The Los Angeles Times from Los Angeles, California • Page 34

C8 WEDNESDAY, JULY 19, 2000 NA LOS ANGELES TIMES f)ii; i VI Mm A FLANIGAN: Steel Firm Thrives in Southland instead of cash and invited Japan's Kawasaki Steel in as a partner. But the new company didn't use the old blast furnaces to make raw steel at Fontana. It relied instead on importing semi-processed slab steel from mills in Brazil. Slabs are 20-ton lengths of steel that can be pressed in rolling mills into rolled sheets of steel, ready for fabricating into air-conditioning ducts and appliance panels. After 17 years supplying lively construction markets in Phoenix and Las Vegas as well as the Inland Empire and Orange County, California Steel has become the world's largest buyer of slab steel.

That gives it leverage in world steel markets. When he. came to Fontana from Brazil two vears aeo. America, Bank Boston and Wells Fargo. The bonds required California Steel, which is owned 50-50 by Companhia Rio Doce and Kawasaki Steel, to issue reports to the Securities and Exchange Commission.

"That gives us transparency for investors," a factor for any future public offering, Goncalves notes. But a combination with another steel company in the Western states is more likely. California Steel could contribute its expertise in buying steel slabs, which are not involved in disputes over imports of rolled sheet and other finished steels. Then the company could go public, as a profitable supplier of basic materials to a growing Western states economy. California Steel is an example of things this region sometimes takes for granted: The possibility of renewal in a growing economy, as the Fontana company has resurrected an industrial complex of another era.

And the importance of the ports and rail and highway infrastructure, which unglamorously undergird the area's global eminence. James Flanlgan can be reached at jlm.flanlganlatlm9S.com. Continued from CI region, but growing in their place is a great diversity. California Steel's output goes to more than 300 customers mainly to steel service centers such as Tor-rance-based Reliance Steel Aluminum. The centers in turn supply makers of computer cases, gas pipelines, electronic devices, building structures and the metal sticks that hold up grapevines in the state's vineyards.

The diversity has caught Wall Street's eye. Reliance, which has 70 steel centers nationwide and $1.5 billion in sales, has sold for more than a year at a higher price than the average industrial share. Elsewhere on the West Coast, however, steel has proven a tough business. Pdrtland-based Oregon. Steel which is publicly, traded, is struggling and-so report-edly is USS-Posco, the joint venture, of USX's Steel Group and Pohang Steel of South Korea.

California Steel is doing well be- cause it's a global company supported by Southern California's infrastructure. The company got started because Kaiser Steel, which dated to World War II, owed money to a Brazilian iron ore supplier in 1983 when Kaiser went out of business. The Brazilian firm, Companhia Vale do Rio Doce, took steel assets aku 4 IriMiJ i- Goncalve's, a PhD in ginafbrazzi LosAngcu Tunes metallurgical engineering, decided CEO Lourenco Goncalves watches as hot slabs of steel are pressed irj Fontana mill. Water cools equipment. to force a better price from his Bra- zilian suppliers by spreading his or it only had to' pay 8.5, 'a good credit standing and by negotiating a new $130-million line of credit with the local offices of Bank of The company has been gearing up for expansion.

It' consolidated its debt last year by floating $150 of high-yield bonds on'which Aug 02 99.27 Aug 02 99.19 Seo02p 98.26 well," he adds. The strategy has succeeded. California Steel's profit per ton has risen from about $30 a ton in 1998 to $65 a ton this year. That's five times the average'prpfit for American steel companies and well above the average for the most modern mini-mill companies. 'v The nonunion employees who work the giant rolling mills and galvanizing lines benefit directly.

Profit-sharing distributions in June amounted to $4,450 per person, in a plant where average pay is $40,000 a year. Treasuries ders among steel makers "We buy from Mexico, Australia, Russia, China, South Africa and from Geneva Steel in Provo, Utah," Goncalves says. The imported steel slabs come into the Port of Los Angeles and are. brought by rail to Fontana. For the plant's rolled-steel output, the freeway and rail complexes of San Bernardino County offer fast transport.

