Tampa, Fla., will be the headquarters city for North America's newest steelmaking multinational now that Canadian steelmaker Co-Steel is combing its North American steel operations with those owned by Brazilian steelmaker Gerdau. The merger comes as part of a consolidation trend in the North American steel industry as fewer steel makers find they can go it alone against foreign competition. So, in a deal valued at $382 million, the new Gerdau AmeriSteel Corp. will be a world-class steel enterprise with annual revenues in excess of $1.75 billion.

The merger plan unites 11 steel mills in the U.S. and Canada with annual capacity in excess of 6.8 million tons of finished steel bar and rod products. Co-Steel manufactures and markets merchant bar, structural shapes, reinforcing bar, wire rod and flat-rolled steel used principally in the construction, automotive, appliance, machinery and equipment industries.

Gerdau is a 101-year-old firm with 12 million tons of steel capacity in Brazil, Chile and Uruguay. Within Brazil, Gerdau also operates a nationwide network of 70 branch locations dedicated to the distribution of a full range of long and flat-rolled steel products. Gerdau's North American holdings are reinforcing bar giant AmeriSteel of Tampa—which operates mini-mills in Jacksonville, Fla.; Charlotte, N.C.; Jackson and Knoxville, Tenn., and Cartersville, Ga.—along with Gerdau Courtice Steel of Cambridge, Ontario, a maker of hot-rolled bars, shapes and special sections; and special sections mill Gerdau MRM Steel of Selkirk, Manitoba.

Co-Steel's operations are Co-Steel Lasco in Whitby, Ontario, which makes a wide range of angles, channels, flats, grader blades and rebar; rebar mill Co-Steel Sayreville in New Jersey; wire rod mill Co-Steel Raritan in Perth Amboy, N.J.; and half ownership of Gallatin Steel in Ghent, Ky., a flat-rolled mini-mill.

All these mini-mills will be integrated with 29 downstream fabricating and specialty product businesses, and a ferrous scrap operation Co-Steel Recycling in Whitby, Ontario. "Through this combined network, we expect to strategically service long product customers throughout eastern North America, resulting in improved operating efficiencies," according to Phillip E. Casey, currently chief executive officer of AmeriSteel who will be CEO of Gerdau AmeriSteel.

"We think that Gerdau and Co-Steel have crafted a transaction that provides financial stability as well as a significant platform for an enterprise to lead the resurgence of the North American steel industry," says Casey. He adds the firm also expects to realize a number of economic benefits as a result of the combination though:

• Freight rationalization, mill product production scheduling efficiencies and enhanced purchasing volume-which will result in $23 million in near-term annual cost savings, without significant capital expense.
• Additional incremental cost savings realized through the adoption of best operating practices and coordination of manufacturing technologies.
• Restructuring of operating units so the manpower reductions among the current combined 4,800 employees are expected to be minimal.