumping ground for the unfairly traded products that are coming here," said Bethlehem Steel Chairman and Chief Executive Officer Curtis H. "Hank" Barnette.

Dumping

Bethlehem Steel has joined a host of other steel companies and the United Steelworkers of America union in asking the government to stop such countries as Japan, Russia and Brazil from "dumping" steel on the U.S. market. Dumping means selling a product for less than it costs to make and is generally considered to be a violation of international trade laws. Some of that foreign steel is being made with subsidies from the host government, the steel companies allege.

The government could impose punitive tariffs to slow the alleged flood of cheap imports.

The increase in imports has created huge excess inventories of steel and has dramatically driven down prices.

Steelworkers and area residents are planning a "Stand up for Steel" rally at Bethlehem's Sparrows Point plant today from 4 p.m. to 7 p.m.

Credit Suisse First Boston analyst Thomas Abrams said the U.S. companies seem to have a good case but says he sees tough sledding for Bethlehem for the rest of this year and probably the first half of next year. He rates the stock -- which fell 31.25 cents per share yesterday to close at $8.6875 -- as a "hold."

The shares have closed as high as $17.125 and as low as $7 in the past 52 weeks.

The low price of Bethlehem's stock "is a reflection of a lot of uncertainty," Abrams said. "It's a reflection of much slower domestic growth."

Bethlehem's case involves "hot-rolled steel." Yesterday, the U.S. government levied preliminary punitive tariffs on the makers of stainless steel from six countries, stating that they are selling the steel at unfairly low prices in this country.

Pub Date: 10/29/98

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