Guy Dollé
1942–



Chairman and chief executive officer, Arcelor

Nationality: French.

Born: 1942, in France.

Education: École Polytechnique.

Career: Irsid Steel Research Center, 1966–1980; Usinor, 1980–1984, head of plates and tubes division; 1985, chair of GTS Industries; 1986, executive vice president of Unisor Aciers; 1987–1993, vice president of industrial affairs for Solca; 1993–1995, chairman and CEO of Unimetal; 1995–1997, executive vice president of strategy, planning, and international affairs; 1997–1999, head of stainless-steel and alloys division; 1999–2001, senior executive vice president; Arcelor, 2002–, chairman and CEO.

Address: Arcelor, 19, avenue de la Liberté, L-2930 Luxembourg; http://www.arcelor.com.

■ Guy Dollé became the CEO and management-board chairman at Arcelor's inception in February 2001 when the industry giants Aceralia Corporation Siderurgica (of Spain), Arbed (of Luxembourg), and Usinor (of France) joined forces to create the world's largest steel business. Dollé, who spent his entire career in the steel industry, was a longtime senior executive with Usinor; his last position with the company prior to the merger was senior executive vice president. He was active not only within Arcelor but in the international steel trade in general, believing that consolidation among international companies—as was the case with the inception of Arcelor—was the best way for steel corporations to survive in an industry that he saw as suffering from overcapacity.

Arcelor was officially formed on February 19, 2001; the consolidation became fully effective when the company's shares were first listed on several stock exchanges on February 18, 2002. The company functioned under four core business operations: the production of flat carbon steel, such as coated steel sheets and cold and hot coils; the production of long carbon steel, such as beams, merchant steel, sheet piling, concrete reinforcement, and public transport rails; the manufacture of stainless steel, for the appliances, construction, packaging, mechanical-engineering, and automotive industries; and the management of steel distribution, transformation, and trading.

INTERNATIONAL INFLUENCE

Dollé's experience with Usinor as executive vice president of the strategy, planning, and international-affairs department made him not only a valuable member of Arcelor's senior management team but a respected player in the global steel arena. During the last decades of the 20th century and into the 2000s the steel industry worldwide had been experiencing upheavals. In particular the United States saw many of its gigantic steel conglomerates struggle and collapse one by one as steel from other countries increased in quality, quantity, and affordability. Japan's Nippon Steel and JFE Holdings became major players, and by 2004 Arcelor had a 30 percent stake in the Brazil-based Companhia Vale do Rio Doce, the biggest and one of the least expensive of the world's iron-ore suppliers. The Luxembourg-based Arcelor was producing 9 million of its annual 44 million tons of steel in that country.

On March 6, 2002, under Section 201 of the Trade Act of 1974, President George W. Bush imposed stiff import tariffs on steel products, with duties ranging from 8 to 30 percent. European steel producers angrily denounced the imposition, though analysts could not agree on exactly how badly the tariffs would affect European producers. A BBC News reporter quoted one analyst as saying, "As Asian producers redirect exports to Europe, there will be increased competition and the potential for disproportionate price pressure on companies in the already weak market"; downplaying the possible effects, another commented, "Europe produces 160 million tonnes of steel a year, of which only four million are exported to the United States" (March 6, 2002).

Of the 4 percent of Arcelor's exports going to the United States, approximately 70 percent were lost as a result of the imposed tariffs. Dollé attacked the importation taxes, saying, "This decision is unfair and incompatible with laws of international trade" (March 6, 2002). The tariffs created such anger that the Anglo-Dutch group Corus asked the European Commission (EC) to retaliate against the United States; the EC immediately announced it would take the issue to the World Trade Organization (WTO), the acting court for international trade disputes. The EC's top trade official Pascal Lamy said, "The U.S. decision to go down the route of protectionism is a major setback for the world trading system." In the New York Times Dollé was outspoken about the issue: referring to the health and retirement benefits due to retired workers, he said, "The big problem in the United States is the legacy costs of the integrated steel companies" (March 6, 2002). He believed the U.S. government imposed the tariffs in order to "safeguard" the U.S. steel industry from increased imports, not because foreign producers were competing unfairly—as such he believed the action was taken on shaky legal grounds.

PROMOTES NEGOTIATION RATHER THAN CONFRONTATION

By September 2002 major unrest still existed among Asian and European steel producers over the tariffs, though the U.S. government agreed to exempt more than 700 steel products—a move many U.S. steel producers said could only harm the local industry. Japan, which had been strongly in favor of retaliation, softened its stance after the United States added more of the country's products to the exemption list. Dollé commended Japan's flexibility and urged the EC to follow suit; Nancy Kelly of American Metal Market quoted him as saying, "Retaliation on exports of Florida orange juice will not help solve the problems of the steel industry" (September 5, 2002). He believed that negotiation, as oppposed to confrontation, would be a far more effective way of dealing with the tariff issue and instituting further exemptions.

In early 2003, however, Dollé attacked the United States further, accusing the superpower of operating under a double standard: the government continued to impose tariffs under Section 201 even while U.S. steel producers had increased exports to Europe. In American Metal Market he wondered, "They take 30 percent duties and the advantage of a dropping dollar and export to Europe—is that fair?" (March 7, 2003).

ADVOCATES CONSOLIDATION TO ADDRESS OVERCAPACITY

Though he would not rest easy with respect to Section 201, Dollé indicated that he would concentrate on addressing what he saw as the longer-term problem in the industry—global overcapacity—by initiating a debate on the matter prior to the October 2003 International Iron and Steel Institute in Rome and the high-level multilateral talks scheduled for December. Dollé was adamant about the need for industry consolidation; Arcelor, the largest steel producer in the world following the consolidation of the three independent companies, still only accounted for 4.5 percent of world production. Andrew Sharkey, the president of the American Iron and Steel Institute, agreed with Dollé on the consolidation issue. Kelly of American Metal Market reported Sharkey as commenting, "It is appropriate that opponents of the tariffs are shifting their attention to the hard work of reducing excess capacity and instituting new government disciplines. Dollé's personal commitment to those goals can only help" (September 5, 2002).

