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Sparrows Point up for sale, company mum, workers bracing for layoffs

Finishing operations will be temporarily closed next week, leaving about 90% of the plant idle.

August 11, 2010 at 6:30 pm 64

reutter sparrows point main entrance 3

Sparrows Point’s owners are shutting it down through the end of the year.

Photo by: Mark Reutter

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Sparrows Point is up for sale by its Russian owner, union and industry sources told the Brew, confirming reports in an industry newsletter. Meanwhile, rank-and-file employees brace for layoffs and managers prepare to temporarily idle some operations next week.

The United Steelworkers Union (USW) is spearheading efforts to find a new owner for the troubled steel mill controlled by Russian billionaire Alexei Mordashov, founder and CEO of Severstal, the Brew has learned.

Sparrows Point is not the only Severstal operation being shopped around. The company’s North American division is also soliciting bids for its money-losing mills in Ohio and West Virginia, according to a report by Metal Bulletin.

Several foreign companies are reportedly mulling a bid for Sparrows, including Germany’s ThyssenKrupp and Brazil’s CSN. Two domestic companies, U.S. Steel and AK Steel, have reportedly looked over the property.

Whether potential buyers will actually submit bids that are acceptable to Severstal is an open question. Severstal purchased the mill in May 2008 for $810 million. Four months later, the world recession sent steel prices tumbling. Since then, Sparrows Point has not made a monthly operating profit, according to management sources.

Asked about a potential sale, Marika Diamond, spokesperson for the company, replied today by e-mail, “It is Severstal’s policy not to comment on market rumors or speculation.”

Finishing Mills to be Idled Next Week

On Sunday the company plans a two-week outage of all but one of its finishing mills, the Brew has learned. The facilities will include the hot-rolled, cold-rolled, galvanizing and coated steel mills, which produce the bulk of product.

Only the tinplate operation, which makes specialty steel for the container industry, will remain open.

This follows the close of the “L” blast furnace on July 25 and suspension of all steel-making operations. The company has told union officials that the furnace will be closed until market conditions improve. The earliest date for resuming operations is said to be in October.

Together these cutbacks mean that most of the plant’s 2,300 union workers will not be assigned their regular tasks for the final two weeks of August.

Attempt to Delay Layoffs

Layoffs at the mill have been delayed in part because of union complaints that Severstal violated the union contract by importing Russian-made steel slabs. That controversy has stopped the influx of foreign steel at least temporarily, according to sources.

These sources say that USW Local 9477 President John Cirri has offered to terminate the complaint over Russian slabs in return for no forced layoffs. Cirri is on vacation this week and did not respond to an e-mail request for comment.

USW Local President John Cirri issued this statement to the Brew tonite:

I have been informed that Severstal NA is for sale. I have not signed any confidentiality agreements so very little information has been shared with me about the details of any pending buyer.

[RE: the Russian slabs]: I was willing to a settlement on Severstal’s violation of our basic labor agreement when they began processing Russian slabs while our furnace was not at full capacity. The settlement would have had to meet these conditions … Severstal would have to admit that they violated our basic labor agreement and would cease and desist from such future practice and there would be no forced layoffs during the Primary Side shutdown period. The company decided to reach no agreement, so the grievance is moving through the process and will go to arbitration.

I also want to point out that with the right quality and price of raw material, Sparrows Point can compete with anyone in our industry. We have been through many changes and restructuring over the many years and have a highly dedicated and experienced workforce that is committed to Sparrows Point having a long term viable future and we can make that happen with the right owners.

John Cirri – President
District 8, USW Local 9477, Sparrows Point Plant

For months, Cirri and Moscow-based Severstal have fought over job cutbacks and a stalled contract (employees are still working on a contract that expired in 2008).

“The union has lost faith in the Russians, and the Russians are tired of losing money at this plant,” said one source, using the word “Russians” to describe Severstal’s management team.

Point Losing Money

Both the union and company agree that Sparrows Point is losing money. The reason for the losses differs according to the party being questioned.

The company blames overmanning and insists that 500 jobs must be cut or handed to subcontractors, while the union says that the company’s lack of long-term contracts for iron ore has made the mill uncompetitive and subject to skyrocketing raw-material costs.

Whether a property that has lost money since the onset of the world recession – and was only marginally profitable before then – would be attractive to another steel company is an open question.

Equally critical is the question of whether a potential purchaser could (or would) make the necessary investment to turn the mill into a consistently profitable operation.

Yet another issue is the potential environmental liability facing a new owner. Sparrows Point is under a court decree to clean up years of pollution, including the toxic chemicals that continue to flow from contaminated groundwater into Baltimore Harbor.

Severstal’s Unhappy Tenure

Mordashov was encouraged to buy Sparrows Point by the USW after a prior bidder, the Bouchard brothers of Chicago, failed to secure financing.

Mordashov pledged to spend $500 million to modernize production, which had suffered from sustained underinvestment following the 2001 bankruptcy of Bethlehem Steel Corp.

That promised investment was derailed by the world recession. Since 2009, Severstal’s efforts have been directed at reducing costs at the plant, including using a new type of iron-ore feed for the blast furnace that resulted in repeated malfunctions.

Brazilian steelmaker CSN reportedly offered $400 million for the steel mill in June, but Mordashov rejected the offer.

Non-union mill expanding

While Sparrows Point suffers from widespread cutbacks in production, Severstal is concentrating output at its non-union facility at Columbus, Miss.

The new facility can make everything that Sparrows Point makes except for tinplate. It is widely believed that Severstal is sending as many orders as possible to the Columbus mill, bypassing the Point and its high cost margins.

The Mississippi mill is attracting other steel processors and new jobs. Last week Gov. Haley Barbour hailed the opening of a new facility at the Severstal site for creating “high-quality jobs for Mississippians.”

