Dunham rises at Beth Steel

Leadership: A steel executive with a Sparrows Point connection takes the helm of America's No. 3 steelmaker.

April 23, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

Duane R. Dunham spent just six years at Sparrows Point, running Bethlehem Steel Corp.'s Baltimore division, but people here like to think of him as their own. His ascension Tuesday to head of the company is almost a local-boy-makes-good tale.

He was the first head of Sparrows Point as an independent division responsible for its own bottom line, and he is widely credited with turning around the 113-year-old facility in eastern Baltimore County by injecting a new way of thinking that emphasized customer service, the value of hourly workers and a spirit of teamwork.

Now, Dunham, 58, said he intends to apply that management style companywide.

"My vision of the future strategy and organization for the company is one that is consistent with my own personal beliefs -- boundaryless, a focus on speed, a focus on results, value creation," he said during an interview at the steelmaker's headquarters in Bethlehem, Pa. "And the organization, with the things under way now, will really start to have a laser beam on that specific mission."

With the help of union concessions, Dunham showed his bosses at headquarters that the sprawling Sparrows Point complex, then on the brink of obsolescence, could be profitable. As a result, Bethlehem invested more than $600 million in renovations and upgrades that were recently completed.

The plant that many analysts said should be shuttered is virtually guaranteed to stay open for at least a decade, if not considerably longer.

Now that Dunham is about to become the top boss -- assuming the titles of chairman, chief executive and president -- Bethlehem administrators, hourly workers and investors are waiting to see if he can repeat his Sparrows Point successes.

Bethlehem, like so many manufacturers, is a shadow of its former self. It employed 130,000 people in 1965 -- the year Dunham came on board as a salesman -- and is now down to 15,500. It doesn't even make steel in its hometown anymore.

The country's No. 3 steel company is struggling to keep costs down while it pays out retirement benefits to about five people for every one employed. And it's being squeezed from both ends -- by the largest integrated steelmaker, U.S. Steel Group, and by mini-mills such as Nucor Corp., which keep expenses down by using nonunion labor and by recycling scrap metal instead of making steel from scratch.

Both U.S. Steel and Bethlehem have complained that inexpensive imports are hurting their bottom lines. Still, U.S. Steel, whose stock is trading at about $25, walked away from 1999 with a profit of $44 million, although it was a drop of 88 percent. Nucor is trading at $45 and netted $244 million in 1999.

Bethlehem, in contrast, lost $179 million on operations last year (and posted a $183 million net loss), and its shares are worth less than $6.

Dunham must "work on costs and work on trying to develop -- I hate to use the word morale, it's not bad -- but get people working together, and he's got to be focused," said Charles A. Bradford of Bradford Research in New York. "He did a lot of that at Sparrows Point."

The reviews from those who worked with Dunham in Baltimore suggest that he is nothing if not uplifting.

"He encouraged, motivated, would try to inspire you to imagine what could be if we did all the things we were supposed to do," said Peter W. Tucker, commercial manager for Sparrows Point's tin mill products group. "He could be very tough and stand up and tell you this is the way it's got to be. He was strong, but you never felt anger."

Sales background

Dunham's background and style is a switch for the steel company. Like his predecessors, he's a company man, having joined Bethlehem the year after he graduated from Western Michigan University with a bachelor's degree in administration. But instead of coming from the engineering side or the legal team, as did his immediate predecessor Curtis H. "Hank" Barnette, Dunham is only the second chairman to come up through the ranks from the sales department.

"There are certain skill sets you learn about how to deal with people, listening to what their needs are," Dunham said of his days in sales. "I found out a long time ago you're better off if you ask questions, then shut up and listen."

Frank Rose, immediate past president of United Steelworkers of America Local 2610 at Sparrows Point, said the plant was "in a death spiral" before Dunham arrived.

The company doesn't release division earnings, but confirms that Sparrows Point was losing money before Dunham arrived in early 1993 and that by 1994 it started making money.

"He talked to people in the mill," Rose said. "He believed that if we were to be profitable, it would be through the workers, that Bethlehem's greatest asset is its workers, and that's true.

"Duane challenged members not just to work harder, but smarter," said Rose, who will retire at the end of the month after 43 years with the company. "He let us in on the business strategies and the competition that was out there."

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