Beth Steel's hopes ride on new $300 million mill

Sparrows Point was facing choice: renovate or close

Steel industry

May 02, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

A new mill at Sparrows Point that could be vital to the future of Bethlehem Steel Corp. got up and running over the weekend. The $300 million mill replaces one that ran on 1940s and 1950s technology.

The new mill -- about 65 feet high and covering 800,000 square feet, 200,000 fewer than Camden Yards -- reached a milestone when the first coil of steel ran though all of the mill's linked processes Saturday at 2: 55 p.m.

The 113-year-old Sparrows Point complex was getting to the point that it needed to be extensively renovated to keep it competitive or close. The new mill virtually guarantees the plant's life for at least a decade, if not considerably longer.

"The old cold mill would have gone out of business because of quality," said Steve C. Taylor, Sparrows Point's manufacturing manager of cold-rolled products and project director for the new mill.

"We could not produce what customers required: higher-end products."

Sparrows Point expects to cut its costs by about $130 million a year because of the new cold mill, job reductions and other improvements throughout the plant that were made in conjunction with the new mill.

"The mill is critical to the success of the company and of Sparrows Point," said Waldo T. Best, an analyst for Morgan Stanley Dean Witter.

It will be years before anyone can tell whether the move was cost-effective, he said, adding, "We as a firm were in the camp that said it probably would have been better to close the facility down ... but you have to deal with union issues, and the union made a huge gesture and a huge amount of job concessions to keep the plant open."

The union agreed to 400 job cuts, mainly through attrition, in return for the mill, which requires half the 800 workers the old cold mill required.

The union also agreed to more flexible work rules. Machine operators, for example, will also do light repairs.

"We're excited about the potential for the new mill, but we have real concerns about safety, pace of work and training," said Len Shindel, grievance committee chairman for Local 2609 of the Steelworkers union, which represents about 1,400 workers at Sparrows Point.

For example, he said, there was a hydrochloric acid leak in the new mill last month and he felt there was not adequate safety equipment nearby.

"No one was injured, but we're concerned," he said. "We think the mill is essential, but at the same time we have real concerns about safety."

Taylor said the leak is being investigated and that the company felt it had taken the proper precautions.

He noted that the contractors building the mill logged 2 million man-hours with no accidents that caused lost work days.

Bethlehem employees have been in the mill since August and have lost no days because of accidents, Taylor said. Two accidents required first aid, he said.

"We think we did everything that was required," he said.

Bethlehem sells hot-rolled and cold-rolled steel. The hot-rolled is made by taking a 10-inch-thick slab, heating it and rolling it into a coil. Cold-rolled starts the same way but goes through more processing.

The hot-rolled coils are transported by rail to the cold mill, where they are run through a "pickler," an acid bath that removes impurities.

The coils are then run through a tandem mill with five more sets of rollers -- much like giant rolling pins that produce 900 tons of force each -- that make the coils even thinner.

The main difference between the old mill and the one that replaced it, aside from technological advances, is the layout. In the old mill, the 32-ton coils would go from the pickler to a storage area to the tandem mill.

In the new facility, the steel runs in a long, continuous strip and goes directly from the pickler into the tandem mill, saving time and cutting the number of workers needed.

The change also means that machines handle the steel much less -- eight times rather than 24 -- and put fewer dents and scratches in the coils.

"The biggest complaint we have from our customers is damage," Taylor said.

Bethlehem has beefed up its focus on customer service, which is essential because of the company's difficulty in competing on cost. Cheap imports and steel from U.S. minimills, which use scrap metal and nonunion labor, consistently offer far lower prices.

"There are a lot of hopes and dreams riding on the success of the facility," said Carl G. Osterman, vice president of operations and manufacturing services at the Baltimore County plant.

"It's a tremendous tool that we have and we're fortunate to be able to put it in Sparrows Point."

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