Mark Reutter can be reached at reuttermark@yahoo.com

  • Fernando Vargas

    Quote:
    “The company blames overmanning and insists that 500 jobs must be cut or handed to subcontractors, while the union says that the company’s lack of long-term contracts for iron ore has made the mill uncompetitive and subject to skyrocketing raw-material costs.”

    - Have to agree with the Union on this one. Raw material costs make up the majority of the cost per ton of liquid iron. Labor costs are probably in the range between 5 and 10 percent. Severstal's lack of securing longer term contracted raw materials certainly has had a negative impact on their raw material costs.

  • guest

    Sparrows Point would have weathered the recession better if the Severstal management would have put in place the same raw material contracts that they had at the Dearborn plant. Severstal instead chose to run customers away with surcharges that other US companies were not charging.

    But don't think that Severstal was the only one losing money during that time. The people working in the tin mill have lost thousands of dollars each. Ask Bill Rull (Grievance Committeeman Tin Mill) who is sitting on thousand of requests for payment for 6&7 th day overtime. Ask Tyrone Lewis (Grievance Chairman) why he has not been involved in getting these people paid the money they are owed when he has been asked numerous times to do so. Better yet ask John Cirri, who in August of 2009 said that he would look into this matter at a meeting of the Tin Mill employees. Is the union going to do the status quo which is nothing and let the Russians sell the plant without paying the people, just like they did with Mittal?

    • your friend

      John Cirri is not concerned about the employees of the Tin Mill. If he was, he would have done something about the incentive plan in the Tin Mill a long time ago. Don’t you think that it is ridiculous that he allows the incentive plan to be at zero percent for months now and the Tim Mill is the only mill making money for the corporation. His actions or lack there of speaks for itsself.

      • Lets be a Union

        You know I find it crazy how we are suppose to be a union & in our companies time of hardship the way that we are, that as a union we can not seem to rise above this BS and act as one. J.Cirri has done something w/the tin mill incentive, it to date does not sit at 0%. I'm not sure where this info. is coming from. I belive that he does try & we as a union fail to back the man that we as the members ELECTED several times over to be the man that gets a through these episodes. He (J.Cirri) is only one man & along w/his team (again we elected) are working hard to keep us in the best position that can be. This co. is playing hard ball & recanting every agreement that has been came to, to date. J.Cirri has seen us through several owners, many hards times, & I don't recall to many people ever hitting the street that they didn't volunteer for! Yes, many didn't agree with all of the decisions that he has made; as in the 32hr. work week, but if we look beyond ourselves and act as a union should, we would see that this move saved several people their jobs and keep many families food on the table & roofs over their heads. Its time we learn the true meaning of the union…We rise together, We fall together! I for one would venture to say that w/the individuals that own us now that Cirri is doing the best possible job that he can. This place also puts a roof over his head.

        • Voice of the people

          Please give me a BREAK!!!! Talk is cheap. Your actions speak for themselves. You use the word “elected” several times. Isn't it true that the Department of Labor has filed suit in District Court ordering a new election for President of Local 9477 because they do not believe that the membership got a fair and honest election? We can begin to restore faith in the union and return it to representing the membership when the direction of the union changes and the leardership changes…

          • lt1350

            AMEN BROTHER !!!!!!!!! Its unbelievable how many of these kids follow Cirri,they will follow him over a cliff blindly.

          • Guest

            I disagree, the new people that work with us in the Tin Mill actually see Cirri and the Red, White and Blue for what they really are. They understand that the incompetence of our union leadership from the shop stewards to the president are run by people with their own agendas and that we need to get rid of them. Cirri knows that this is his last term as president of the local. If we survive until a new election he doesn't have a snowball chance in h#LL of getting reelected.

          • Lady of Steel

            I couldn't agree with you anymore. The younger workers of the Tin Mill are fed up with the whole union, besides the stress of dealing with a foreign company, in these hard economic times. They fear for their own future. Who ever heard of union working with management, whatever happen to the union standing up for us hourly workers? I kind of side with the person who response, “union sucks!”

          • Tattersal

            I always agree with the Lady of Steel – but the dirty truth is that the union bosses and management work behind closed doors to not only cut deals that benefit both the workers and the owners – but also to put pressure on the government and politicians to look the other way on tax breaks, worker safety and health issues, worker benefits, and turning a blind eye to all the pollution allowed in the worker’s lungs, as well as killing the Chesapeake Bay for our grandchildren. It is good cop vs. bad cop and the workers and the community are the ones being used and abused. The union must play these games or the company will pack-up and move elsewhere – then the game is over for the workers and the community!

            Very true what Steel Lady and others say about the younger workers in the Tin Mill – they are smart, ask questions, and are not sheep like us old guys. They most likely will move on to better jobs with a future and not live under the thumb of the company and union bosses.
            We were told that we had the best jobs at the Point and that we could not do any better with our education and the job market – so we better blindly follow what the company and union bosses told us. The young folks are not buying into that the Point is the ONLY show in town, they see how us old guys were used and abused and they have more pride and options than we had or strived for. They have the guts to tell the owners and the union to “take this dead-end job and shove it!” This something we never even thought of doing. I am proud that our young people will not take the bull and abuse that we took for granted.

            Tattersal

          • Lady of Steel

            Mr. Tattersal, I have to disagree with you about the younger workers. They know in their hearts that job opportunities are very limited. Some of them were just working jobs before, that had no health benefits, or any other retirement benefits. Some of them were still living home with mom and dad, and still are! As far as we older workers being sheep, like under the Bethlehem reign, so are the younger workers along with the rest of us older sheep. Do you know why? Because in all reality, we are cheap people, WE HAVE TO EAT, ONCE IN AWHILE! That is the whole scenario of the big picture.
            It just seems that some of these old corporate companies, like Bethlehem and many others like them, when they fold up and leave, they all leave a bad taste in all the mouths of what is left of we workers. And anytime the feds put their hands in the pot, it makes it stink even more.
            I, along with the rest of the rank and file at Sparrows Point, do hope that things continue on, as the eventful shut down can affect us all, the communities will suffer great economic hardship. I do hope that there will be some improvement in the working conditions, for the safety of all of us.

