Beth Steel to build new mill at Point $300 million facility is called a job saver, but 900 will be lost

October 30, 1997|By Sean Somerville and Lorraine Mirabella | Sean Somerville and Lorraine Mirabella,SUN STAFF

Bethlehem Steel Corp. said yesterday that it will build a $300 million cold-rolling mill complex at its Sparrows Point plant in a deal that will pare 900 of the plant's 5,200 jobs by 2000.

Company and state officials characterized the deal as a job saver, saying that a decision to locate the cold mill elsewhere would ultimately have cost even more jobs -- perhaps even the closure of the entire Baltimore County plant.

"We were really at a watershed," said Duane Dunham, president of the Sparrows Point division, who was at the company's headquarters in Bethlehem, Pa., for the announcement.

"Ultimately, it would have been significantly different if the cold mill had gone elsewhere," he said. Eventual closure of Sparrows Point "clearly would have been a viable alternative," he said.

"This is the biggest economic development news in several decades for the state," said Gov. Parris N. Glendening, speaking yesterday afternoon at Sparrows Point. "This plant would be closed and abandoned within seven to 10 years if we did not get this investment. They would have gradually transferred operations to other states."

The 1.5 million-square-foot mill will replace an outdated mill that currently employs 850 people. Because of new technologies, the new mill will require only about 450 workers.

But to secure the new mill, the United Steelworkers of America agreed to job combinations, smaller crews and work-rule changes throughout Sparrows Point to save the company $130 million annually. Those changes will cut the number of plant jobs to about 4,300 by 2000 -- the year the mill is to be completed.

Dunham said the 900-job reduction can be achieved by attrition, with the possibility that the company will offer buyout packages for some workers. He declined to elaborate but said no workers would face layoffs.

A psychological boost

The choice of the Baltimore County location over rival sites in Virginia and West Virginia was also a psychological boost for the century-old Sparrows Point plant, which is less profitable than Bethlehem's Burns Harbor, Ind., plant.

Curtis H. Barnette, chairman and CEO, said, "It is an enormous vote of confidence in Sparrows Point management and the union leadership to bring this project in."

The company's board approved the cold mill plans yesterday, after months of Bethlehem's negotiations with the three states as well as the union.

Despite the forthcoming job cuts at the Sparrows Point plant, which employed about 30,000 people in 1960, union officials were elated by the decision.

"This is exactly what we hoped for," said Joseph J. Rosel Jr., president of United Steelworkers Local 4727. "We deserve this mill, based on the profitability we achieved over the last four years. By having this cold mill, the future of this plant is assured."

Plans to build the mill came as a relief to Yvonne Lewis, a stocker who cleans steel and has worked at Sparrows Point for 21 years.

"Now I'll be working until I retire, without being laid off," she said, standing outside the plant yesterday.

The state and Baltimore Gas and Electric Co. offered incentives to get the mill. Bethlehem confirmed a package worth about $10 million, which includes money for training, construction assistance and enterprise-zone designation. But the company declined to comment further. BGE also did not release details.

Glendening said only that the state agreed to give Bethlehem tax credits, loan guarantees and cooperation in scheduling issuance of building permits.

Cold-rolling reduces the thickness of hot-rolled steel sheet and improves its finish and texture. Once coated, cold-rolled sheet is one of the industry's most profitable products. Cold-rolled products from Sparrows Point are used in containers, tubing and machinery. Cold-rolled steel accounts for about 50 percent of Bethlehem's sales at Sparrows Point. Dunham said that might increase with the new mill.

"The new facilities will allow us to go after some additional markets that we have not been able to do," he said. "We can go after the near strip market, which goes into various automotive applications."

Present mill to be phased out

The new mill will be capable of producing 1.3 million to 1.5 million tons of cold-rolled steel. It will be built at a site adjacent to the existing mill, which will be phased out as the new one is completed.

The new complex will include a continuous pickling line; cold reducing mill; annealing facilities; a skin pass mill; and coil-handling, storage and shipping facilities. Engineering will begin immediately, with construction beginning in the spring of 1998.

Analysts have said Sparrows Point will need an efficient cold-rolling mill to compete with low-cost competitors known as minimills, which use scrap iron as their raw ingredient.

As does the existing mill, the new mill will use hot-rolled steel from Sparrows Point's hot strip mill. Cold-rolled steel produced by the mill will be coated at Sparrows Point's coating lines to produce galvanized steel and other products.

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