CSN deal nearer for Beth Steel

Miller is hopeful union and Brazilians agree on a contract

Joint venture is goal

If current efforts fail, then liquidation would be lurking

April 03, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

An agreement to form a joint venture between Bethlehem Steel Corp.'s Sparrows Point plant and a Brazilian steelmaker is expected to be largely completed by the end of the month.

Bethlehem's chairman and chief executive, Robert S. "Steve" Miller Jr., said the biggest hurdle now is a new contract between Companhia Siderurgica Nacional (CSN) and the United Steelworkers of America.

"This is 100 percent dependent on having a satisfactory labor agreement," Miller said.

"The business logic is so compelling for both CSN and for the Steelworkers' represented workers that I would be totally surprised if they can't work it out," he said.

Under the scenario that has been put forward, CSN would take over the day-to-day operations of the plant and Bethlehem would act as a holding company responsible for the health care and pension costs for workers who have already retired.

Bethlehem's retiree obligations are in part what led to its Chapter 11 filing in October; its pension fund is short $1.85 billion, and its health care obligation is underfunded by nearly $3 billion.

Bethlehem's board is to meet April 23, and Miller said he should be able to report by then whether significant progress has been made between the union and CSN, or if the plan should be abandoned.

The CSN deal comes after Miller's so-called "Plan A" - a sale of Bethlehem to United States Steel Corp. - collapsed.

Miller said if the CSN deal, which is Plan B, does not succeed then Bethlehem will have to move to Plan C: liquidation.

"But," Miller said, "we think this is going to work."

Union officials, though, are a long way from signing off on the deal.

Six members of the Steelworkers union are to leave for Brazil Sunday to get a sense of what it would be like to work for Latin America's largest steel company. They are to spend a week touring CSN's plant in Volta Redonda, about 90 miles from Rio de Janeiro.

`In the dark on this'

"We want to sit down with the union and get a flavor on how [CSN is] to deal with and what we can expect," said Ron Allowatt, president of Local 2610, which represents workers on the steelmaking side of Sparrows Point.

"We're in the dark on this and we're curious to see if they operate similar to the way we do with Bethlehem Steel right now."

Union officials expect negotiations on a new contract to begin in earnest after they return April 12. The Steelworkers are concerned that CSN will change the retirement policy that currently allows workers with 30 years at the company to leave with full benefits. The union is also worried that longtime workers could lose their seniority.

"The biggest issues are pension and health care," said John Cirri, president of local 2609, which represents workers on the finishing side of Sparrows Point.

Cirri, who will not be going to Brazil, said the union is also concerned that CSN may use contract workers if it decides to run the plant at full capacity.

Flexibility a likely priority

Miller said CSN will likely want a more flexible labor agreement that would allow workers to do more than one job and that would include production bonuses as part of the compensation structure.

He said the company plans to increase output at its iron ore mine in Brazil and ship the raw material to Sparrows Point to feed its blast furnace and boost production at the plant.

It has not been decided how much of the joint venture would be owned by each side.

"We are talking about more economic activity, more job security and more employment at Sparrows Point," Miller said.

"They really want to grow the business."

Opportunities in U.S.

CSN, which also owns a small steel facility in Indiana, has declined to comment. But during a conference call with investment analysts last week, Albano Chagas Vieira, executive officer of CSN's operations sector, said the company is seeking opportunities in the United States and that Bethlehem is one of them.

"We are looking," he said, "but there is no decision at this point."

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