Northwest Indiana News: nwitimes.com

The mega-combination of Ispat Inland Inc. and International Steel Group Inc. inspires both hope and fear in suppliers, mayors, and those concerned about the regional economy.

There is no doubt that East Chicago will maintain its "steel town" standing and the hope is the merger will enlarge it, according to Mayor Robert Pastrick.

"We want them to be very successful, because we need employment very badly in Northwest Indiana," Pastrick said.

Like Pastrick, others were also crossing their fingers Monday when it comes to employment at the four major mills in the region owned by the two companies. Small steel supply companies were also hoping the new steel behemoth would remember them.

The deal announced by Ispat Inland on Monday has billionaire steel magnate Lakshmi Mittal first combining his two international companies, Ispat Inland and LNM Holdings. The merged company, called Mittal Steel Co., will then buy ISG for $4.5 billion in cash and stock.

Mittal Steel will have its headquarters in the Netherlands. The companies hope to close the deal in the first quarter of 2005.

Ispat Inland's steel mill dominates one side of the Indiana Harbor in East Chicago. ISG's East Chicago mill, which it acquired out of bankruptcy from LTV Steel, dominates the other side. ISG also owns mills in Burns Harbor, Riverdale, and nine other locations in the United States.

"First, I want to make sure this merger does not negatively impact steel employment in Northwest Indiana or the United States," stated U.S. Rep. Pete Visclosky, D-Ind., in a release on Monday.

"Additionally, I will be monitoring the impact of this consolidation in terms of competition within the domestic industry and the consequences to other, smaller businesses," he added.

It's no secret that East Chicago officials would like Ispat Inland's national headquarters located in their city. Pastrick said any such move by the company in the wake of the merger would be "wonderful."

Analysts generally agreed on Monday that there will be no major mill closures as long as the steel boom, fueled in large part by demand from China, continues unabated.

That means no mass layoffs of blue-collar workers. But white-collar workers could be vulnerable where there is duplication.

"With merged management and administration you may be able to cut some jobs," said Donald Coffin, an economics professor at Indiana University Northwest. "But probably not much. As far as I know they don't have real top-heavy managements."

Ispat Inland salaried employees received a letter from company president Lou Schorsch Monday explaining the move. Schorsch wrote that much "heavy lifting" remains to be done and that he couldn't speculate on future management structures.

News of the potential buyout of ISG came as a shock to State Rep. Ralph Ayres.

"It's a shock, a total shock," said Ayres. "It's a 20 on the Richter scale."

"My concern is any loss of jobs in Northwest Indiana," he added.

Small- and medium-size businesses in the region that supply steel mills with everything from engineering services to paper towels were also buzzing with the news on Monday.

Those suppliers and other steel-connected companies in the not to distant past dealt with a half dozen major steelmakers in the region. They will now deal with two.

"Any supplier, any vendor has to make sure they're in with those big consolidated companies," said Christopher Plumber, president of Metal Strategies, a metals research and consulting firm in West Chester, Pa.

Ian Hirt, General Manager of Burns Harbor cargo handler Federal Marine Terminals, was also wondering how things would turn out. The company unloaded 100,000 tons of rolled steel coils in August.

Since demand in the United States has been high, the company has been unloading a lot of steel imports.

"When exports become more popular, we'll see what the impact" of the sale is, Hirt said.

Taxes were on the mind of municipal officials, some of whom are still engaged in high-stakes wrangling with steelmakers over taxes.

Attorney for the Porter County Council Dave Hollenbeck said he assumes that Mittal Steel will continue to operate the former Bethlehem steel mill, but he is wary of closure.

Local government and school agencies lost $31 million in tax revenue when Bethlehem Steel went bankrupt in 2001. They then endured property tax reassessment. Some made deep cuts in services.

The Burns Harbor mill was later bought out of bankruptcy by ISG.

Matt Van Dusen and Sue Erler contributed to this story.

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