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Allegheny Tecnologies's Simmons says 'Sayonara'

Tuesday, December 14, 1999

By Len Boselovic, Post-Gazette Staff Writer

Allegheny Technologies Chairman Richard P. Simmons announced yesterday he will retire next May, capping the remarkable career of one of the nation's most respected steelmakers. The 68-year-old executive said he won't stand for re-election to the board at the annual meeting in May. No successor was named.

 
    Richard P. Simmons

Age: 68

Title: Chairman, Allegheny Technologies Inc.

Education: Bachelor's, metallurgy, Massachusetts Institute of Technology.

Career Path: Began his career with Allegheny Ludlum Steel. Left in 1959 to join Latrobe Steel, and three years later, left Latrobe to join Republic Steel. Returned to Allegheny Ludlum in 1968, was named president of the steel division in 1972 (Allegheny Ludlum Industries had become a diversified conglomerate by then), and led a management buyout of the steel operations in 1980, using the old Allegheny Ludlum Steel name. In 1987, the company went public under the Allegheny Ludlum Corp. name, which was changed to Allegheny Teledyne Inc. in 1996 after it acquired Teledyne Inc. Last month, Teledyne Technologies and Water Pik Technologies were spun-off from the parent company, which was renamed Allegheny Technologies.

 
 

His career with the specialty metals company spanned five tumultuous decades. During that time, Simmons made specialty metals at Allegheny Ludlum, forged a conglomerate at Allegheny Teledyne, then returned to specialty metals at Allegheny Technologies. The Bridgeport, Conn., native thrived in an industry known for its red ink. Allegheny Ludlum posted only one quarterly loss as a public company, during a 10-week strike by the United Steelworkers of America in 1994.

Simmons impact on the Steel City has been much broader than metals.

As chairman of the Allegheny Conference on Community Development, he spearheaded efforts to spur job growth in the region. Three years ago, he launched Birchmere Investments, a $20 million venture capital firm that funds fledgling local businesses. One of Birchmere's bets paid off handsomely Friday, when Internet auction house FreeMarkets' stock rose 483 percent after its initial public offering.

"He was truly one of best CEO's in the steel business," said David MacGregor of Midwest Research in Cleveland. "He had a lot of the capital discipline that other guys in this industry don't have."

Said Parker/Hunter analyst Richard Sporrer: "He built, you could argue, the premier specialty metals company in the world."

Simmons was the domestic industry's preeminent player during a period when U.S. specialty steelmakers faced increasing competition from foreign producers and pressure to achieve strength through size. His career and his company's transformation reflect just how much those forces have altered the landscape.

Consider 1980, when Allegheny Ludlum was the ugly duckling in a portfolio of consumer products businesses being welded together by its parent, Allegheny International. Simmons' boss, AI Chairman Robert Buckley, wanted to get rid of Ludlum in the worst way because of the steel industry's high capital costs and vulnerability to economic cycles.

It fell to Simmons, president of Ludlum since 1972, to lead a $195 million management buyout. The LBO was funded by George Tippins, a steel equipment supplier who liked Simmons' grasp of mill economics. While Buckley drove AI into bankruptcy, Simmons transformed Allegheny Ludlum into a swan. The steelmaker went public in 1987 and embarked on a series of acquisitions. The spree culminated with the purchase of Teledyne in 1996, with Simmons playing the white knight when the Los Angeles conglomerate faced a hostile bid by Ron LaBow, the chairman of WHX, parent of Wheeling-Pittsburgh Steel.

The $2.3 billion acquisition gave Simmons' company a new name -- Allegheny Teledyne -- and look. Its mix of aerospace, electronics, government contracting and Water Pik products was along the lines of what Buckley envisioned nearly 20 years earlier. More importantly, Teledyne brought an $851 million pension surplus that was used to cover Allegheny Ludlum's underfunded pension plan as well as retiree medical health benefit costs.

The Teledyne acquisition forced Simmons, who had retired as president and chief executive officer in 1990, back into daily grind. His repeat performance was made necessary in 1997, after Teledyne Chairman William Rutledge decided not to make the move to Pittsburgh.

With Simmons at the helm, the acquisitions continued. Oregon Metallurgical, an Albany, Ore., titanium producer, was bought for $560 million in 1998. Late last year, Teledyne paid Bethlehem Steel $175 million for plants the steelmaker acquired when it purchased Lukens.

Then in January, Simmons announced he was tearing apart what he had put together.

He would split Allegheny Teledyne, which had $3.5 billion in revenue in 1998, into three publicly traded companies: metals producer Allegheny Technologies; Teledyne Technologies, the aerospace and electronics businesses; and Water Pik Technologies, the consumer products businesses.

Critics would say Simmons had the breakup in mind ever since he laid eyes on Teledyne. While the merger agreement placed restrictions on divesting Teledyne assets, some analysts expected that sooner or later, companies such as Water Pik would be sold off.

Parker/Hunter's Sporrer disputes that. But there's no disputing the fact that a little of the sheen has gone off Simmons' reputation in recent years. Not all the acquisitions performed with the clockwork precision he was known for. The fact that cheap imports sent prices down 30 percent or more in recent years didn't help.

Nor did investors give a hearty endorsement to the spin-off, which was completed last month. Shares lost a third of their value following the Jan. 20 announcement. Allegheny Technologies closed yesterday at 21 15/16, off 13/16.

"When you're building houses, a couple of blocks get put in crooked and I think that's what happened here," said MacGregor, of Midwest Research.

Barring a robust turnaround in its stock, Simmons will not depart on a high note. However, "he's created a lot of wealth along the way for a lot of people," MacGregor said.

Company officials were not available for comment on who will succeed Simmons, the only chairman the company has known since the 1987 public offering. Early speculation centers on former Lockheed Martin executive Thomas A. Corcoran, who succeeded Simmons as president and CEO on Oct. 1.



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