Hot Seat at the Steel Mill
A year ago, Robert "Steve" Miller Jr. and his wife, Maggie, were at a model-train convention when he received an urgent phone message. Miller had stepped aside eight months earlier as acting CEO of auto-parts maker Federal-Mogul Corp. (FMO )--his fourth rescue mission in two years--to return to his home in Oregon's Cascade Range and resume building the miniature railroad that he and Maggie had begun in 1993. Now, Lewis B. Kaden, a director of Bethlehem Steel Corp. (BS ) who knew Miller from his 2000 stint at Aetna Inc., had called with another plea for help: Would Miller come try to salvage the fast-fading steelmaker?
The next morning, Miller left the Salt Lake City convention to meet with Kaden and Bethlehem's other outside directors in New York City. Miller, 60, had never before set foot in a steel mill. Nonetheless, that evening in Kaden's office, he outlined Bethlehem's problems, based on public financial filings he had read on the flight, and offered a few solutions. The following day, Sept. 24, 2001, Miller became chairman and CEO of the nation's No. 3 steelmaker.
A hasty pairing, no two ways about it. But that's Miller. "A fireman doesn't launch into a big due diligence about how hot the flames are or which hose to bring. He just goes," Miller says. Besides, he believes more lengthy reviews would do him little good. "My attitude is, it's probably going to be worse than anyone's willing to admit," Miller says, "and the worse it is, the more they need me."
Since retiring in 1992 as vice-chairman at Chrysler Corp. (DCX ), where he won attention for his central role in the auto maker's 1980 bailout, Miller has hopscotched across the country as a fill-in CEO eight times, often signing on at a moment's notice. While leaving day-to-day operations to company veterans--unlike most other turnaround artists, Miller doesn't bring in his own managers--he assembles a restructuring plan lickety-split. "It doesn't matter whether it's a good idea or a bad idea," he says. "People need to be led. So let's go do! Charge!" Meantime, Miller trolls for an executive who can take over once he has stabilized things. His average time on any assignment: seven months.
Miller's record is mixed. Federal-Mogul, as well as Waste Management Inc. (WMI ), fell back on hard times after he left. And even Miller concedes that he's having trouble devising an acceptable rescue plan at Bethlehem. Still, Gerard R. Roche, chairman and CEO of headhunters Heidrick & Struggles International Inc., calls Miller the top solo act on the turnaround circuit today. "I'm hard-pressed to come up with anybody like him," Roche says. Indeed, Maggie has had to relocate so often that she keeps around what she calls a care package: a couple of boxes of household essentials that she can ship ahead to their next temporary dwelling.
True to form, Miller started out fast at Bethlehem: He put the company into Chapter 11 bankruptcy three weeks after arriving and within three months had negotiated a deal to sell the $3.3 billion operation to U.S. Steel Corp. (X ) But the sale fell through because the government wouldn't pick up Bethlehem's crushing retiree-benefit obligations. His backup plan--forming a series of joint ventures with foreign mills--also went nowhere. Now, he's trying to persuade the United Steelworkers of America to let the Bethlehem (Pa.) company outsource more work to cut costs.
So far, it's not working. During a recent trip to the company's Sparrows Point mill outside Baltimore, workers accused Miller of making them pay for decades of mismanagement. "He can press all he wants, but we're not going to be dictated to by Steve or anyone else," warns Leo W. Gerard, the union's international president. Miller is still hopeful but acknowledges that a shutdown and asset sale may be unavoidable. Either way, he expects to move on in early 2003.
This wouldn't be the first time he has come up short. Miller was nonexecutive chairman at Federal-Mogul in 2000 when he was brought back in as CEO, because, he says, his handpicked successor, Richard A. Snell, went on an acquisition spree that swamped the company with debt and stuck it with ruinous asbestos liabilities. Federal-Mogul declared Chapter 11 bankruptcy last October. Likewise, Miller says he resumed control at scandal-tainted trash hauler Waste Management in 1999 after discovering that the new management was cooking the books, too. And if Bethlehem folds on his watch, after 98 years of business? At least, he says, he'll have tried when others wouldn't dare.
Miller can't be accused of fleecing his employers. At Bethlehem, he earns a flat $900,000 annual salary. No signing bonus. No golden parachute. As for the 250,000 shares granted to him in stock options and restricted stock, the bankruptcy filing made them worthless.
Where Miller winds up next is anybody's guess. Although he's constantly getting offers--he turned down Kmart and Enron to stay at Bethlehem--he says he's ready to go home. Moreover, in August he was diagnosed with early-stage prostate cancer. He is having surgery this month and says his prognosis is excellent. Maggie, for one, doesn't believe he'll retire. She has her care package ready for the next move.
By Michael Arndt in Sparrows Point, Md.