          • Walter

            Good News – The wire services are reporting that the hot side is about to be fired-up soon. The guys outside the local 7-Eleven say that they see signs this is going to happen soon. Maryland Pig is getting ready for the first hot metal, the BOF is ready, and they are still digging out the old iron skulls buried in the slag pile to toss in the furnace! Plenty of ore and coke on hand too – best to sell the mill when she is up to speed and showing her best!

  • Steelworker75

    Since when did john cirri become a spokesman for the grievance committee? I didn't know that as President that he had the authority to move or settle a grievance.

    • Steelman

      You certainly sound like an opposing political caucus member. If your not, how long have we all been working without a lay-off, when everyone else has been out of work. Do you even come to Union meetings? Do you read constant communications from the President and when has he ever said he was a spokes person for the grievance Committee? As a matter of fact he continually tells people that he is not part of the grievance procedures. Of course you never hear about anything like what John has done to keep everyone in a job longer than all the other plants put together. You have already lost the election 3 times give up the masses don't want you!

      • Guest

        First I want to extend my congrats on being the most informed union/steelworker at Sparrows Point. While you are bowing to your John Cirri idol, ponder this:

        1. When the Bouchards tried to purchase us, Wheeling-Pitt was so far in the red that it would have taken an act of GOD to get them back in the black. So the USW talked Severstal into buying Wheeling-Pitt to save the USW from taking a huge loss because the USW was the largest stock holder in Wheeling-Pitt. So it only made sense that Severstal would close this dog till they could reorganize it.

        2. Warren wasn't in any better shape than Wheeling-Pitt. It would have cost more to ship raw materials to them. That is why they were closed.

        3. We are the only facility that could run “Clean Steel” which is needed to make D&I grade steel for the tin customers. We have the only deep water port to bring in the raw materials. And the fact that it was easier to move Wheeling Pitt and Warren customers to a centralized location, being us at Sparrows Point.

        Severstal had us try to run slab from Dearborn, Warren and Russian steel and found that they couldn't match our quality to make into Tin Plate.

        So if you think John was our savior then you aren't correct.

  • Jason

    The Russians have accomplished what Nucor has tried for years and that is shutting Sparrows Point down. Never in my lifetime have I seen a more hostile attitude from a company to their managers and workforce. Severstal top management seemed more concerned showing they are in control of all that worked under them than satisfying their customers needs.

    • Fernando Vargas

      Totally correct, Jason.

      Spot on.

      The Commies treat Sparrows Point’s employees like dirt.

      Their arrogance is surpassed only by their ignorance.

      In a manager’s meeting in the Fall of 2009, Comrad Sergei exclaimed “Your children will starve this winter if certain costs are not met”. WTF was that? Management by fear and intimidation.

      Take care.

      • Sikofit

        Sounds like what Cirri says to anyone who opposes what he says

  • JM

    Dear Guest,
    I know exactly how you feel. john cirri and Paul Eline sat on hundreds of grievances filed by the membership aagainst Mittal and said they were going to arbitration and never did. Now, cirri wants you to believe that the Russian slab grievance is going to be arbitrated. I hope we all live long enough to see this happen. cirri is alot of talk with little action!!!

    • Gagme

      Cirri and Eline were your greatest enemies now it’s cirri mcclarion and polanowski
      look to see who forms a new caucus at the point.

      • Ben

        haven’t you heard. Since the Department of Labor has ordered a new election for all those Red, white and blue candidates, cirri is looking for a new caucus. The name may change, but the faces are the same. Faces of corruption.

  • Fernando Vargas

    Quote:
    “The company blames overmanning and insists that 500 jobs must be cut or handed to subcontractors, while the union says that the company’s lack of long-term contracts for iron ore has made the mill uncompetitive and subject to skyrocketing raw-material costs.”

    - Have to agree with the Union on this one. Raw material costs make up the majority of the cost per ton of liquid iron. Labor costs are probably in the range between 5 and 10 percent. Severstal's lack of securing longer term contracted raw materials certainly has had a negative impact on their raw material costs.

  • guest

    Sparrows Point would have weathered the recession better if the Severstal management would have put in place the same raw material contracts that they had at the Dearborn plant. Severstal instead chose to run customers away with surcharges that other US companies were not charging.

    But don't think that Severstal was the only one losing money during that time. The people working in the tin mill have lost thousands of dollars each. Ask Bill Rull (Grievance Committeeman Tin Mill) who is sitting on thousand of requests for payment for 6&7 th day overtime. Ask Tyrone Lewis (Grievance Chairman) why he has not been involved in getting these people paid the money they are owed when he has been asked numerous times to do so. Better yet ask John Cirri, who in August of 2009 said that he would look into this matter at a meeting of the Tin Mill employees. Is the union going to do the status quo which is nothing and let the Russians sell the plant without paying the people, just like they did with Mittal?

  • Steelworker75

    Since when did john cirri become a spokesman for the grievance committee? I didn't know that as President that he had the authority to move or settle a grievance.

  • MungoJerri

    Can I say the S word on here???

    Wow. All that reassuring talk that was conveyed through the Severstal press person was smoke. 30 day shutdown, 60 day shutdown…this was all planned a long time ago.

    A new owner will have so much backlog of environmental hangups that the property will not look appealing. It's going to have to come to a state or federal, along with community activism to compromise with the Union and potential new owner to clean up. It can't be left to a new company. They will go somewhere else.

