The contracts are with about 40 different steelmakers around the world, and will supply GM with a majority of its steel needs over the next four years. A GM purchasing official said he thought it was the largest single steel purchase GM has ever made.

The GM program has been under way for nearly a year. Last spring, the auto maker brought steelmakers from around the world to Detroit for presentations on a new steel-buying program. The company sought to extend the length of the typical steel contract and put far more of its steel needs up for bid at the same time than it had previously.

Many Four-Year Pacts

The contracts,which were signed in December, are unusual for their length: many are for four years, while typical auto-steel contracts in recent years have been for just two or three years. Several years ago, auto-steel contracts lasted only a year, and some were on a quarter-by-quarter basis. Analysts say GM's move to lock in longer-term contracts could prompt other big steel buyers to do the same.

"Four years is a long time, and is longer than any steel contract I've heard of," said Richard Aldrich, an analyst with Lehman Brothers. "I'm sure some other big steel buyers will try to get the same. Steel pricing has gotten smashed down recently, and everybody's going to try to lock in those prices for four years."

GM didn't release specifics on which company won which contracts, or how much in concessions it was able to extract from steelmakers. John Stiles, GM's executive director of world-wide purchasing, metallic, did say that the new bidding process was more successful than he had expected. He added that GM"unquestionably" will spend less on steel over the next four years than it would have otherwise.

Bidding Winners

Three names GM did single out as winners in the bidding process were Bethlehem Steel Corp, Bethlehem, Pa; AK Steel Holding Corp, Middletown, Ohio; and Japan's Sumitomo Metal Industries Ltd. All three were already among GM's top steel suppliers.

Mr Stiles said there was some shifting of business among the big steelmakers. He contended the bidding process was beneficial both for GM and for the steelmakers. He said that GM was able to lock in low prices during a time when the steel industry was particularly weak, and that steelmakers can now plan their production levels and capital expenditures four years into the future.

The biggest impact from the new contracts might be on the mindset of steelmakers, who are under additional pressure to cut their costs. "Overall, this represents an increase in the competitive forces steel and metal companies face," said Christopher Plummer, aconsultant with Metal Strategies Inc., of West Chester, Pa. "In key metals markets, big customers are consolidating and are exerting a lot more bargaining power over suppliers."

The longer-term GM contracts come as US steelmakers struggle with falling profits. Steel prices fell considerably last year, in part due to an onslaught of imports into the US market; that decimated the profits of many US steelmakers. This year, as major steelmakers prepare for labor talks with the United Steelworkers of America, the new GM contracts may force them to toughen their negotiating stance as they try to cut costs.

(The Wall Street Journal)