"Raw materials are 70 of our costs, so it's important that we buy 5.75 Oct 02 p. 98.17 11.63 Nov 110.27 5.75 Kov02p 98.15 NOTES BONDS Rite Maturity Bid View BidCh I Rule Maturity 'Bid YiefdBWCh. Jul 00 Jul 00 9930 9931 99.31 100.05 4.74 4.44 5.21 5.26" 5.70 Aug OOP Aug OOP Aug 00 99.27 647 0.01 6.45 644 6.43 0.01 644 6.43 645 6.45 6.47 6.45 Aug 00 100.00' SepOOp 99.19 SepOOp 99.29' Oct OOp 99.11 OctOOp 99.26 Nov OOP 99.26 Dec 02 98.04 Jan 03 97.25 Feb 03 99.16 Feb 03 109.30' Feb 03 97.23" Mar 03 97.21 Apr 03 98.07 May 03 110.22 May 03 97.16 Jun03p 97.06 Aug 03 96.23 Aug 03 98.02 Aug 03 112.21 Nov 03 .93.19 Nov 03 115.26 Feb04p 94.25 Feb 04 98.10 May 04 119.19 May 04 96.05 May 04 102.23 Aug 04 98.20 Aug 04 102.31 Aug 04 125.22 Nov 04 98.03 Nov 04 105.13 6.42 0.01 6.41 6.42 6.42 0.01 6.48 0.01 6.430.02 6.43 6.43 6.43 6.46 6.430.01 6.43 6.42 6.50 6.44 6.41 0.01 6.42 0.01 0.01 6,49. 639 6.48 0.01 6.39 0.01 638 6.47 638 0.01 6.41 636 639 6.45 6.36 6.40 0.01 6.40 0.01 6.38 0.01 6.34 6.29 6.41 6.35 6.41 635 0.01 6.35 101 6.39 436 0.01 6.36 0.01 6.35 0.01. 4.05 0.05 .6.32 0.02 6.58 6.32 0.02 6.32 0.01 6.66 4.06 0.06 6.30 0.02 6.29 0.02 6.68 6.26 0.01 6.66 4.05 0.06 6.23 0.02 6.61 0.01 6.22 O02 6.61 4.03 0.07 6.15 0.01 .6.59 0.01 6.60 0-01 6.55 O01 6.55 6.53 001 6.52 O01 6.50 0.01 6.50 0.01 6.50 6.44 632 0.02 631 0.02 630 0.01 630 6.28 0.01 6.29 0.01 6.30 0.01 630 0.01 630 0.02 6.290.02 6.30 0.02 629 0.01 428 0.01 6.28 0.02 628 0.01 427 627 0.01 6.27' 0.01 626 625 625 624.

0.01 622 0.01 622 0.01 422 .6.20 6.19 0.01 418 0.01 618 0.01 618 0.01 418 616 0.01 3.86 0.03 6.14 0.01 612 0.01 610 0.02 3.85 0.04 6.06 0.03 191 0.03 May06p 102.13. 7.00- Jul 06 103.03 6.50 Oct 06 p- 100.21 3.38 Jan07f 96.04 6.25 Feb 07 99.17 7.63Feb02-07 101.13 6.63 May 07 101.19. 6.13 Aug07p 98.26 7.88NW02 -07' 102.16 .3.63 Jan 08 97.04 5.50 Feb08p 95.05' 5.63 'Mai 08 95.28 8i8AugO3-08 104.18 4.75 Nov 08 90.07 8.75Nov03 -08 106.02 3.88 Jan 09 1 98.21 5.50 May 09 95.00 9.13 May 04-09 108.09 61X1 Aug 09 0 98.14 10.38NOV 04 -09 113.28 4.25 Jan 10 101.21 6.50 Feb 100. 102.15 1175Feb05-10 120.00 lOOOMay 05-10 113.25 12.75NovOS-10 127.12 1388May 06-11 134.29 H00NOV06-11 138.03 10.38NOV07-12 122.03 1200Aug08-13 134.01 H25May09-14 144.23 12.50Aug09-14k 140.18 11.75Nov09-14k 136.22 11.25 Feb 15 146.14 10.63 Aug 15 141.15 9.88 Nov 15 134.22 9.25 Feb 16 128.30 7.25 May 16 109.18 7.50 Nov 16 11205 8.75 May 17 125.04 888 Aug 17 12620 9.13 May 18k 129.31 Nov.lSk 129.03 Feb 19 127.30 Aug 19 120.06 Feb 20 124.22 May 20 127.21 Aug 20 127.27 Feb 21k 11809- May 21k 121.09 Aug 21k 121,15 Nov 21k 120.07 Aug 22 1U.27 Nov 22 116.11 Feb23k U0.17 Aug 23 100.08 Nov 24 115.26 Feb 25 117.18 Aug 25 10814 Feb 26 97.17 Aug 26 107.06 Nov 26 104.01 Feb 27 10521 Aug 27 102.17 Nov 27 99.14 Apr 28 1 95.30 Aug 28 9115 Nov 28 8810 Feb29k 88.15 Apr 29 100.10 Aug 29 100.27 May 30 104.21 Nov OOp 100.21 Nov OOp 99.13 TELECOM: NTT to Reduce Network Access Fees 6.47 646 6.47 644 6.46 6.45 JunOlp 99.10 JunOlp 100.03 Jul 01 99.00 Jul 01 p-. 100.04 Aug 01 101.12 Aug 01- 107.00 Aug 01 Aug 01 99.31 Sep 01 p.