In November 2003, as the guest of honor at the National Association of Steel Stockholders' annual dinner, Dollé noted the difficulty of achieving success in the steel industry due to the high capital-investment requirements and costs associated with keeping substantial inventories for the typical four to six months. He said that while distribution was one way of creating value, service innovations were necessary in order to reduce capital costs, particularly in inventory. He reiterated his philosophy of consolidation, which would necessarily, he believed, involve intercontinental mergers.

WORLDWIDE STRATEGY FOR ARCELOR

One-fourth of Arcelor's revenue was earned outside the European Union (EU), and Dollé was developing a worldwide strategy to further exploit the company's global influence. One strategy focused on the automotive industry—and was driven by that industry's own globalization—in which Arcelor built partnerships with manufacturers in Italy and Spain and with Nippon Steel in Japan, forming their Global Steel Alliance. He looked into the possibility of forging a joint venture with Baosteel in Shanghai in order to gain access to China's auto industry. In Metal Bulletin Monthly , referring to the highly successful global alliance initiated by Lufthansa in the airline industry, Dollé was quoted as saying, "So we have a worldwide strategy for automotive—mainly focused outside of Europe, on joint ventures and partnership. It's like the Star Alliance with more shareholder links" (June 2003).

Another line of attack was the institution of low-cost production. Dollé noted, "For the moment, there are two regions in the world where you can produce very cheap steel: the first is Brazil; the second is Russia." He planned to increase the company's already significant presence in Brazil, particularly in the production of carbon steel, and establish operations in Russia by partnering with Severstal. Dollé's first goal in that country was to deliver products to Russia's auto industry, which he said was a medium-to-long-term goal because of the industry's relative weakness; Arcelor would also help Severstal deliver Russian products to the rest of the world. Dollé noted that J&L Steel, Arcelor's stainless-steel producer in the United States, had yet to break even.

Dollé believed that while having a global strategy in place was beneficial, mustering the resources necessary to implement that strategy required an entirely unique approach. He stated that although the company's balance sheet was not weak, he would concentrate on debt reduction before focusing on growth. He told Metal Bulletin Monthly , "In this business you must be a low-debt company if you want to be consistent" (June 2003).

CAUTIOUS ABOUT CAPITAL

To gain footing in the U.S. market, Dollé had been negotiating with Bethlehem Steel Corporation, the third-largest steel producer in the United States, for a stake in their Burn's Harbour, Indiana, steel mill; Bethlehem had filed for Chapter 11 bankruptcy protection the previous year. By mid-2002, however, Dollé announced that he would not pursue the deal because Arcelor was unwilling to shoulder the burden of Bethlehem's health-insurance and pension-plan liabilities. He was quoted in Stainless Steel World as commenting, "We cannot take over this risk" (July 10, 2002).

In early March 2003 Dollé announced 2002 operating earnings of EUR 780 million for Arcelor, compared to its 2001 operating loss of EUR 200 million. While commenting that the company was open to cooperation with Japan's Nippon Steel to supply coated material to China, Dollé said that the company was still not delving into the acquisitions market due to the need to improve cash flow before spending capital. He had no definite intentions to act at that time, but Dollé certainly had a plan of action if the necessity arose: Arcelor would consider selling its more than 50 percent stake in the Germany-based Dillinger Hutte if ultimately unable to restructure its heavy-plate business. Dollé noted, "We don't want mere financial participation in our balance sheet and, if we can't find the industrial synergy, we will sell our stake in Dillinger." As he told American Metal Market , he was unwilling to make any commitment that would put the company in a high-risk financial situation: "In the next two years there might be a larger cash operation, but not in the U.S. Concentration in the U.S. has only begun, and only they themselves can handle the necessary adjustments to benefit plans" (March 7, 2003).

After reviewing Arcelor's progress at the company's Ordinary General Meeting on April 25, 2003, Dollé said that, despite the difficult economic and global environment and a marked slowdown in growth in the steel industry, Arcelor's operating performance measured up to management's ambitions and expectations. He noted that the group had increased its selling price by more closely tailoring supply to demand and making profit margins a higher priority than volumes. As reported by Business Wire, he stated, "2002 was a year of integration; 2003 will be a year of consolidation. It is now up to us to confirm over the longer term the good start Arcelor has made" (April 25, 2003).

sources for further information

Andrews, Edmund L., "Angry Europeans to Challenge U.S. Steel Tariffs at WTO," New York Times , March 6, 2002.

"Arcelor Chief Slams U.S. Steel 'Double Standards,'" American Metal Market , March 7, 2003, p. 5.

"Arcelor Ends Talks with Bethlehem Steel," Stainless Steel World , July 10, 2002, http://www.stainless-steel-world.net/projects/news_detail.asp?NewsID=1839 .

"Arcelor Ordinary General Meeting on April 25, 2003," Business Wire, April 25, 2003, http://articles.findarticles.com/p/articles/mi_m0EIN/is_2003_April_25/ai_100604008 .

Barrett, Richard, "Global Influence," Metal Bulletin Monthly , June 2003, p. 32.

Kelly, Nancy E., "Steel Exec: EC Should Follow Japan 201 Stay," American Metal Market , September 5, 2002, p. 1.

"Steel Shares Recover Early Losses," BBC News, March 6, 2002, http://news.bbc.co.uk/1/hi/business/1857850.stm .

—Marie L. Thompson



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