Top Holder Cleans House at Wheeling : Chairman, Several Others Quit; Bid to End Strike Deadlock
Troubled Wheeling-Pittsburgh Steel announced sweeping changes in its management structure Friday, including the resignations of its controversial chairman, Dennis J. Carney, and several other top officers and directors.
The changes apparently were forced by Allen E. Paulson, Wheeling-Pittsburgh’s largest shareholder, who pressured Carney and his team to quit and took over as chairman Friday. Paulson, who is also chairman of Gulfstream Aerospace, named George A. Ferris, a 69-year-old retired Ford Motor executive who previously ran the auto maker’s steel division, as vice chairman and chief executive.
Paulson, who controls 34% of Wheeling-Pittsburgh’s stock, apparently made the move in part to break the deadlock in the two-month strike by the United Steelworkers against the nation’s seventh-largest steelmaker. In a statement issued by the company, the 64-year-old Carney, who was named chairman in 1978, said he was resigning “in order to facilitate resolving the current labor impasse and to accommodate the desires of Mr. Allen Paulson.”
Other Resignations
Paulson could not be reached for comment Friday. Gulfstream Aerospace, in which he has a controlling interest, has recently been sold to Chrysler.
Other top executives and directors who announced their resignations Friday included George Raynovich Jr., Wheeling-Pittsburgh’s general counsel and director; Joseph Scalise Jr., the firm’s senior vice president for labor relations, and directors Henry G. Allyn, Jr., Donald S. Anderson, C. Taylor Marshall and Robert E. Seymour.
The company said it did not make any severance payments to Carney. But the firm said that Paulson, who had rocky relations with Carney even before the strike, personally settled with Carney, Raynovich and Scalise in order to obtain their resignations.
The housecleaning comes as many industry observers wonder whether the company can survive its current labor dispute. After years of losses, Wheeling-Pittsburgh entered Chapter 11 bankruptcy proceedings last April, and it later won bankruptcy court approval to reduce its labor costs by nullifying its contract with the steelworkers.
Once it did that, the firm unilaterally cut wages and benefits from an average of $21.40 per hour to $17.50 per hour, but the steelworkers immediately went on strike July 21.
Since that time, the union has blasted Carney for his stubborn refusal to compromise in the dispute. Union leaders have repeatedly claimed that they are willing to offer some concessions to keep the firm afloat, but they have insisted that Carney’s confrontational approach to the contract negotiations has made it impossible for them to reach a settlement.
Hope for New Talks
Although union officials say they have not reached any kind of agreement with Paulson, a union spokesman did say that union leaders hope to meet with the new management team next week to reopen negotiations.
In addition to Ferris, Paulson also brought in several other new directors Friday--attorneys George W. Bermant, Mark A. Rosenbaum, and B. A. Karlowitz.
Rosenbaum represents Nisshin Steel of Japan, Wheeling-Pittsburgh’s second-largest shareholder, which had also been upset with Carney’s management of the company and had earlier pulled its director off the board.
Earlier this year, Paulson and Nisshin had jointly asked the bankruptcy court to allow them to form an independent shareholders committee to gain a greater voice in the bankruptcy proceedings.
Nisshin had initially invested in Wheeling when the two firms planned to form a U.S. steelmaking joint venture, but that project was deferred when Wheeling-Pittsburgh entered bankruptcy proceedings.
