Getting the Point

February 22, 2007

The Justice Department's decision to require the sale of the Sparrows Point Mill as a condition of Mittal Steel Co.'s $33 billion acquisition of Arcelor SA is not necessarily bad news for Sparrows Point. But it's not necessarily good news, either. It means only that the Point's future is as uncertain as ever, and that's something the facility's 2,400 workers can probably live with.

In theory, one would think that it's better to be part of the world's largest steel producer. That's the view of United Steelworkers - the union is asking federal officials to reconsider the order. But it has never been clear whether Arcelor Mittal would be willing to invest the money needed to keep Sparrows Point a competitive player in a global economy. Certainly, the potential for such a future is there.

In a curious twist, the Justice Department's view is that the Point should be divested because of its competitive edge - the fact that it's an integrated producer and manufacturer of mostly tin-plated steel with international shipping facilities gives it far greater flexibility than Mittal's Weirton, W.Va., plant, which fabricates but doesn't currently operate a blast furnace. A buyer shouldn't be hard to find; from India to Brazil, there's no shortage of potential suitors with the necessary cash.

Then what? It's clearly wrong to assume that profitable steel mills can't operate on U.S. soil. They can. The Point claims the largest and most efficient blast furnace in North America. But what domestic ownership, including Bethlehem Steel, learned a bit too late was that keeping up with cheaper producers overseas required dramatic changes.

The Sparrows Point community has had to endure a lot in recent years: the bankruptcy of Bethlehem, several ownership turnovers, layoffs and a loss of retiree health benefits. But the Point remains an important part of Baltimore County's economy, not just for direct employment but for the thousands of jobs, from trucking to local retail, that it helps sustain.

No, Sparrows Point will never again employ 30,000 people as it did a half-century ago. With automation and consolidation, the industry has evolved. But the workers at the Point have always demonstrated a willingness to adapt. They believe in a future at the Point. Now they need an owner who believes in that future, too.

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