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U.S. Steel leadership change is a cultural transformation

Sep 30, 2013 | 07:00 PM | Thomas C. Graham

Tags  U.S. Steel, Mario Longhi, John P. Surma, David B. Burritt, Thomas C. Graham, Parting Shots


With the announcement of four early retirements at the top of the company, U.S. Steel Corp. made news by breaking with long-established practice and recruiting a chief executive officer and a chief financial officer from outside the company.

Mario Longhi joined U.S. Steel a year ago as executive vice president and moved quickly to president and chief operating officer and his recent appointment as chief executive officer, succeeding John P. Surma, who will remain executive chairman until his retirement at year-end. Longhi was at New York-based Alcoa Inc. and Tampa, Fla.-based Gerdau Long Steel North America before moving to U.S. Steel.

New executive vice president and chief financial officer David B. Burritt came from Peoria, Ill.-based Caterpillar Inc., taking over from Gretchen R. Haggerty, who retired at the end of August.

When Longhi took office he immediately announced a sweeping cost-reduction program, dubbed Project Carnegie. Although no dollar goals have been made public, Longhi has defined the effort into four specific segments: the cost of producing pellets; the cost of converting pellets into steel products; ways to increase revenue; and overall administrative cost. Steel analysts and industry observers applauded the move.

Reaching outside the company for talent is commonplace in the business world today, but U.S. Steel might have been the last company to cling to a “promote from within” policy. This mantra is a vestige of the Great Depression, and was publicly espoused by businesses that were not exposed to a fiercely competitive landscape such as steel. Why a company would limit its search for an executive is a complete mystery.

The Surma years (2004 to 2012) were characterized by congenial relations with the United Steelworkers union through a significant improvement in worker safety statistics; the launch of a huge effort in enterprise resource planning that is now in midstream; two large acquisitions, Lone Star Technologies Inc. and Stelco Inc.; the disinvestment of the company’s Serbian steel plant; significant reinvestment in coke at its Clairton, Pa., and Gary, Ind., facilities; the construction of a continuous anneal line for high-strength automotive steels; and organizing a group of domestic tubular products manufacturers that filed a trade suit against nine foreign suppliers alleging violation of U.S. trade laws.

Lone Star was quickly integrated into the Pittsburgh-based steelmaker, but Stelco has been more difficult.

The transaction with the Serbian government represents the essence of a European liberal culture. This means that money-losing steel plants are “national assets” and may never be shut down. Serbia (and France) need a modern-day Margaret Thatcher.

Thomas C. Graham is a founding member of T.C. Graham Associates. He is a former chairman and chief executive officer of AK Steel Corp., president and chief executive officer of Armco Steel Co. LP, chairman and chief executive officer of Washington Steel Co., president of the U.S. Steel Group of USX Corp. and president and chief executive officer of Jones & Laughlin Steel Co. His column appears monthly. He invites readers’ comments and can be contacted at tom.graham@tcgrahamassociates.com.




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