The Bethlehem Steel Corp. announced yesterday the completion of a three-year, $200 million improvement to the Sparrows Point plant line that turns thick, red-hot slabs of steel into the thin gray sheets used by factories making everything from soup cans to refrigerators.
Though the rehabilitation of the hot strip mill will cost steelworker jobs and hurt the company's bottom line during the ongoing industrial recession, steel experts said it will turn the 6,900-worker Sparrows Point plant into one of the top-quality steelmakers in the nation.
The construction of new, computerized, 12,000-horsepower rollers to press, cut and wrap hot steel into 6-foot-high coils of steel sheet will improve Bethlehem's productivity and quality, said Don Kellner, president of the United Steelworkers local that represents the approximately 530 hot strip mill workers.
"We needed the modernization. . . If we didn't modernize, we would have been in a lot of trouble," Mr. Kellner said. "But we do lose jobs."
G. Ted Baldwin, a Bethlehem spokesman, said that the company expects to cut 40 jobs through attrition from the hot strip mill as a result of the modernization.
Though the improvements don't turn Sparrows Point into a state-of-the-art facility, Charles Bradford, who watches the steel industry for UBS Securities in New York, said that they make the plant one of the top competitors in the nation.
Mr. Bradford said that Sparrows Point's new hot strip mill, which processes nearly all of the up to three million tons of steel made annually at the plant, will be able to press bigger slabs into longer strips and wrap them into huge coils that look like oversized paper-towel rolls.
And that means productivity gains for the entire facility, he said. Because the new rollers can handle slabs as much as 2 inches thicker than the old machines' 8-inch limit, the casting machines that currently turn liquid steel into 8-inch-thick slabs should be able to turn out the thicker slabs 25 percent faster, he explained.
Mr. Bradford predicted the productivity improvements could shave the number of worker-hours needed to produce a ton of steel at Sparrows Point from four to three and could save the company as much as $100 million a year.
Though Bethlehem's profits have suffered because of the investment and the machines are being fired up when the steel industry is suffering from slack demand, Mr. Bradford praised Bethlehem's timing.
It's better to make repairs when business is bad, he said. And though he predicts Bethlehem will see "nothing positive [from the investment] for the rest of the year," he said that the improvements make Sparrows Point "a first-class mill."
Jerry Connolly, purchasing manager for the Worthington Steel plant on Martin Road in Baltimore County, said that he has been looking forward to Bethlehem's improvements for years because customers have been demanding coils of steel twice as long as the 15,000-pound coils the plant previously sold.
Mr. Connolly buys steel from Bethlehem for his plant to cut, press and resell to other processors or factories.
It's surprising how much time and money the bigger coils can save, he said. Companies load the coils onto big unwrapping machines that whip the steel out at up to 1,500 feet per minute. "If it takes 15 minutes to run the end of a coil through a [processing] line, it can definitely make a difference," Mr. Connolly said.
Though the new machines will turn out more valuable steel, Mr. Connolly said that he doubted Bethlehem would be able to charge more for the improved coils because automakers, bridge builders and other steel users just don't want much steel.
"It's the law of supply and demand. . . . The market is very soft," Mr. Connolly said.