BethSteel to trim 400 jobs Sparrows Point plate mill to close within a year

Union may challenge

Agreement to acquire rival Lukens prompts decision on facility

December 16, 1997|By Shanon D. Murray and Sean Somerville | Shanon D. Murray and Sean Somerville,SUN STAFF Contributing writer Stacey Patton contributed to this article.

Bethlehem Steel Corp. will eliminate more than 400 jobs at Sparrows Point as the result of its acquisition of a rival steelmaker, the company announced yesterday.

The job cuts were driven by Bethlehem's agreement to buy Lukens Inc. for $650 million.

Within a year, Bethlehem will close its Sparrows Point plate mill, an aged facility that would cost too much to modernize, said Curtis H. Barnette, chief executive officer of Bethlehem.

Many of the jobs would be lost through attrition, but there's a possibility other workers would be reabsorbed into the company, he said.

"We absolutely believe this merger has significant strategic benefits in establishing Bethlehem as the premier plate business in North America, and in my view, the world," Barnette said in a conference call with reporters.

"This is a very positive step for Bethlehem Steel and Sparrows Point," he said.

Plate mill workers at Sparrows Point were informed of the closing yesterday morning by a letter faxed from the company's headquarters in Bethlehem, Pa., said Gary Valentine, acting treasurer of the United Steelworkers of America Local No. 2610.

The union will most likely fight the closure, based on a clause in its contract that stipulates it must be a partner in major decisions affecting the plant, he said.

"Needless to say, everyone is upset about this," said Valentine. are aware that our plate mill is old and needs modernization.

"But we were hoping there would be some reinvestment in the steel plate mill along with the building of the cold mill," Valentine said.

Bethlehem Steel's plan to close the plate mill represents the third major development in three months that will shrink the company's Sparrows Point work force, which stood at about 6,200 employees last year.

Together, the three moves ultimately mean the reduction of Bethlehem's Baltimore County work force by one-third.

The company sold its historic shipyard for $16 million in early October. That put the fate of about 900 former Bethlehem workers into the hands of the new owner, New York-based Veritas Capital Inc.

In late October, Bethlehem Steel said it would cut about 900 jobs by 2000 as part of a deal to build a $300 million cold-rolling mill at Sparrows Point.

With the loss of the 400 plate mill jobs, Sparrows Point may have only 4,000 jobs by the turn of the century, yet another notch down from its peak of about 30,000 in 1960.

James T. Brady, the state's secretary of business and economic development, said Bethlehem's commitment to Sparrows Point -- illustrated by its agreement to build its new mill there -- cannot be erased by yesterday's closure announcement.

"No one likes jobs to be lost, but the picture here is very positive from the long-term perspective," Brady said. "Without the cold-rolling steel mill, I believe we would have lost all of the jobs at Sparrows Point over the next decade."

With Bethlehem's aging work force, retirements might absorb all the necessary job cuts. Nearly 50 percent of the plant's workers have 30 years experience and are eligible for retirement, union leaders said.

"It depends on how long the cold mill modernization takes and the number of people who retire," said Joseph J. Rosel Jr., the president of United Steelworkers of America Local 4727.

Job security runs out

He said another factor is 1999 contract negotiations. The current six-year contract, which includes a job security component that forbids layoffs, expires July 31, 1999. "Without another security agreement, we'll have layoffs," Rosel said.

Larry Pugh, 56, who has been working at the plant since 1965, said the acquisition of Lukens is right for Bethlehem, and convenient for him. He was planning to retire anyway, he said.

"We can't compete with other mills the way we are now," Pugh said. "This is necessary."

New mills and increasing imports are increasing U.S. supply, pressuring steelmakers to reduce costs and consolidate.

Bethlehem had to join with Lukens to increase cost competitiveness, product range and customer service, said Barnette, Bethlehem's chief executive.

Steel plate is Bethlehem's core business. Mills roll slabs of steel up to 3 inches thick, 150 inches wide and 90 feet long, to be used by heavy equipment makers, rail car manufacturers, and ship and bridge builders.

The deal to acquire Lukens also entails closing a 30-person Lukens plate mill in Coatesville, Pa., the company's headquarters. The four remaining mills are expected to produce the same amount of tonnage as the six, saving on operating costs, Barnette said.

nTC If approved by shareholders and regulators, the buyout of Lukens would create a $5.5 billion firm with annual shipments of 10 million tons. Bethlehem currently employs about 15,500 workers and Lukens about 3,400.

Cash and stock deal

Bethlehem would pay $25 -- 38 percent equity and 62 percent cash -- for each share of Lukens' common stock, a total of about $400 million. It would also assume $250 million in debt.

Bethlehem said it would sell two of Lukens' divisions -- its light flat rolled stainless business and its Washington Specialty Metals business.

The new Bethlehem-Lukens Plate Division would be based in Coatesville and headed by R. W. Van Sant, chairman and chief executive officer of Lukens Inc. Company officials said they expect the acquisition to be complete by the second quarter of 1998.

"In this rapidly changing, global industry, it was time to find a strategic partner," Van Sant said. "It was time to combine our strengths and shed our weaknesses."

Pub Date: 12/16/97

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