    Has anyone seen the new plants for Hyundai Steel? Could improvements such as this help into a transition to cleaner steel? It could be an edge. We need an edge to secure jobs for so many people and stimulate the economy for Baltimore and the US.

  • Kcm

    To: Sparrows Point hourly employees
    From: Fellow USW member from previous Mittal plant

    I empathize with all of you. You were dealt a lousy hand by Bethlehem and then the Justice Department which made Mittal sell your plant. My prayers are with you all that a buyer will appear who will keep your plant open. Please note that unity will help this happen in addition to a concerted attack on your local city/county/state officials. Good luck and god bless.

  • Unionssuck

    Unions Suck and that is why the mill is shutting down, closed minded lazy union workers!!!!

  • Voice of the people

    Please give me a BREAK!!!! Talk is cheap. Your actions speak for themselves. You use the word “elected” several times. Isn't it true that the Department of Labor has filed suit in District Court ordering a new election for President of Local 9477 because they do not believe that the membership got a fair and honest election? We can begin to restore faith in the union and return it to representing the membership when the direction of the union changes and the leardership changes…

  • Don't Give Up!!!

    not all union workers are closed minded lazy workers… LOOK TO THE LEADERSHIP.. AND YOU WILL KNOW WHY WE ARE IN TROUBLE!!!!!

  • Unionssuck

    Unions Suck and that is why the mill is shutting down, closed minded lazy union workers!!!!

    • Don't Give Up!!!

      not all union workers are closed minded lazy workers… LOOK TO THE LEADERSHIP.. AND YOU WILL KNOW WHY WE ARE IN TROUBLE!!!!!

    • Steelman

      Well, Mr. Salaried employee, if you want to talk about lazy I can give you plenty of information on salaried employees that are worthless. Lets start with the t.o.p. program that Severstal wanted us to believe in. In theory this program would have worked, there were some dedicated hourly employees that put a lot of time and effort into believing that this may be an opportunity for people in the mill to finally be listened to. Unfortunately, the salary forces refused to even try for the most part, there were a few that did, but they were far outnumbered. The union effort was a gallant try but the egos of the managers stood in the way. We warned our union brothers and sisters that management would never see them as equals, so we were the ones with the open minds and salaried a—–es like you were the one with the closed minds. I feel bad for the brothers and sisters who put so much time and effort into trying, only to be made look like fools because of idiots like you!

  • Lady of Steel

    Everybody is either pointing the finger at the union or the company, or both! Global economic times is bad all over. What astounds me is that a corporation like Severstal would even consider Sparrows Point Plant, and thinking about getting into the auto-industry at the time when he bought Sparrows Point was just plain idiotic on his part. Look around at all the vehicles that are on the road! It's crazy. At that time the economy was starting to falter. Yeah, everyone can point the finger at something, but I think it is a combination of all, a foreign company, a sleazy union who is trying to look legit and the government with their hand in it doesn't make matters anymore reasonable. I am a steelworker, and I sympathize with all my brothers and sisters. It is a very sad situation for us all.

    • Ajs917

      i agree

  • Lady of Steel

    Everybody is either pointing the finger at the union or the company, or both! Global economic times is bad all over. What astounds me is that a corporation like Severstal would even consider Sparrows Point Plant, and thinking about getting into the auto-industry at the time when he bought Sparrows Point was just plain idiotic on his part. Look around at all the vehicles that are on the road! It's crazy. At that time the economy was starting to falter. Yeah, everyone can point the finger at something, but I think it is a combination of all, a foreign company, a sleazy union who is trying to look legit and the government with their hand in it doesn't make matters anymore reasonable. I am a steelworker, and I sympathize with all my brothers and sisters. It is a very sad situation for us all.

  • Walter

    Dear Mungo Jerri

    You are correct – the environmental problems, as well as the new Gobal market place does not make the Point very appealing to investors. Even if someone GAVE you Sparrows Point – the numbers just do not work with all the baggage that comes with the property!

    There is an underground aquifer under the Patapsco River that feeds the ground water in Kent County on Maryland’s Eastern Shore. Could the Benzene and other toxins from the old Coking operations be heading over to the pristine Eastern Shore? Some old Point plant engineers think so, but let’s not tell anybody OK?

    Now let the Brazilians (or some other new owner) pick-up the tab to clean up this environmental nightmare! The Russians are smart – cut loses and leave town – Beth Steel did!
    I really feel sorry for the Russian owner, he is a good guy who bought a broken-down white elephant. The state should buy the plant – doze it down and build a marine terminal and put people back to work in clean, and safe high paying jobs! Sparrows Point is a Rustbelt dinosaur that even the finishing side can no longer support!

    Walter

    • Rob

      Dont know what Walter does for a living,but i hope his employer is as good guy as we have here at the point who wouldnt make repairs that were needed,Wouldnt buy spare parts.We were running full tilt with full order books making world class steel in August of 2008 when the greed merchants house of cards came tumbling down.Its funny that we bail out the banks who continue to charge fees for everything under the sun.But we cant help a plant that served this country and put food and clothes and thousands of kids through school.So with the right owner willing to do it the right way the Point can get back to provide good paying jobs

      • Walter

        Hi Rob,

        I am not so sure that they really have a full order book? Why would the Russians run when (as claimed) the customers are beating down your door?

        I do agree with you that we need an owner who will pump hundreds of millions into the tired old girl to get her back on her feet again – but many feel that the numbers just do not work for the investor. The steel market is no longer king and a sure thing. Investors have safer and more profitable places to invest their money.

