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FEATURE

Tom Usher No. 1: Quiet, Reserved, Deliberate.
Tom Usher No. 2: Daring, Innovative, "Shoot-From-The-Lip."
Will the Real Head of USX Please Stand Up?


STEEL IN CONTROL
WRITTEN BY MARK COLLINS


In the hallway outside the executive offices atop the USX Tower in downtown Pittsburgh is a bust of J. P. Morgan. The statue matches the viewer's expectations: stern, mustachioed, impervious, still watching over United States Steel, the company he founded nearly 100 years ago.

Inside the president's suite is another view--all of Pittsburgh at one's feet. From 61 floors up, it's easy to spot landmarks, bridges, and buildings, most of them made of local steel. From here, looking west, one can imagine seeing all the way to Chicago, to California, maybe, on a clear day, to Japan.

In the inner sanctum--the corner office, thank you--is Thomas Usher, chief executive of USX, the parent company of the U.S. Steel Group, Marathon Oil, and Delhi, an energy company. Usher (Engineering '71, '66, '65) fits into the role of J. P. Morgan's successor. He sits behind a large desk, a hefty walk from the office door. He wears a crisp white shirt, competent tie, nice haircut to rein in his thick hair. He speaks softly and directly, the voice of someone used to people listening.

But comparing the company's past and present is difficult. On one hand, Usher's approach to rival companies and unions would probably make Morgan, the quintessential capitalist, turn somersaults in his grave. On the other hand, Usher's no-nonsense dedication and his success at adapting to changing business conditions would no doubt please Morgan the shareholder. "A lot of people overworry about their careers and lose opportunities," Usher says, and the listener imagines the bronze ghost of J. P. Morgan breaking into a smile.

I n recent decades, "opportunities" and "steel" were rarely used in the same sentence. As anyone in Western Pennsylvania can testify, Big Steel's Big Day has long since passed. The industry that fathered Pittsburgh's growth, enticed its immigrant worker stock, authored its political and social history (good and bad), forged weapons for its country's wars, and virtually provided the livelihood of an entire region, suddenly went south in the early 1980s. The hulking blast furnaces that had fueled the region's growth had ironically become scrap metal themselves. Whole neighborhoods seemed to dry up overnight. Big Steel was dead as a doornail.

Or not. Slowly--certainly with less speed than its decline--the U.S. Steel Group is coming back. It's not reliving past glories and certainly not re-birthing towns, but it is coming back. And feeding the success is a new vision of capitalistic cooperation, championed by this quiet industrial engineer from Reading, Pennsylvania.

His appointment to chief executive officer last July surprised some insiders--the 53-year-old Usher seemed young for the job, and he hadn't been slated to replace his predecessor, Charles Corry, for perhaps another year. But while Usher's career reads like a blueprint for the CEO's job, he claims it's all been a series of surprises. "I can truthfully say I never knew what was coming next," he says. "Everyone tries to hypothesize what their next move will be. For the most part, my assignments often came out of the blue, and they were not what I had envisioned them to be. I had a certain idea I'd be moving to this job or that, but it never seemed to work that way. I guess I'm younger than the traditional CEO, but I feel I've had a lot of experience. I'm ready."

"A lot of experience" is an understatement. While many executives are groomed through management ranks in cushy offices at headquarters, Usher spent much of his early career in the field, working at U. S. Steel's South Works in Chicago. "I think it was very helpful to work in jobs that some might consider mundane. I never thought that way. I always learned something. One of my responsibilities was supervising the plant janitors. I dealt with people, I faced the problems. It taught me a lot about human nature and people and organizations and how to get things done."

Apparently others thought so too. After stints in South Works and Gary, Indiana, Usher moved back to Pittsburgh in 1979 as director of corporate strategic planning. Two years later, at the tender age of 39, he became assistant to the president and managing director of facility planning, engineering, and research. Then his career switched to hyperdrive: president of USS mining in 1983, senior vice president of steel operations in 1984, executive vice president of heavy products in 1986 (the year "United States Steel" changed its name to USX--a reflection of its move toward oil and energy concerns), president of the U.S. Steel Group in 1990.

