Sparrows Point recalling workers immediately

150 employees will constitute first wave

March 17, 2011|By Andrea K. Walker, The Baltimore Sun

The Sparrows Point steel mill will soon rumble back to life, according to its new owner, which on Thursday announced plans to restart primary operations at the plant this spring.

Under the plan by the New York-based Renco Group, which is expected to close on an acquisition of Sparrows Point by the end of the month, 150 workers will return to work next week — bringing life back to a large portion of the hulking Baltimore County mill, which has sat idle, dark and quiet since July.

It also brings hope to the nearly 1,000 workers who were laid off during the shutdown and stability — at least in the short term — to the mill, union leaders said.

After the first group of 150, additional workers will return in phases over the next several weeks, the company said, although it did not reveal how many total employees it plans to recall.

"After eight months of day-to-day blurred vision, our future begins to come into focus," John Cirri, president of United Steelworkers Local 9477, said Thursday in a letter to union members. "With today's announcement ... comes both joy and a sigh of relief because today starts a new day for all Sparrows Point employees and our plant."

The Renco Group announced earlier this month that it had entered into an agreement to buy Sparrows Point as well as mills in West Virginia and Ohio from Russian owner Severstal in a $1.2 billion deal.

Sparrows Point management and local union leaders told workers in a letter Thursday of Renco's intention to restart the blast furnace and resume steelmaking in May. The hot mill, which rolls out steel, would begin production shortly afterward.

It will take several weeks to restart the blast furnace, which creates raw steel from ore. That process can take even longer if cracks or other problems are found in the furnace.

In the first weeks, workers will refresh their skills and undergo safety training, said Sparrows Point spokeswoman Bette Kovach.

Both company officials and union leaders said the total number of workers to be recalled was still being hammered out. They declined to say whether job reductions would be included in a new contract that workers will vote on in the next few weeks.

It takes hundreds of workers to operate the primary side of the plant, but the number can vary based on the amount of steel being produced.

Cirri said that the new contract would be mailed to members in the next few weeks so that they can review it before a vote is taken. The union's negotiating committee approved the contract last week.

Severstal had shut down part of Sparrows Point because of poor economic conditions and low demand for steel. High commodity prices also had increased production costs. However, the tin mill side of the plant, with about 1,000 workers, has remained open.

In selling the plant, Severstal said Renco was better equipped to make it profitable.

The deal would be the fourth ownership change at the plant since Bethlehem Steel declared bankruptcy in 2001, beginning years of uncertainty.

Renco has created a subsidiary, RG Steel, which would be based at Sparrows Point and would become the umbrella company for the plants in West Virginia and Ohio.

Renco, a privately owned company, often buys struggling firms and resells them, although it has kept some. The company has not revealed a business plan for Sparrows Point.

Analysts applauded plans for the quick restart of the plant but said Sparrows Point faces obstacles in getting back to work.

Michael Locker, a New York consultant with Locker Associates, said the plant is returning to production as the market is beginning to improve. But he said the going might be rough at first.

"They will have a hard time weaning back their customers who have been supplied by other steel mills," Locker said. "It will be a tough road."

Charles Bradford, of Bradford Research, said the plant could be at a disadvantage if it has to restock raw materials to make the steel. He also noted that other steel mills have run into problems after idle periods because the work force shrinks as employees retire or find jobs elsewhere.

Kovach said the company would pay close attention to the work force. "We could face some staffing issues through natural attrition," she said. "We need to see how many people are coming back, who is eligible and who wants to come back."

Bradford said Renco is smart to jump right back into business.

"The sooner they start the better because the market is good," he said.

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