        Looks like the young folks are going to have to work harder for less money or be out of a job? My generation made big money at the Point – plenty money for management and the worker! American kids these days are lazy – the Chinese and Indian kids will work all day and not complain for 50 Cents per hour and no benefits – how do you complete with these low wages?

        Walter

  • Tattersal

    Hey Guys – We all need to look at the bigger picture. John Cirri is not responsible for the realignment in the global market place. The Titanic (Sparrows Point) is sinking because it is a slightly updated WW II steel plant. We were told that the Point was the biggest and the best in the world – and it WAS a very very long time ago!

    But the world and steel making have changed and moved on. There are several new steel plants in China alone that can produce all the steel China needs and then supply most of the world’s needs too. Add to this new mills in India, Europe, the Pacific Rim, South America, and the USA – plus a global depression and it is easy to see it is not Mr. Cirri’s fault. He is trying his best – but we are living in new world order and not the President or Congress or the Courts can change the outcome. Let us all let go of the past and try to come up with new uses for the Point that will create new jobs and restore our dignity and pride as hard working Americans!

    Bethlehem Steel made fools of us, then ISG, then the Hindustani owners. At least our Russian owner, Alexei Mordashov is honest and tells it like it is. Alexie is not happy about the outcome, nor is John Cirri – these men are not the enemies – we are all in the same boat! Mr. Mordashov lost hundreds of millions of his dollars trying turn around our very sick and dying plant. We should all thank him for believing in us! The American worker did not let Mr. Mordashov down, nor did he let us down – it is the global market place that we cannot compete in that did us both in! If you do not believe me -let's go over to Wal-Mart and try to buy something made in the USA!

    • lt1350

      Rich heres one for you from your man Cirri,he wants to do joint ventures that will save the company 0 dollars but will cost the company millions by letting contractors in the plant by the thousands.Cirri said this out of his own mouth,so why are we even doing this?He is suppose to stand up for ALL the union workers of the plant and NOT give away certain departments to save others that are junior and family members.we were also told that if we didnot like what was being forced on us that was basically tuff , people that didnt want this could not bump into the mills ,even if they were senior , there has to be an opening. BS

      • Readbetweenthelines

        Just to continue on what ITsays….. look a litle deeper- Cirri has planned joint ventures for everyone of his political enemies – all senior – all maintenace people. talk about election fraud…….

  • http://pulse.yahoo.com/_R2RA43L4SSJTMPOK37YKTZBP7Q Joe Jablonski

    While SP has had many owners since Bethlehem, Severstal has been the most incompetent, by far. Most of the issues that Severstal complains of are either a direct result of their mismanagement or don't exist at all. Much of the blame can be attributed to the Russian management brought in to run North American operation. Alexander Pogozhev and Sergei Kuznetsov lack the basic technical understanding of the operations that they manage, which has lead to a series of poor decisions that have hindered Sparrows Point operations. Pogozhev seems to be obsessed with reducing the headcount, despite the fact that labor (salary+hourly) is less than 10% of SP's overhead. If every employee worked for free for the next year, it wouldn't generate the magnitude of savings needed to cover the purported losses. A reduction of 500 more employees simply isn't feasible because most mills are running well below their staffing complements. The fact that Pogozhev and Kuznetstov are unaware of this speaks volumes about that their lack of understanding of the steel making/finishing process.

    Pogozhev and Howard are known for claiming that SP's woes are due to the inefficient use of manpower, yet they squander the scarce resources that they have on foolish programs that have little to do with turning a profit. SP employees have had to endure the following adventures in idiocy:

    1. Shutting the sinter plant down- Despite being told by countless blast furnace experts that this was a very bad idea, Russian arrogance won out over American engineering. Now, we're hearing that the damage to the BF is intense and a relining may be required.

    2. Total Cost of Ownership program (TCO)- This is where SP employees were supposed to conduct a financial investigation of the vendors and determine the true cost of production of a particular widget. Then the employee was supposed to inform the vendor that their quote is irrelevant, Severstal was only paying the price they calculated to be fair. Fortunately, this was too stupid to put into practice, but it gives an indication that capitalism is still mysterious to Severstal senior management.

    3. Total Operating Performance program (TOP)- This program was supposed to identify wasteful spending and inefficiencies at the mill level. Of course, that requires competence, so they decided to quit buying spare parts instead. Thus, they disabled the automatic reordering functions in the inventory system, which ensures that you only find out that a part is out of stock when you actually need it. As you might imagine, delay rates have increased significantly because of this and I can assure you that there are few costs in manufacturing as significant as downtime.

    4. Key Performance Indicators (KPIs)- This is the latest fad which consists of eliminating the current incentive plan, and replacing it with one that is based on a needlessly complex series of metrics, most of which are beyond the individual's control. At SP, it will result in about a 20% pay cut for salaried employees and if the union is foolish enough to agree to it, it will be worse for the hourly workers . The architect of this plan is Michael Lewandowski who is the Division Manager of Human Resources at SP. In meetings that explained the plan, it is said that Lewandowski admitted that this was a drastic pay cut, but insisted it was still a great opportunity for SP employees . It would appear that it's such a good opportunity that Lewandowski is actively seeking employment elsewhere, as evidenced by this online job application: http://www.learn4good.com/jobs/language/english/search_resumes/cv/462870/. I'll leave it to the reader to determine the competence of an HR Director who allows his job application to be posted on the internet.

    Personally, I question Severstal's claims of unprofitability for SP. If SP has been consistently losing the vast amounts of money that Severstal purports, why would they continue to run close to full capacity for the last year? By the Russian logic, the best thing that could happen is to have the union strike, so why would they extend the contract further and further? This is wholly my opinion, but I'm guessing that SP's losses are Severstal Resource's profits and that it's advantageous to dump losses on SP. Either way, SP will be far better off with a new owner

    • Halsaxby00

      Hey Joe, are you salary or hourly? I'm curious because I saw a union member give basically the same speech as your post in Howard's business update meeting. You description of the KPI program is about right–Lewandowski told us that we would have made 1/12th of our incentive in the last quarter when compared to the current plan.

