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 Monday, 15 October, 2001, 16:32 GMT 17:32 UK
Third-largest US steel firm goes under
rolled steel
Steel prices have been depressed worldwide for years

When Robert Miller took the helm of ailing Bethlehem Steel less than a month ago as chief executive, he intended to turn the US' third-largest steel maker around - not put it into the ground.

Chapter 11 does not solve our problems

Robert Miller, CEO, Bethlehem Steel
But pounded by foreign competition and weighed down by high labour and pension expenses, Bethlehem Steel has filed for bankruptcy protection under the nation's Chapter 11 laws.

Bethlehem Steel's board of directors approved the plan on Sunday, and the company filed its petition on Monday in New York, saying it was in the best interest of the company.

"Chapter 11 does not solve our problems," Mr Miller said in statement. "It provides us [with] a process and a framework within which we can address and explore the significant issues facing the company."

The firm had made considerable progress in reducing costs and demand for high-quality products, Mr Miller said. "However, we need to do more."

Broken industry

Bethlehem Steel's problems are many, not the least of which is the $4.5bn debt burden it has amassed.

The domestic steel industry as a whole has been struck with a triple whammy of factory overcapacity, decreased demand amid a sluggish US economy and depressed prices.

Analysts expect more steel firms to file for bankruptcy in the near future.

"Bethlehem is a broken business in a broken industry," said Peter Chapman, president of Bankruptcy Creditors Service, an investor in troubled companies. "No one has a long-term solution to this."

The 11 September terror attacks on the US have conspired to drive steel demand down further, with auto manufacturers cutting back on orders as consumers delay big-ticket purchases such as cars.

The troubled state of the US steel industry has some experts predicting consolidation as a way to reduce the number of plants and workers.

Bethlehem Steel attorney Jeffrey Tannenbaum, addressing rumours of a potential merger with another steel firm, called the speculation premature.

While noting a merger "a possibility", he said it was "down the road, though".

Steel probe

In June, President George W Bush called on the International Trade Commission to looked into the possible imposition of quotas or tariffs on imported steel.

The International Trade Commission (ITC) is an agency of the US government that oversees import protections.

"We're concerned about unfair trade practices that may be affecting the economics of the steel industry," Mr Bush said at the time.

The ITC wrapped up hearings on the matter on 5 October. It is now evaluating what "injury" the industry has suffered.

After further evaluation, the ITC will present its finding to President Bush on 19 December, according to spokesman Dan Leahy.

Separately, Bethlehem steel said its profit/loss picture worsened during the three-month period ending 30 September.

For the period, the firm said it lost $152m (105m), or $1.25 a share, compared with last year's loss of $35m (24.2m), or 34 cents a share, for the same period.

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