Union, WHX break talks on purchase Failure threatens sale of Bethlehem Steel's Sparrows Point yard

Shutdown is an option

Workers reject cuts in salary package, hope for new buyer

March 12, 1997|By Sean Somerville | Sean Somerville,SUN STAFF

Talks between the Sparrows Point shipyard workers' union and WHX Corp. collapsed yesterday, jeopardizing the sale of the Bethlehem Steel Corp. yard to the New York-based company.

Murphy Thornton, president of the International Union of Marine and Shipbuilding Workers Local S-33, said WHX insisted on cuts in wages and other benefits worth $8 an hour -- more than one-third the BethShip average of $22.20 in wages and benefits. He said the union offered no concessions.

"We appeal to BethShip to find a buyer that will pay a fair price to the work force as well as to" Bethlehem, the union said in a statement. "We know that BethShip can operate at a profit without raping the men and women who do the hard, dirty work that generates that profit."

Paul Bucha, a WHX director leading the company's effort to buy the yard, dismissed the union's $8 estimate as "laughable," but declined to give a company estimate. He said WHX would bring dramatically more work to the yard, which would translate into higher pay for more workers.

"We made an offer that makes the yard competitive," he said. "They just have to think about it. If they persist where they are, I guess the yard will be closed."

Bucha said Bethlehem may close the yard and later negotiate a sale of the property to WHX. The yard would make "a nice industrial park, but we thought it made the best shipyard in the country," Bucha said.

Bethlehem Steel spokesman Gary Graham said the company had no comment on the yard, which employs about 700 people. Bethlehem has said only that the yard will be closed if it is not sold, and that it hopes to reach an agreement by the end of March.

Bethlehem is negotiating solely with WHX, which offered about $27 million for the yard, according to sources. WHX prevailed over two other bidders. One of the bidders, Baltimore Orioles owner Peter Angelos, offered about $20.5 million and remains interested in buying the yard if WHX's purchase falls through.

Bethlehem Steel has called the yard unprofitable, but has not released details. According to a confidential memorandum, the yard reported a loss of $1.7 million in 1995. But in the first three quarters of 1996, the yard reported earnings before interest and taxes of almost $2.4 million.

Labor costs include a $13.47 hourly wage and $8.73 in fringe benefits, according to the memorandum.

Bucha, who said WHX wanted to reach an agreement with workers before buying the yard, delivered the company's proposal to the union almost two weeks ago. WHX has not publicly released its offer.

But union leaders last week presented parts of the proposal to union members, who were not pleased, at one point chanting, "No concessions."

Thornton said WHX is seeking salary cuts of between $1 and $3 an hour, an elimination of the company's defined-benefit pension plan, a cut in the night-shift hourly bonus and other concessions.

"It's tough when you go through every article and see that it all has serious ramifications," Thornton said. "I've never seen negotiations like that."

The union said it started yesterday's meeting by saying it wanted to operate the yard under its current agreement with Bethlehem. "We felt they could have worked with it," Thornton said. "They could have made money with it. But WHX said that unless we're willing to get down to where they are, there's no sense in proceeding."

In its statement, the union said, "We expect WHX will not return to the bargaining table because it appears they want the workers to buy the shipyard for them over the next five years."

Bucha said the company is still interested in buying the yard. "We're marketing and selling and working [hard]" to generate business for the yard, he said.

Bucha said WHX is aiming to increase the average yard worker's number of hours from 1,200 a year to about 2,000 a year. He said the company planned to increase employment from about 700 to 1,000. "We just assume people want to work and see this thing grow," he said.

He said WHX's proposal includes profit-sharing and is competitive with other shipyards and other Baltimore employers. He said Bethlehem will likely close the yard if WHX does not buy it.

Bucha said BethShip is not accepting work beyond the end of June, meaning the yard will be much less valuable to others and too expensive for Bethlehem to run.

"If the union doesn't come to terms with us, we understand the yard will be closed. Then we have to think about what we're going to do," Bucha said.

He said WHX is in no hurry to make a deal. He said the company could buy the yard without an agreement with the union or hire other workers to operate it. "I don't want to say what we will do or won't do," he said.

Tim Colton, an Arlington, Va.-based shipbuilding consultant, said workers must give up something to ensure the yard's survival. He also said WHX should have negotiated an agreement before making an offer for the yard.

"This is not a good sign," he said. "The goodwill of the work force is necessary for the success of the shipyard. Time and time again, we've seen that if you have an unfriendly work force, productivity goes down."

He said that while the yard has at least one buyer waiting in the wings, the June cut-off date for new work increases the likelihood of a shutdown. "This is getting serious," Colton said.

Pub Date: 3/12/97

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