  • Walter

    Joe,

    The Russians closed the Sinter plant because the best American and Dutch engineers could not get it to run without throwing more sinter product into the air than into useful product.

    The huge red cloud could be seen for miles as product shot into the sky! Our wonderful American (and Dutch) engineers were milking the company for hundreds of thousands of dollars with band-aid fixes that did not fix the problems. The Russians know how to make steel and how not to waste money – The sinter plant is a very poorly designed old relic that the best engineering minds in the business cannot make keep cobbled together.

    I do agree that digging up old slag encrusted iron skulls out of the bottom of the Patapsco River and tossing them into L- Furnace is the a wacky idea! No wonder the old girl blew her top off! Using the slag piles as an iron ore mine was a crazy idea!

    Walter

  • PATRIOT

    Everyone, this is a most critical time for those who work at Sparrows Point, and the community. Once again, Sparrows Pt. is up for sale.Severstal has given up, the Witch hunt has been on way before the Russians purchased the best steel making plant in the world. It is shameful to know that the Battle continues with those Special interest groups, The Churches that workers supported for many years now tell us in an indirect way that the Church doesn't need our support. This is also a victory for the Progressives { SOCIALIST }. There are more Enviremental groups in numbers than there are employees at Sparrows Pt. The workers must not give up, when the going gets tough the tough keep going. I continue to live that 100 year Logo ” UNITED STEEL WORKERS OF AMERICA ” now United Steel Workers. We must Fight that Fight, Unite together, we can make a come back in America and Sparrows Point. For those Special interest groups that all is on there mind is to Go Green, I suggest that you get educated and research the country of ” SPAIN, since they had gone GREEN the country has gone Bankrupt. For every Green job that was created at least Two Manufacturing jobs were lost. Socialism { PROGRESSIVES } will try what ever it takes to Destroy Capitalism and the lively hood of the AMERICAN WORKER. Our Internatinal Union also The U.S Government should be involved with the Enviremental clean up of Sparrows Point also assist us with Hope of finding a NEW BUYER to purchase Sparrows Point. I look foreward to once again have an AMERICAN operated and owner of THE SPARROWS POINT PLANT. Stand up United Steel Workers” Stand up and Fight with Pride!

    • Walter

      Dear Patriot,

      Capitalism is alive and well all over the world – the Russians are no longer “Commies”. They are the leading capitalists (been in a Moscow $500 per night hotel lately?), as well as the Chinese and our friends in India.

      This is the problem with our outdated and run-down Sparrows Point steel mill. We can not complete against the “new capitalists! America does not have a monopoly on Capitalism – Capitalism IS the new world order and has no place or need for our aged and outdated plant in the global market place! Our Russian owners are making money in their new MS plant because they are not burdened with the legacy costs of a rest-belt relic and the growing environmental awareness that the cat is out of the bag with years of cover-up by the EPA, politicians, and the plant's past owners.

      Nor, does the plant support the community – Beth Steel took Baltimore County Industrial Revenue Bonds worth millions needed for plant “improvements” and the money is unaccounted for – some Beth Steel big shot is still having fun?

      Check the Baltimore County property tax assessments
      paid on plant property and you will note large parcels where not even a penny was paid! Try not paying your property tax and they will take your home away from you.

      And – with so little workers living anywhere near the community -just look at the Ohio and other out of state tags running in and out of the plant (and Micky's Package Goods)
      and you will see that the little money (other than cashing of of state checks at the local bars) there is – is going to out of state scab labor contractors!

      Add to this the uncontrolled toxic Kish releases (no steel plant in America still releases Kish into the air) and the enlarged Gray's toxic landfill, mountains of Blast Furnace slag waste piled falling into the Patapsco River.

      Turners Station even has an registered “Historic Home” where the Negro lady who had a cancer that would not even die 50 years after it killed her once lived!!!, the dumping of toxic waste into Tin Mill Canal and its release into Bear Creek and the Chesapeake Bay and you can see that the plant in not so popular with Baltimore County, Baltimore City, and the wealthy new home owners across the Patapsco River in AA County! Oh -do not forget the Benzene in the underground aquifer heading over to Kent County?

      Our Union leaders are always calling for “Buy American” why don't they buy SP, as if they claim, can so easily be made profitable?

      Walter

      • Rob

        If you admire Russian style capitalism i suggest you do some research on how the heads of those companies got where they are.I think its funny that 2500 men and women who risk they're lives everyday and for the last two years have worked under extreme conditions to put out quality steel.Yes Walter Beth steel executives bilked the company and left it a shadow of it former self,then a 'wall street savior”came in to save the day and walked off hundreds of million dollars richer while retirees lost their health care and hand they're pension diminished,but thats ok right Walter thats captitalism isnt it.I dont know what buisnes you are in,but let me tell you i have worked at the Point for almost 15 years now.I think that while the Point is far from perfect,it didnt get this way overnite and not all by itself.They're are alot of blame to go around.If the Point shuts down tomorrow its not just the 2500 hourly and salaried people who will lose they're jobs but the contracters who work there,the gas and resturants that people stop at on their way in and out from work.Now is not the time for this area to take that much of a hit.Lets get everyone together and come up with creative ideas that can move the process foward to a solution that can lead to a long term solution.So Walter are you just one of the those types who likes to scream and throw mud at the wall or are you someone who like to be part of the solution,because simple shutting the doors and locking the gates isnt going to solve anything.

