By Arun Kumar, IANS,
Washington : The filing for bankruptcy by General Motors may have a major impact on the steel industry as the failed US auto giant owes four US integrated steelmakers nearly $35 million, including $9.55 million to Lakshmi Mittal owned ArcelorMittal.
Besides NRI steel czar Mittal’s firm, GM owes to US Steel Corp, AK Steel Corp. and Severstal North America Inc., according to the automaker’s filing with the Bankruptcy Court in the Southern District of New York Monday.
But the impact of the 100-year-old automaker’s filing for Chapter 11 bankruptcy protection runs much deeper in steel than that figure indicates as the companies will have trouble getting all they are owed, American Metal Market, a leading source on the metals industry said.
GM filed for bankruptcy protection Monday, joining Chrysler LLC as the second of Detroit’s Big Three automakers to file for federal protection from creditors.
Additionally, those companies and other North American steelmakers face the daunting task of dealing with the fallout of the financial woes of a huge portion of their customer base, AMM.com said.
“I don’t really know how the industry is going to react to this,” Keith E. Busse, chairman and chief executive officer of Steel Dynamics Inc., Fort Wayne, Ind., was quoted as saying. “None of us has dealt with Government Motors before.”
Thomas Danjczek, president of the Washington-based Steel Manufacturers Association, drew a parallel between what the steel industry went through in 2001 and the Big Three auto woes today.
“Similar issues included legacy costs, ratio of retirees to active employees, health-care costs, capacity utilization, transplant and foreign competition, union negotiation items, geographic factors and products,” he said. “The big difference is the steel industry did not get tens of billions in bailout funds.”