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U.S. Steel reorganizes operating units

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Mario Longhi, chief executive officer of U.S. Steel.

U.S. Steel Corp. is reorganizing its three operating units to focus on industries the company serves, the latest phase in the Downtown-based company’s Carnegie Way program to cut costs, boost revenue and return to profitability.

As part of the new management structure, U.S. Steel is realigning its North American Flat-Rolled division to focus on five markets: automotive, consumer, industrial, service centers and mining.

“These commercial entities will put our company in a stronger position to be best-in-class in product innovation, customer service and solutions, as well as steel manufacturing,” CEO Mario Longhi said.

The company is renaming its Tubular Products unit Energy Solutions, reflecting its focus on providing steel pipe to the booming oil and gas industry. And its operations in Europe were renamed U.S. Steel European Solutions.

The company called the reorganization a “logical next step” in its strategy to boost its performance. The aim is to grow business by collaborating more closely with its customers and establishing “clearer and more focused and effective accountability.”

Charles Bradford, president of Bradford Research Inc. in New York, was skeptical about how much reorganization would do to improve U.S. Steel’s performance. But he said anything the company can do to make its operations more transparent and accountable would be welcomed.

“If this is designed to make people more accountable for their performance, that’s terrific,” he said.

John Tumazos, an analyst with Very Independent Research in Holmdel, N.J., said focusing the company on specific markets is a positive move, because competition in those industries is growing. “They’re trying to focus their salesmen,” he said.

In automotive, for example, Alcoa Inc. is trying to increase sales of lightweight aluminum to carmakers, eating into a market that steelmakers dominate. Car companies are looking for lighter materials to help them improve fuel economy.

“The companies are lining up to compete,” he said. “It’s trying to make the organization more focused and efficient with the customer.”

U.S. Steel last month said its Carnegie Way strategy yielded $495 million in savings this year. The company is cutting debt and expenses, some through layoffs and plant closings, while exploring the use of new steelmaking technologies that are viewed as cheaper and more efficient.

Spokeswoman Courtney Boone said the realignment does not involve additional cost-cutting or layoffs. The company is in the process of hiring executives to lead each new segment, she said.

In the third quarter, U.S. Steel improved its net loss to $207 million, compared with a net loss of $1.8 billion a year earlier.

The move to organize its tubular division around the energy industry occurs amid a boom in shale oil and gas drilling. Steelmakers were expecting to reap big rewards supplying the industry with pipes for drilling and transmission but were undermined by cheaper imports.

The domestic steel industry recently won a case against foreign competitors they accused of dumping low-priced steel in America. The Commerce Department said in September that it was adding tariffs on imported steel tubing from South Korea and eight other countries, which U.S. Steel said would have a positive impact on its finances.

While the changes affect the way U.S. Steel approaches customers, the reorganization won’t change the way it reports financial results, the company said. It will continue to breakdown operating performance by North American flat-rolled products, tubular products and Europe.

U.S. Steel shares closed at $36.11, down 13 cents, or 0.4 percent.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or [email protected].

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