Mittal seeks Point layoffs

5-week leaves mark third offer since Oct. as steelmaker scales back to fit demand

December 19, 2006|By Allison Connolly | Allison Connolly,Sun reporter

Netherlands-based Mittal Steel Co. NV is offering workers at Sparrows Point another round of five-week layoffs, a sign that the world's largest steelmaker doesn't expect the industrywide slowdown to recover immediately in the new year.

It is the third such offer since October as Mittal scales back production to stay on par with demand and avoid an inventory glut.

Last month, crude steel production in North America totaled 10.2 million metric tons, down 2.2 percent compared with November a year ago, according to the International Iron and Steel Institute.

Elsewhere, Mittal idled a blast furnace at each of two of its bigger plants, Cleveland and East Chicago, Ind.

Sparrows Point General Manager Thomas Russo said hundreds of the Baltimore County plant's nearly 2,500 workers are being offered the temporary furloughs. About 200 signed up for each of the last two rounds, he said.

"We want as many people to take the VLOs as possible," Russo said.

Historically, plant management has worked with the union to offer voluntary, temporary layoffs in an effort to head off mandatory, permanent layoffs.

"The market's so bad right now, they're doing everything they can to cut costs," said John Cirri, president of United Steelworkers Local 9477, which represents nonmanagement workers at the plant.

The workers who take leave will receive state unemployment benefits as well as a "sub-pay" negotiated with the company, Cirri said.

Mittal is using the downtime to perform maintenance in the sinter plant and hot mill, where the steel is made, Russo said.

Sparrows Point is one of three plants Mittal might have to sell to avoid antitrust issues related to its merger with Luxembourg-based Arcelor SA, a $33.5 billion deal that will make the combined company, Arcelor Mittal, the largest steel producer in the world with annual output of more than 110 million tons.

The Justice Department has given Mittal until Jan. 28 to sell Canadian subsidiary Dofasco Inc. because of its concern that the merged company would have a monopoly on tin production in the United States. Mittal promised to sell Dofasco to German steelmaker ThyssenKrupp AG if its hostile takeover of Arcelor was successful.

However, in a bid to thwart Mittal's advances, Arcelor locked up Dofasco in a Dutch trust, which is making its sale difficult. If Mittal is unable to divest Dofasco, the government will force Mittal to sell either Sparrows Point or a sister plant in Weirton, W.Va.

The heads of both unions have expressed interest in being sold if it means a new buyer will make bigger investments in the plants. Sparrows Point has fared better under Mittal than has Weirton, whose blast furnace was idled and 1,000 workers laid off last year.

allison.connolly@baltsun.com

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