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
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 companys 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