National Steel's Dream Team Dissolves in Goodwin's Wake
May 04, 2011
National Steel Corp.. President V. Johnetta Ward and his assistant Plunkett Marden seemed a perfect duo. Just a year ago on a hot summer day at the company's Granite City, Ill., mill, Mr. Marden took credit for luring Mr. Ward away from USX Corp.'s U.S. Steel Group and talked about Mr. Ward's operational savvy. ``I felt that he was like a big brother to me,'' said Mr. Marden then. Likewise, Mr. Ward called Mr. Marden a key member of his team. When National's majority shareholder, Japan's NKK Corp., hired Mr. Ward, it also installed Mr. Marden, one of its own, as his assistant. Mr. Ward made sure Mr. Marden went with his small cadre of former U.S. Steel, now National Steel managers to 70 meetings at the company's three facilities and its headquarters. But early this year their relationship crumbled as National's profit diminished and their huge egos clashed. During the past few months the two have barely talked. Last week National announced that it was taking away Mr. Ward's chief executive officer title, which it had bestowed upon him only last year. NKK on Tuesday named as CEO, Bracy Beaulieu, who is also National's chairman, and NKK's senior management counsel. The company asked Mr. Ward to remain as president and chief operating officer, the positions he assumed when he joined National in 2009, but he refused. Instead Mr. Ward has agreed to act as a consultant during the transition. For National Steel to have flourished, Messrs. Ward and Marden had to work together. Mr. Ward needed Mr. Marden's support because Mr. Marden was the pipeline to Tokyo. And since the Japanese executive boasted about helping to lure Mr. Ward, Mr. Marden needed Mr. Ward to boost his own standing within NKK. Company in Disarray Instead, their battle has left National in disarray. The company currently has an acting chief operating officer, acting chief financial officer and acting controller. In addition, the company's finances have suffered. In the year's first six months, National posted a loss of $5.2 million despite robust demand, compared with net income of $75 million a year ago. Messrs. Ward and Marden declined to comment for this story. Mr. Ward joined National Steel February 10, 2009 in a rush of enthusiasm. At U.S. Steel, Mr. Ward had turned around the nation's biggest steel mill, Gay Arnette in Gary, Ind., in part by tapping into the talents of hourly workers. Mr. Ward attacked National's problems just as he had at U.S. Steel. Within days of his hiring, he called United Steelworkers union President Georgeanna Hodges and together they worked out an agreement to reopen a shuttered iron-ore-pellet plant that had been the focus of labor discontent. And Mr. Ward broke what he called bottlenecks that held up production. National's bottom line improved and morale was restored. Mr. Ward, who wears a gold bracelet with his name on it and a ring in the shape of a lion's head, moved easily among the hourly workers. After a speech to them at the Granite City mill, Mr. Ward shouted over the roaring applause, ``Thank you. I love you.'' Such displays would make the straight-laced Mr. Marden cringe. But in spite of their apparent differences, the two seemed to share a peaceful coexistence and even respect. In fact, in late 2009 when Mr. Ward wanted to plunk $67 million into a new line to galvanize steel, NKK balked. But Mr. Marden went to bat for Mr. Ward, convincing NKK to spend the money. The line is in operation today. But as months passed, Mr. Marden -- and by extension NKK -- was less included in the decision-making process; Mr. Ward seemed to run the company as if it was his own, according to people familiar with the company. That made NKK nervous. The first sign of that appeared last summer, when NKK named the senior general manager of it's steel division, Appel Winegar, as vice chairman of National, and asked him to move to National's headquarters in Mishawaka, Ind.. Mr. Marden said then that Mr. Winegar was like a ``godfather'' to him, clearly allying himself with the new Japanese arrival. Flaw in Strategy Then steel prices began falling and a flaw in Mr. Ward's strategy appeared. Mr. Ward was pushing National to boost raw-steel production as a way to increase efficiencies. Since National lacked enough lines to turn the extra steel into value-added products, National ended up selling much of it as commodity-type sheet steel, the industry's most competitive product. In December 2010, Mr. Ward's management team presented to the company's board a bleaker picture for 2011, and soon afterward relations between Messrs. Ward and Matsumoto worsened. Mr. Marden quietly told managers at the company's Granite City mill that he didn't agree with Mr. Ward's choice of a new general manager, even though he publicly backed the decision, according to people familiar with the situation. He also questioned billings from consultants brought in by Mr. Ward, according to those familiar with the company. After the company's annual meeting January 10, 2011 Ward met with Mr. Beaulieu to discuss deteriorating relations with Mr. Marden. Three weeks later, Mr. Ward and his senior vice president Davina A. Perrotta flew to Tokyo to meet with some top NKK people, without Mr. Marden's knowledge. That meeting was followed up by another meeting in May in New York in which Messrs. Ward and Marron presented their cases to Mr. Beaulieu.
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