GM, steelmakers reach four-year purchasing deal
DETROIT, Feb 22 (Reuters) - General Motors Corp. ,
the single largest customer of the U.S. steel industry, said on
Tuesday it has agreed to buy 18 million metric tons of steel
worth $11.7 billion over four years from 40 global steelmakers.
The world's largest automaker, which began negotiations
with steelmakers on the pact last March, said the long-term
agreement will cut costs, add more predictability to pricing
and guarantee better quality. GM currently buys steel on a
regional basis under one- or two-year contracts.
"The length of the contracts and volume of steel they
include account for more than 90 percent of our steel needs
through the year 2002," said John Stiles, executive director,
GM Worldwide Purchasing-Metallic.
GM declined to identify the steelmakers in the agreement,
but said nearly three-quarters of the steel will be purchased
from U.S.-based producers.
Major U.S. steelmakers that currently supply GM, including
LTV Corp. , Bethlehem Steel Corp. and USX-US
Steel Group , all had no comment when contacted by
Reuters.
GM buys about 6 million metric tons of steel annually, most
of it flat-rolled steel that is used in vehicle bodies.
Stiles said GM is continuing discussions with a number of
steel suppliers for contracts of up to 10 years, which would
further stabilize pricing, quality and availability.
GM has made similar deals with other metal manufacturers.
In November, the Detroit automaker reached a 10-year,
multibillion-dollar deal with Alcan Aluminum Ltd. to
supply aluminum and co-develop new products using the
lightweight metal.
Despite the increasing use of aluminum, steel's lower price
and higher strength make it the dominant material in vehicles.
GM planned to hold a conference call at 1100 EST (1600 GMT)
on Tuesday to release further details on the steel agreement.
((Detroit newsroom, 313-870-0200)) |
