Losses, layoffs raise doubts about recovery Armco will cut 490 workers at 2 area plants

January 27, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer Staff Writer Ted Shelsby contributed to this article.

Armco Inc., jettisoning a number of money-losing operations, said yesterday that it will cut about 490 workers within the next several months at its two stainless-steel plants in the Baltimore area.

The company, based in Parsippany, N.J., said that its East Biddle Street plant, which employs 370 workers, would be reduced to a skeletal crew, and that its melting operations at its Eastern Stainless plant in Essex would be shuttered.

Armco's announcement was the latest shock to the local economy. The news came less than a week after Westinghouse Electric Corp. said it would lay off 500 workers at its division in Linthicum, and B. Green & Co., a 77-year-old wholesale grocer, said it was selling its wholesale division, eliminating between 300 and 400 jobs.

For Armco, yesterday's announcement came as part of a restructuring plan that will eliminate 1,400 jobs, or 12 percent, of the steelmaker's national work force. The cuts, which will cost the company $188 million in the fourth quarter of last year, will save $40 million in 1993.

"Armco Inc.'s restructuring actions are necessary as the company continues to transform itself into a smaller, more profitable company that is focused solidly on specialty steels," said Robert L. Purdum, Armco's chairman and chief executive officer.

Armco said it planned to gradually eliminate about 340 jobs at the Biddle Street plant by May 31, leaving only a few dozen workers to do "conversion" work, such as remelting, forging and processing steel. At present, the plant makes stainless-steel products, including ingots, billets, wire, rod and reinforcement bars.

At the Eastern Stainless plant on Rolling Mill Road, the melt shop is slated to close by August, when 150 workers will lose their jobs. The plant will keep a work force of about 450 to make stainless-steel plates and sheets.

"I'm personally relieved that it's over," Christopher Sorting said as he left the Armco's Biddle Street plant yesterday afternoon.

"I started here in 1967, and they have been talking about shutting the gates since then. It was just a question of time."

"I've watched things deteriorate for five, six, seven years," said the 42-year-old Gardenville resident. "There has been no future here for some time. Now I can get on with my life."

The 81-year-old Biddle Street plant has been losing money for years, and Armco has tried various ways to make it profitable.

The latest effort came in May, when the Baltimore operation was linked with an Armco plant in Bridgeville, Pa., outside Pittsburgh. The arrangement included a new five-year concessionary labor agreement with the United Steelworkers of America, the union representing the workers.

"The ink is hardly dry on the contract, and they are doing this," said Harry J. Spedden, subdistrict director for the union in Baltimore. "This is terrible."

Mr. Spedden said that union officials had not been told of the cutbacks and that the news came as "a total shock."

He said he was particularly surprised because he understood that the agreement with the union included a commitment from the company to spend $22.5 million on modernizing the Biddle Street plant.

Edward M. Romanoff, an Armco spokesman, said the agreement with the union did not include any employment guarantees.

"We attempted to take the best of both plants and combine them," he said.

But a weak market, intense foreign competition, weak prices and less-than-expected cost savings worked against the new arrangement, Mr. Romanoff said. "All these factors prevented it from being profitable," he said.

Under the arrangement, the joint operation between the Baltimore and Bridgeville plants, Armco was to save money by producing raw stainless steel at the Bridgeville mill and shipping it to the Baltimore plant to be made into finished products.

In yesterday's announcement, the Bridgeville plant was also reduced to doing conversion work similar to that of the Biddle Street plant. A total of 50 workers would be employed at the Bridgeville and Baltimore plants.

The company also said its Cytemp Specialty Steel operation in Titusville, Pa., was for sale. The plant employs 285 workers, making high-temperature superalloys and other specialty steels.

Mr. Romanoff said it was "not in the cards" that the Baltimore and Bridgeville plants would ever return to their former operations. He said that although the company was not looking for any buyers, it would consider any reasonable offer for either plant.

Even though the actions were "brutal," they were necessary to stop the flow of red ink, according to Charles Bradford, vice president of UBS Securities Inc., an institutional investment brokerage.

"These have been a big loser for a long time, and they finally bit the bullet," he said.

Armco, which has not recorded a profitable year since 1989, has lost $480 million since the start of 1990. The company has not reported results for the final three months of 1992.

Given Armco's recent financial troubles and the Biddle Street plant's long history of losses, few workers interviewed yesterday afternoon said they were surprised by the news.

Rod "Chopper" LaPausky, a 45-year-old statistical process control technician at the Biddle Street plant, said he considered himself one of the lucky ones, because his house is paid for, and he expects to get by -- at least for a while -- on the company's pension plan.

"I've been hearing that this day was coming for 28 years," he said. "It's like you get hardened to it. But it's sad. I feel like my whole life has been here."

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