Steel workers give to get a lot Job cuts OK secures Sparrows Point mill

Industry

November 09, 1997|By Sean Somerville | Sean Somerville,SUN STAFF

The prospect of Bethlehem Steel Corp. building a $300 million cold-rolling mill out of state conjured a frightening sequence in David Wilson's mind.

The United Steelworkers of America official saw barges taking steel from Bethlehem's Sparrows Point plant to be processed in Virginia. He saw Bethlehem building an electric furnace next to the new mill there.

Finally, Wilson saw Bethlehem shutting down "the Point."

The new cold mill, intended to replace an outdated mill at Sparrows Point, threatened not only the old mill's 850 jobs, but every one of the Point's 5,300 jobs, Wilson believed.

To get the new mill built at Sparrows Point, the union agreed to changes that Bethlehem says will eliminate 900 jobs at the Baltimore County plant by the year 2000, when the new mill will start operating. Bethlehem agreed to the union's proposal late last month.

The deal will leave the Point with about 4,400 jobs, another notch down from its peak of 30,920 in 1959.

"In the days of big steel, we demanded anything we could think of and got it," said Wilson, the District 8 director who started working at Sparrows Point in 1951. "Now you see some of those things taken away and it's not a pleasant thing. But I think this has guaranteed the survival of the plant. I think without it, we would have guaranteed the demise of it."

The state, which agreed, committed a $5 million economic package to Bethlehem. Baltimore Gas and Electric Co. will contribute incentives worth another $5 million to Bethlehem, its largest customer. "The important thing for the state is that we get the deal done correctly," said James T. Brady, the state's secretary of business and economic development.

It's unclear whether a Sparrows Point shutdown was imminent if the cold mill had gone elsewhere. Curtis H. Barnette, chairman and chief executive, declined to answer what he called a hypothetical question. "You can think about many different alternatives if you didn't do this," he said.

Cold-rolling reduces the thickness of hot-rolled steel sheet and improves its finish. The cold-rolled steel from Sparrows Point, which is used in containers, tubing and machinery, accounts for about 50 percent of the plant's sales.

The cold mill constitutes the middle one-third of the steelmaking process at Sparrows Point, taking steel from the Point's hot-strip mill, and sending it to the Point's coating lines.

The new 1.5 million-square-foot mill will be built next to the old Sparrows Point mill. Because of new technology, the mill will require only about 450 workers -- down from the current 850 workers at the existing mill. But to get the project, the union had to agree to smaller crew sizes, job combinations and changed work practices.

The company said the adjustments will cut 900 of the 4,500 union jobs at Sparrows Point. Union officials say the reduction might be smaller.

For the union, which won job security for its members in a six-year 1993 labor agreement, sacrificing one in every five jobs to save four made sense. "I guess everybody becomes a little uncomfortable when the competition does something radically different," Wilson said. "Either you are going to change or you're not going to survive."

Virginia, a job-hungry state, was pitching a deal that would cut about $14 from Bethlehem's average worker cost at Sparrows Point of $31 an hour -- about $18 in wages and $13 for benefits and overtime, according to sources who insisted on anonymity.

At the same time, competitors such as Nucor Corp., which uses electric furnaces and a nonunion labor force, are producing steel at lower costs than Bethlehem's.

Charles Bradford, a steel industry analyst for Smith Barney, called the workers' agreement a response to that pressure. "Sparrows Point has way too many people compared to other mills that have the same output," he said.

He cited Nucor's plant in Berkeley County, S.C., which has one-tenth the workers and can produce one-half the steel. Without sacrifice throughout Sparrows Point, Bethlehem would not have been able to justify the investment, he said.

Attrition may take care of the job cuts. With its aging work force, Sparrows Point is losing about 20 to 50 workers a month. If retirements don't do the job, Bethlehem will offer buyout packages.

Even though workers are protected from layoffs, some were reluctant to support the union's plan.

In meetings attended by 50 representatives of the five steel worker locals at Sparrows Point, some union leaders voiced reservations about giving up anything.

"There was a strong sentiment that this was all jive, that the company was just bluffing and just trying to squeeze the workers," said Michael Locker, president of Locker Associates, a New York-based business consulting firm that was hired by a Sparrows Point union-management team to work on getting the mill.

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