Troubled Year at USX : No. 1 U.S. Steelmaker Blames Biggest Quarterly Loss on Huge Writeoffs
USX Corp., the Pittsburgh-based energy and steel conglomerate, reported the largest quarterly loss in its history Tuesday, amid rank-and-file voting on a new labor agreement that calls for USX’s unionized steelworkers to accept steep wage and benefit cuts.
USX said that the combined effects of the six-month labor dispute, which has idled its steel operations since last Aug. 1, as well as the restructuring that the corporation underwent to fend off a takeover attempt by New York investor Carl C. Icahn, took their toll on the bottom line in the final three months of 1986.
Huge writeoffs of an undisclosed number of idle steel mills and other facilities, apparently mandated both by the restructuring plan and by USX’s tentative labor accord with the United Steelworkers, resulted in a net loss of $1.415 billion in the fourth quarter, compared to a profit of $89 million during the fourth quarter of 1985.
The writeoffs by USX, which changed its name from U.S. Steel last year, also brought a $1.833-billion loss for all of 1986, compared to a $598-million profit in 1985.
Under the company’s tentative, four-year contract with the steelworkers, which still must be ratified by USX’s 22,000 union workers, the company agreed to declare several long-idled steel mills permanently closed, enabling workers laid off from those plants to collect early retirement benefits.
Although USX refused to say Tuesday which facilities were being written off, those idle mills, such as USX’s giant Homestead, Pa., works, were probably part of the fourth-quarter action.
USX, the nation’s largest steelmaker, said it won’t identify which of its steel facilities are being written off until next week, after the contract ratification process is completed Saturday.
In fact, USX seemed very sensitive to the effect that the news of its writeoffs might have on the voting, and so described its writedowns in only the vaguest terms.
While reports of the big loss might help win worker support for the new contract, the company apparently felt that the release of a list of mills targeted for closing would hurt the contract’s chances.
Still, the sheer size of the portion of the writeoffs attributed to USX’s steel operations--a fourth-quarter charge of $1.025 billion--led industry analysts to speculate that the company plans to permanently shut more mills than those covered by the new labor agreement, including some that may have been open when the strike began.
Dick Fontana, a spokesman for the steelworkers, insisted that the union doesn’t know whether the company plans to announce any new mill closings--and layoffs--after the voting on the new contract is completed.