98.31 Sep 01 99.27 99.06 Oct 01 99.21 Nov 01 p. 101.06 Nov 01 111.16 Nov 01 99.05 DecOlp 99.15 Jan 02 99.20 Jan 02 99.26 Feb 02 111.14 Feb02p 99.20 Feb 02 100.00 Mar 02 100.00 Mar 02 100.06 Apr 02 99.25 Apr 02 100.06 May 02 p. 101.22 May 02 100.01 May 02 100.08 Jun02p 99.19 Jun02p 99.28 Jul 02 1 99.14 Jul 02 99.05 5.38 6.00 8.75 5.13 6.25 4.50 6.13 4.00 5.75 5.75 8.50 4.63 5.63 4.63 5.50 4.50, 5.25 5.38 7.75 11.75. 5.00 5.63 4.88 6.38 5.00 6.25 5.63 BOO 13.13 5.25 6.50 5.57. 0,01 611 609 6.10 0.01 6.07 6.09 0.01 612 6.08 0.01 6.06 0.01 6.38 6.38 :6.35 0.01 6.34 0.01 636 632 0.01 6.14 6.39 635 0.01 6.49 0.01 643 6.43 6.42 0.43 643 6.41 6.47 645 99.24 99.05 9917 98.31 99.12 99.12 100.23 103.01 99.04 99.16 98.28 Nov OOp Dec OOp Dec OOp Jan 01 Jan 01 FebOlp FebOlp Feb 01 FebOlp FebOlp Mar 01 Mar 01 Apr 01 Apr 01 May 01 6.45 6.45 643 644 6.44 6.44 0.01 6.45 6.45 646 645 0.01 6.43 0.01 6.45 0.01 6.43 0.01 6.40- 3.88 0.04 6.41 0.01 99.28 9827 99.25 99.09 11.63 Nov 04 119.12 7.50 Feb 05 104.10 650 May05p 100.18 6.75 May 05 10L27 12.00 May 05 122.24 650 Aug (Bp 100.18 10.75 Aug 05 1 118.15 5.88 Nov 05 97.26 5.63 Feb 06 96.19 9.38 Feb 06 113.23 statement last week at the end of a meeting of the and U.S.

-Japan business councils last European companies also want a piece of the action. While the U.S. is leading the political charge to get rates reduced, the likes of France Telecom SA and Global One, which want to expand their business in Japan, also stand to benefit. Lower fees may also woo additional domestic and foreign compa-. MavOlp 101.05 May 01 105.06 May 01 98.30 May 01 99.31 Continued from CI are retroactive to April 1, Barshef-sky said.

NTT rivals at home and abroad, including WorldCom, DDI Corp. and Japan Telecom Co. have been paying NTT up to 40 of their telephone revenue for access to every home and business in Japan. Japan had proposed that NTT, the world's largest phone company, cut interconnection charges by 22,5 over three years, while the U.S. wanted a cut of that size in the first two years and a more than 40 reduction after the third year.

NTT owns the wires that connect each home and business to the telecommunications infrastructure of the world's second-largest economy. The fees are seen as a barrier to increased competition in an industry that could help spur domestic demand-led growth. NTT fees have been the focus of a lobbying push by American businesses in Japan. A reduction in interconnection rates is needed to help develop information technology in Japan, companies from to auto and defense parts maker TRW Inc. said in a joint Prices quoted in dollars and 32nds; 101.01 means 101.

Subject to federal taxes but not to state income taxes. Source: Bear, Stearns Co. via Street Software Technology Inc. Representative quotations based on transaction of $1 million or more, Treasury notes; non U.S. citizens exempt from withholding; I inflation-indexed securities (TIPS), principal is adjusted; return is "real" after Inflation.

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