    • urkidding

      Unfortunately for the Steelworkers who believe in AMERICA – these socialist -progressives are the union and the obama lovers who are watching as Obama and his Green men take America and Her Constitution and spit on it. They are corrupt and so is the Obama regime in DC. But the United Steel Workers back them 100%. Tell me that ain’t shooting yourself in the foot.

  • Walter

    Hello Mark,

    Have your readers pick up a copy of the Wed, August 11, 2010 Dundalk Eagle Newspaper – or go on line to view this story about the Black lady from Turners Station who lived across from the Sparrows Point Plant and had the most famous CANCER the world has ever known – the cancer that never dies!

    Notice in the article how the elected officials never mention how they will try to clean-up and stop the cancer causing toxins from making more Henrietta Lacks in the Turner Station community?

    Partial article from the Dundalk Eagle, posted here so it may help to stop more folks from dying of this horrible cancer.

    “Henrietta Lacks’ unique cells make up the HeLa cell line. This cell line has been instrumental in research into polio, cancer and AIDS.
    Turner Station resident made medical history
    by Nicole Rodman

        When former Turner Station resident Henrietta Lacks visited Johns Hopkins Hospital for abdominal pain in February 1951, she did not expect to be diagnosed with cervical cancer.
        She was, and she would die of the disease eight months later.
        When Lacks died at age 31 on October 4, 1951, she left behind a husband, five young children and a lasting medical legacy.            Without Lacks’ knowledge or consent, cells from her cancerous tumor were taken for testing. Scientists soon discovered that Lacks’ cells were far from ordinary.
    Union Baptist Church in Turner Station hosted the historic landmark service in honor of Henrietta Lacks. photos by Michael Rodman

        Unlike most cells, Lacks’ cells did not die after a few divisions. This immortal cell line, named HeLa after their donor, went on to be used in research into polio, cancer, AIDS and many other diseases. The HeLa cell line was also instrumental in mapping the human genome.”

  • No political affiliation

    It's a shame how certain politicians tries to corrupt peoples mind. President Cirri is the only President that I know of that has had to face numerous and difficult challenges during his terms in elected office. Yet, he has managed to keep us working for the last 7 going on 8 years. The company wanted 500 people terminated back last October, but through his leadership the company did not get what they wanted and only because of the the economy, pricing and market conditions is his hands tied today. Do I agree with all his decisions, absolutely not. But lets stop the political BS and stop acting like the man has done nothing to help us and our UNION. One guest mentions the DOL stepping in to re-elect our President. It is obvious he has not read or cares to read the findings of the DOL. I care about the union I belong to and pay dues to so I took the time to read the findings. Not one violation was found against President Cirri and in fact only two violations were found…one person identified for one email that was sent out and one fax from an unknown sender was sent out. We are facing troubled times and only coming together and supporting our ENTIRE LEADERSHIP and showing the company that we stand together as ONE can we ever hope for a viable resolution to this mess. I could not agree more we the authors that commented that we would be better off we new owners that have a sustainable long term business plan for Sparrows Point.

    • Walter

      I agree that emotions are high and we have all been hurt by the past owners of SP, we gave our time, labor and health to make the best steel product in the world. I cannot sleep over this – my family started at Sparrows Point when it was owned by Maryland Steel. We all made a good living from the plant- but at a high cost.

      Now my time is running out – was it worth it? Even if the plant returns to its former glory – I do not want my grandchildren to work any where near the Point.

      But this is not to take away from President Cirri's dedication to the working man. He also loses sleep worrying about a changing world and how to keep the American steelworker employed in this changing global market. His job if difficult because the playing field has changed under his feet. No more dealing with the Beth Steel big shots in Martin Tower, PA. How do you deal with a billionaire from India, a Brazilian company without a face, or Mr. Putin's close friend? President Cirri's job is more difficult then that of President Obama!!!

      Please keep President Cirri in your prayers and wish him God's speed, as he is our only hope that we can retain some type of steel related activity at the Point.

      Walter

    • Steelworker75

      “No Political Affliation” I think that you have been drinking the cool aid at the annex. Just look at the FACTS. John Cirri sent out communications one month before he was elected telling the membership that WE had a pattern contract and that the only thing that had to be worked out were “local issues”. A year and a half later he tells us that we are world apart with NO CONTRACT! He continues to misrepresent the truth. For three months, The Department of Labor investigated witnesses and rendered a decision that ordered a new election for all positions won by ALL RED, WHITE AND BLUE candidates because of impropriates. The Department of Labor has a case filed in District court because the “UNION” has refused their order. Members of The Red, White and Blue of which Cirri was the Chairmain rented a van on election day and picked up political supporters during working hours and the Company paid them to vote for Red, White and Blue candidates. Why can't Cirri and his political caucus take responsibility for their actions and the actions of his political caucus. He was the chairman. He also used his appointed people: the area coordinators and the safety coordinators to sell his raffle tickets and distribute his political literature. The Company paid the bill for this also. You talk about coming together and supporting our ENTIRE LEADERSHIP. When do you think that that might happen? Cirri is a one man band. We meets with Lewandowski by himself behind close doors without the rest of the grievance committee and seems to work out “deals” for himself and his friends and then blames the Company for all of the contractual violations to the membership. WHEN IS HE GOING TO STAND TOGETHER AS A UNION!!! WE HAVE NOT BEEN A UNION FOR A LONG TIME. Cirri has continued to allow the Company to violate the seniority rights of our membership without penalty. Cirri is a great divider. He continues to separate 2609 and 2610, the young against the old, the senior against the junior, the black against white and the wonen against men. Look around you Brothers and Sisters and open your eyes to what is going on. It is your future at stake. Stop drinking the cool aid and look at the facts. These are my opinions and as a member of 9477 I think that the local union leardership should stop all the cheap talk and start protecting the contractual rights of the membership!

