Weak sales at Baltimore Armco plant likely to mean 100 temporary layoffs

December 14, 1990|By Kim Clark

Armco Inc.'s struggling Baltimore stainless-steel plant, which last made money in 1988, will likely lay off at least 100 workers temporarily, company and union officials said yesterday.

Sales of rods, bars and wires made at the Baltimore Specialty Steels plant have fallen off dramatically in the last several months, and company officials said they are rethinking their strategy for the plant.

"We are trying to evaluate the whole business future," said Raymond Hein, the plant's president.

He declined to specify how many workers would be laid off but said the plant has been hurt by a downturn in auto sales, which has reduced the demand for steel springs around the country.

The downturn in sales comes as Armco is trying to revive the plant by training its workers in Japanese-style manufacturing methods and has cut workers at other plants.

"We don't have every person familiar with it yet. We are one-third of the way there," Mr. Hein said. "Once we get to 100 percent we will be able to reduce costs and not have these kinds of layoffs."

In the meantime, Armco must make painful cuts, he said, lamenting the timing of the layoffs. "In this business, we've had unfortunate timing for the last 10 years," he said.

Tony Pulaski, president of the United Steelworkers union local at the plant, said he expects the approximately 110 workers in the melt shop -- where scraps of steel are superheated in caldrons then poured into molds or presses -- to be laid off for several weeks starting Monday.

Mr. Pulaski also predicted that if sales of steel don't pick up, more layoffs will follow at the 900-worker plant. "It could snowball," he said.

Industry analysts echoed Mr. Pulaski's gloomy outlook, saying Armco's move is part of an industrywide contraction.

Charles Bradford, an industry analyst who works for UBS Securities in New York, said Armco and other steel companies around the country have started laying off workers in recent weeks. Some steel companies have started losing money, he said. "There is underlying economic softness. There are going to be layoffs all over the place."

He said that although Armco is one of the financially strongest companies in the industry, it has been hit hard by the downturn in sales and by competition from non-union mills.

Mr. Bradford noted that Armco is being squeezed by the losses in Baltimore because union contracts require payments to laid-off workers. Armco is actually saving money by keeping the money-losing plant open for now, he said. "It costs them more to shut it than keep it open."

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