Armco decides to sell money-losing stainless-steel rod operation in Baltimore

January 13, 1991|By Kim Clark

Armco Inc. has decided it wants to sell its money-losing stainless-steel rod operation on East Biddle Street and is evaluating two offers for the works, a company official said yesterday.

Raymond E. Hein, president of the Baltimore Specialty Steels Corp. plant here, said the Parsipanny, N.J.-based corporate parent has decided that the bar, rod and wire operation "does not fit into [its] long-termstrategy."

The two bidders for the 900-worker Baltimore plant both say they want to keep it operating as a steel mill, Mr. Hein said. He said he did not know when a decision would be reached on the fate of the plant.

Although the plant's managers have drastically improved the quality of the plant's steel rods and wires in the last 18 months by training workers in Japanese-style manufacturing techniques, the operation has continued to lose money.

The plant has lost money in eight of the last 11 years, and Mr. Hein, who said the plant last made a profit in 1988, said he has seen no sign of a return to profitability.

Demand for the stainless-steel automotive springs and appliance

rods made at the Baltimore works has plummeted in recent months, prompting Armco to lay off 30 salaried employees and to start furloughing hourly workers, he said.

"I'm really concerned," Mr. Hein said. "We don't see any demand. We see demand for maybe 60 percent" of previous years' levels, he said.

For several years, steel-industry observers have expected Armco, one of the financially strongest steel companies in the nation, to lose patience with the rod and wire division.

Charles Bradford, an analyst for UBS Securities in New York, said Armco has kept the plant running only because of expensive layoff clauses in the United Steelworkers union contract. "It costs them more to shut it than keep it open," he said.

But that may no longer be true.

In December, Mr. Hein took the unusual step of closing down the 100-worker melt shop -- the division that superheats steel and minerals into a stainless-steel mixture that can be rolled into rods, wires and bars -- while keeping the remaining 800 workers busy using inventoried steel.

Although the melt shop has been operating for the last two weeks, Mr. Hein said he might shut it down again soon if orders don't pick up.

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