But heading the U. S. Steel Group after the tumultuous 1980s could hardly have been seen as plum pickings. Domestic steel had suffered record lows in demand and capacity. In an interview with the Pittsburgh Business Times several years ago, Usher was honest about the odds: "One of the challenges...is maintain[ing] a semblance of morale. When you've been getting beat for so long, it's difficult to get up for this every day. I may have a personality disorder in me, but I do [keep a positive attitude], and it's a challenge to make sure others do also."

By "others," Usher doesn't just mean his wing-tipped colleagues. While visiting the Gary, Indiana, plant in 1992, Usher made a point of stopping in at union headquarters to chat. That was "very, very unusual," Gary's union head Cary Kranz told the New York Times. "Other heads of U. S. Steel would never have dreamed of being in the same room with the union people."

Although USX's relations with the unions will never be cuddly, such rapprochement was "a conscious decision," Usher says, an alternative to "sitting down every three years and hammering out a labor agreement in a very adversarial atmosphere. The union has their agenda, and in many respects it's the same agenda we have: They're interested in security for their people. All people--management, unions--want a voice in what's being done. When I was superintendent of the mills, I tried to treat people the same way I wanted to be treated. Their demands weren't excessive; I think if I had been in their place I would've probably wanted some of these things, too. I use that as a rule: If I were in their position, does it make sense to ask for this?"

While his prior experience with the unions helped Usher in the labor arena, his new job as CEO includes oversight of USX's oil and energy businesses--virgin territory for a life-long steel man. "I'm still fairly steep on the learning curve," he admits. "If you talk about a turn rate on a steel mill of 5,000 tons per turn, I have a real feel for that. But when you talk about an oil field with 100 billion barrels of oil or a gas field with 2 TCF of gas, I have to think about those, do more mental calculations to decide whether that's good news or bad news. But it's fun. I enjoy it."

Fun or not, Usher's new position means facing the glare of the business media. After the announcement of his promotion to president, the Wall Street Journal quoted one unnamed manager who called his new boss "outgoing and laid back" ("a dichotomy of terms," Usher says smiling), while Business Week labeled his style as "shoot-from-the-lip."

Usher shrugs off both portraits. "It didn't really bother me," he says. "I guess it comes with the territory. I might say things sometimes I shouldn't, maybe have a tendency to be a little quick. My wife has told me on more than one occasion, ŌWatch what you say.' No matter how well-intentioned you are, people will find negative things to say about you. No one ever likes to see something negative about themselves, but you gotta get up every morning, look yourself in the mirror, then go out and do the best job you can do. There are times when I'll be critical about something I've done, but, well, you don't call them all right, as some umpire once said."

But Usher makes no such mistake when he talks about foreign competition. ("I could spend an hour on that topic, if you'd like.") Not surprisingly, Usher sticks to the expected company line--how unfair trading practices have cost thousands of domestic jobs. But his baritone voice becomes tinged with passion, as if the issue involves some beloved family member.

"The United States is the only industrialized country in the world that doesn't have the steel capacity to take care of its own needs," Usher says. "Every other country has an excess of capacity, and the extra is going to come here. And there's no problem with that. What we don't like is a company from Italy with a cost of $600 a ton or whatever coming over here and selling for $400. Why would anybody want to lose $200? Well, if the government is subsidizing you $200 a ton, you don't care. Or say we sell steel to a Japanese car manufacturer for, I don't know, $600 a ton. Let's say that car is built here and being exported to Japan. So why can't we sell a fender over in Japan for $600, or $650 with shipping? Because they won't buy from us. The market is effectively closed. Those are the kinds of trade practices we argue against. And we're seen as cry babies and protectionists. We're not. If all of the steel trade was done on the laws of economics as opposed to political reasons, we'd be exporting a lot of steel. We should be building new mills here."

Considering his molten rhetoric, one would hardly expect Tom Usher to join with Japan's Kobe Steel. But politics is politics and business is business, and one of Usher's strengths is flexibility. "Almost all of our joint ventures are either driven by a technological reason or a commercial reason," he explains. "Kobe is recognized as one of the leading bar producers in Japan, and we are in the United States. We thought there was something technically we could get from them, and they had an entrˇe into the automotive Ōtransplants'--the Japanese car manufacturers that have come to the United States to build. It was a marriage of the two best from each country. Sometimes mergers are two dying ducks trying to mate--that wasn't the case here. It was a good deal; both partners are very pleased."

