A Real Steelman For Usx

Last December, when USX Corp. Chairman Charles A. Corry was arrested in Washington for carrying a loaded gun into a federal building, the response in Pittsburgh was quiet glee. Corry, who faced a misdemeanor charge that later was dropped, has never been a favorite in Steeltown. After all, he was the one who pushed U.S. Steel into the energy business, with a $6.5 billion buyout of Marathon Oil Co. in 1982. Later, he put the steel unit on the block but couldn't find a buyer. Rumors swirled in the early '90s that Corry even would move the headquarters of the steel giant to Houston.

Now the steel stalwarts can rejoice: One of their own is back in charge. On Apr. 25, the board of the $19 billion conglomerate announced that it has picked a veteran steelman, Thomas J. Usher, 52, to replace Corry, who is retiring in July, a year and a half ahead of schedule, citing personal reasons. As president of U.S. Steel Group for five years, Usher pushed up production and profits, squeezing more tonnage from mills in Gary, Pittsburgh, and Birmingham. His challenge: to keep the steel group on the upswing while driving down costs at the oil company. But now that he's on a broader stage, Usher may have to ease up on his sometimes raw, shoot-from-the-lip style.

HARD-NOSED LITIGATION. In many ways, Usher boasts an ideal resume for running an industrial behemoth. He has a PhD in systems engineering from the University of Pittsburgh and 29 years of experience in the company, much of it at the plant level. He's smooth and articulate with Wall Street and at ease discussing global trends with his joint-venture partners from Korea and Japan. He jokes readily with workers, both at headquarters and at the mills. "He's a natural leader," says Matthew Botsford, president of WorldClass Processing Inc., a Pittsburgh steel servicing company. "People there believe in him."

However, Usher has been known to go too far. Two years ago, speaking to the Association of Women in the Metal Industries, attendees say that he opened with a lengthy series of sexual jokes, some of them targeted at specific members of the host organization. "It was pretty raunchy," recalls one member of the group. "It wasn't appreciated." Usher notes that the association continues to invite him to speak. Whether the jokes were offensive, he says, may be "in the eye of the beholder."

The chairman-to-be also shows signs of carrying on USX's tradition of hard-nosed litigation that sometimes backfires. In the most prominent case, the company was slow to settle a longstanding antitrust suit lodged against a former holding of U.S. Steel, Bessemer & Lake Erie Railroad, and ended up in 1993 on the wrong end of a $498 million verdict. What's worse, the money went in the form of damages straight to some of U.S. Steel's toughest competitors. Usher says that the best chances to settle were already lost before he and Corry started to run the company.

A year later, when National Steel raided his Gary mill, hiring plant management for top executive jobs, Usher sued National and pushed for an injunction. He and his team flew to Hammond, Ind., and insisted in state court that National was merely intent on crippling a competitor and stealing trade secrets. The injunction was quickly dismissed. But USX still is pushing ahead with a longshot suit against National and its Japanese owner, NKK. "We were the aggrieved party," he insists.

IMPROVING PICTURE. Despite such spats, Usher has led U.S. Steel to an impressive comeback. In the past five years, the company has pushed ahead of German and Japanese rivals in productivity. At the same time, he has prepared for a down market in common grades of steel by forging high-tech joint ventures with Japan's Kobe Steel Ltd. And last year he even teamed up with minimill nemesis Nucor Corp. in a joint venture to develop new steelmaking technology.

At Marathon Oil, Usher steps into an improving picture. Production is up 30% in two years, now that big projects in the North Sea and the Gulf of Mexico are coming on strong. But its consortium in Russia, the Sakhalin Energy Investment Co., is running into bureaucratic resistance. Marathon's stock--which was separated from the steel stock four years ago under pressure by Carl C. Icahn--is at 19, a 12-month high but still 25% below its level at the time of the split. More cost-cutting seems called for, and Usher certainly knows how to do that: U.S. Steel axed more than 100,000 jobs in the 1980s. With him at the helm, Marathon may be in for similar medicine.

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