      • lt1350

        Thank you !!!!! Remember,cirri is also trying to do joint ventures that nobody wants,i believe so he can save his family and relatives that work on the finishing side along with other union officers that have their kids and relatives there too.At the expense of the all the joint venture people that by the way are more senior then most all those in the finishing side,coinsidence ?I think not . He's a basterd that needs to go to jail for all he's done.Its usually the young workers who back him,i wonder why.He's violating senior peoples rights.

    • makemesik

      you sound like the typical cirri _ _ _ kisser. I bet your kids got a job there and maybe your wife also. I bet you work in the annex so you can bow down and kiss his ring too. Who do you have to kiss more Cirri or his wife?

  • Ngnnn1965

    Dear Mr. Mordashov! At the economy is so bad, I think that is time to make some decision here. If the company keep loosing money, there's maybe time to shut it down completely. Can't keep it running and paying high labor, benefits and overtime costs to all of your employees while you're not making any profit. It's rediculous! You have to do what is best for your company, don't worry about the Union and the employees, they're always wanted what's best for them not you. So do not let them continue to intimidating you. They've been there long enough to be retired, they should have been gone awhile ago. Give the new Owner a break!!!

  • No Political Affilation

    “Steelworker 75″ I would rather drink the cool aid then the hallucinating substance that you are on. It is quite obvious that you are a USA political member because mis-leading and inaccurate information is their trade mark. It is people like you that keep trying to keep our union divided all for self political agendas. Facts speak for themselves if one's mind is open to truth. Want to talk about a self serving group…USA political members are allowed to perform their outside second jobs while being paid by the company…some are on last chance letters…your group tried to deny fellow union members from using an ice box to put their lunch in because they were from another department… grievances from USA members are being pushed up to the front of the pile…I could go on, but I hope I made my point. We should use this forum to express our concerns or opinions on what is happening with the current economy and how it affects our livelihood. The elections will handle itself…until then we must show this company that we stand together as one union.

    • your friend

      You should seek professional help!

  • Jason

    The radical environmentalist agenda is to cost hard working Americans their jobs. These no good for nothing hippies will not go to employee information meetings explaining why it is so important to shut American manufacturing down. Many Steelworkers are avid fisherman and do care about the bay.
    The property owners around the point just want their waterfront property increased by shutting down the Point. Greed like this is why so many jobs are sent overseas. I still can't see how people can be so evil to have thousands of people unemployed. Hopefully things will turn around for the Steelworkers and their families.

  • Guest

    Ha, Ha, Gotta…Steelworker 75 is a woman…Remeber this, going to church makes you no more a Christian than going into your garage makes you a car!!

  • Guest

    Ha, Ha, Gotta…Steelworker 75 is a woman…Remeber this, going to church makes you no more a Christian than going into your garage makes you a car!!

  • lt1350

    AMEN BROTHER !!!!!!!!! Its unbelievable how many of these kids follow Cirri,they will follow him over a cliff blindly.

  • Guest

    I disagree, the new people that work with us in the Tin Mill actually see Cirri and the Red, White and Blue for what they really are. They understand that the incompetence of our union leadership from the shop stewards to the president are run by people with their own agendas and that we need to get rid of them. Cirri knows that this is his last term as president of the local. If we survive until a new election he doesn't have a snowball chance in h#LL of getting reelected.

  • Lady of Steel

    I couldn't agree with you anymore. The younger workers of the Tin Mill are fed up with the whole union, besides the stress of dealing with a foreign company, in these hard economic times. They fear for their own future. Who ever heard of union working with management, whatever happen to the union standing up for us hourly workers? I kind of side with the person who response, “union sucks!”

  • Walter

    Good News – They are getting ready to fire-up L Furnace! Lots of prep work observed at the Point – The guys outside the 7-Eleven say that Maryland Pig is getting ready for the first hot metal, as well as the BOF. So much for Wall Street to fill us in on the latest news – just listen to the guys drinking coffee at the Sparrows Point Road 7- II !

    Walter

    Read this just off the wire services =====

    “It is reported that Severstal North America is considering restarting the blast furnace at its Sparrows Point, Md operations earlier than expected as talks aimed at selling that facility and two others heat up. Director Mr Dave McCall told unionized workers that sales talks are proceeding.

    Bidders include Renco Group, Aurora Capital Partners and Metinvest Holding. In the meantime, the current contract extension that covers the Wheeling, Sparrows Point and the Warren, Ohio plants expired recently at midnight. Mr McCall issued a statement on contract talks recently.”

  • Lady of Steel

    Mr. Tattersal, I have to disagree with you about the younger workers. They know in their hearts that job opportunities are very limited. Some of them were just working jobs before, that had no health benefits, or any other retirement benefits. Some of them were still living home with mom and dad, and still are! As far as we older workers being sheep, like under the Bethlehem reign, so are the younger workers along with the rest of us older sheep. Do you know why? Because in all reality, we are cheap people, WE HAVE TO EAT, ONCE IN AWHILE! That is the whole scenario of the big picture.
    It just seems that some of these old corporate companies, like Bethlehem and many others like them, when they fold up and leave, they all leave a bad taste in all the mouths of what is left of we workers. And anytime the feds put their hands in the pot, it makes it stink even more.
    I, along with the rest of the rank and file at Sparrows Point, do hope that things continue on, as the eventful shut down can affect us all, the communities will suffer great economic hardship. I do hope that there will be some improvement in the working conditions, for the safety of all of us.

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  • January 27, 2012

    • Catching up on a slew of interesting things to do and read this weekend that we almost lost track of in the Kickstarter hub-bub. Here are just a few: SATURDAY (1/28/12) New Mercury Non-fiction Reading – Check out tell-it-like-it-is education blogger Edit Barry (see below) and a pack of other feisty non-fictional characters from the [...]

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