And more deals followed--another one in Japan, one in Korea, and then the truly unexpected: a joint venture with Charlotte-based Nucor Steel, one of USX's top rivals. The product, too, is revolutionary: a direct-making steel process that could be as efficient as conventional blast and open-hearth furnaces. Instead of combining coke and scrap iron and then "blasting" the mixture into a new, hot metal, Nucor uses a single, alternative ingredient: iron carbide. As the carbon from the carbide is burned off, the energy released is used to sustain the entire steel-making process--no external energy source should be needed. The venture is now testing a prototype in Trinidad, trying to translate a theory into practical, cost-effective application. If all goes well--a big "if"--Nucor's raw materials and USX's know-how could lead to a profitable minimill without the start-up costs of a traditional steel plant.

"This idea, which might have been prevalent some years ago, that USX can't talk to Nucor, that we're somehow above these upstarts--it's not something I put a lot of stock in," Usher says. "They had something to offer,we had some technology. So it just made sense."

His ability to assess odds, situations, return-on-in-vestment (Usher uses an engineering term, "metrics," to describe such calculations) is part training, part instinct. His reading list includes the expected industrial publications: American Metal Market, the Oil Daily, plus the New York Times, Washington Times, Wall Street Journal, and Pittsburgh Post-Gazette. "One of the things that has always been a problem with people who get too inwardly focused on their company--they know what's going on there, but they don't know what's going on in the outside world," he says. "The kind of work I do requires broad knowledge, juggling a lot of balls, keeping a lot of things in your mind. The failing I see in some people is the ability to isolate the important things, to prioritize. What should other people be taking care of? How much detail do you need to get into?"

His degrees from Pitt--a bachelor's, master's, and doctorate in industrial engineering--gave him more than resumˇ-building credentials. "I learned a pattern for organizing ideas, enumerating solutions," he says. "It's a pattern of thought rather than specific technical knowledge. That's carried me through, I think."

"Tom Usher was a guy with a good sense of humor, but who knew how to get down and solve problems," says Harvey Wolfe, chair of Pitt's department of industrial engineering and Usher's instructor. Usher also served on the engineering school's board of visitors--an outside group of advisors who counsel the school. In that role, Usher "could get right to the heart of an issue," Wolfe says. "He has good technical skills, yet at the same time understands the intricacies of a problem."

One might expect Usher, who is now a University trustee, to wax nostalgic about his Pitt days. Usher, however, isn't one to romanticize: "My association with Pitt was good. We had a good commercial agreement--they gave me a good education, and I paid them. And I got my money's worth."

But Tom Usher is not quite telling the whole truth about his view of education, or about himself.

There's still a missing piece of the portrait. It appears on his resumˇ, almost as an afterthought: Early in his career, Thomas J. Usher--future CEO, future University trustee, someone who would sit on the board of directors for major multinational corporations--spent 10 years teaching in a university classroom. Part-time, mind you, but still: What would possess a fast-tracked manager to leave his office at five p.m. and rush into Oakland to teach a couple of nights a week? Was it the money? Doubtful. Respect? Not likely.

"I enjoyed it," he says simply. "I taught in the business school, in the industrial engineering school, both undergraduate and graduate classes. I guess I was the designated hitter when they had a hole. It was good to meet different people than you usually meet in your day-to-day existence. I always enjoyed being around students. I sort of miss it." It's a small but revealing moment. While J. P. Morgan is forever remembered as domineering and autocratic, this successor quietly worked in classrooms and factories, worked with unions and rivals, doing what he was asked but never hesitating to speak his mind.

It's been a turbulent century for United States Steel, whose hundred-year history in many ways mirrors the tempestuous industrial history of the entire nation. But whatever direction the U. S. Steel Group or USX takes into the inconstant future, its course will forever be altered by the limber vision of this one-time college instructor. One can imagine, from this vantage point, that Tom Usher can see all the way past Chicago--maybe, on a clear day, all the way past Japan--toward a second century at the top.


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