The only thing certain about the future of Baltimore’s biggest industrial facility is uncertainty.
About 2,000 employees (1,200 on layoff) are nervously waiting to hear the fate of the mostly-idled Sparrows Point steel mill. Will it be sold? Will it be closed? Will more people be laid off?
Nobody in an official capacity is saying much of anything.
This includes Russian-based owner Severstal (see Q&A with its spokesperson below), the United Steelworkers union (USW), and the four groups identified as bidders for the plant.
“People are really upset that the union is keeping us in the dark,” said one laid-off steelworker, citing the “invisibility” of David McCall, who represents the USW in the talks. A union representative countered that McCall is under a confidentiality agreement not to discuss a possible sale.
In place of facts are rumors, none of which can be verified. Among them: Argentina-based Ternium will – or will not – purchase Sparrows Point, the mill has already been sold, Severstal will force Sparrows into Chapter 11 bankruptcy, raw materials are coming for a restart of operations, Sparrows will be idled indefinitely.
One verifiable fact is that Severstal has placed “L” furnace and other equipment in “asset protection mode,” making any future resumption of steelmaking a tedious and costly process.
“We Feel Neglected”
John Cirri, president of USW Local 9477 Sparrows Point, told members in an e-mail Wednesday that he had no information on what he termed the “pending sale” of the mill. Attempts to reach Cirri to clarify his statement were unsuccessful.
Last month, sources told The Brew that Ternium’s bid had stalled. For one thing, the bid was viewed unfavorably by the international USW because the Argentine company did not agree to buy two other Severstal mills represented by the union. There were also reported disputes over an iron ore contract signed by Severstal and severance payments demanded by the union for unemployed steelworkers.
McCall wants Sparrows Point sold as a package with Severstal Warren and Severstal Wheeling, two Ohio-based mills. His position has caused a running dispute between the international and Local 9477, which would like to see Sparrows sold separately if better terms could be negotiated.
A number of local unionists believe that McCall instinctively favors the Warren and Wheeling mills as USW District Director of Ohio.
Sparrows Point is represented on the national level by Billy Thompson, who is headquartered in Frankfort, Ky. He has not played a discernible role in the possible sale and has left matters in the hands of two staff members, Jim Strong and Frank Rossi, Jr.
“We feel neglected by Thompson and screwed by McCall,” says a source in Local 9477.
McCall did not respond to a message left at his Columbus, Ohio, office. Thompson referred all questions to Frank Rossi, who was out yesterday and unavailable.
There are three other identified bidders for Sparrows and the two other Severstal properties.
They are New York holding company Renco Group; Ukraine mining conglomerate MetinvestHolding with Optima Management; and Los Angeles-based Aurora Capital. The financier behind Renco, Ira Rennert, owned the Warren mill until it declared bankruptcy in 2003 and was sold to Severstal.
Severstal’s spokesperson Marika Diamond declined to describe the status of the bids except to say that Severstal is “exploring strategic alternatives for certain of its assets” and will “provide updates when appropriate.”
Severstal has previously said it expects to keep the steelmaking furnaces idled at Sparrows Point until market conditions improve. The furnaces have been shut since late July, and many of the finishing operations run irregularly, if at all.
Severstal continues to own a non-union mill at Columbus, Miss., and make steel at Dearborn, Mich., whose workforce is represented by the United Autoworkers (UAW).
Customers Taking Orders Elsewhere
Many Sparrows employees have placed their hopes in Ternium, which flew officials to the mill in November and early December and outlined plans to return Sparrows to full production.
Ternium expressed interest in supplying its booming South American markets with tinplate processed by the mill.
At present, tinplate is the only department running regularly. The department makes substrate for tin cans and other metal containers and is the biggest such facility in the Northeast.
But the department is losing orders as buyers fret about its future and are transferring business to U.S. Steel, ArcelorMittal and other competing companies.
“There isn’t much left to Sparrows Point as far as customers are concerned,” said a source knowledgeable of sales.
Q&A with Marika Diamond, Severstal spokesperson
Do you have any updates as to the status (or progress) of the sale of Sparrows Point by Severstal?
Severstal remains committed to the North American market. As previously disclosed, the Company has been exploring strategic alternatives for certain of its assets. At this time the strategic review is ongoing and we cannot comment further. We will, however, provide updates when appropriate.
Is the steel side still expected to be idled through the 1st quarter of 2011 or has there been a change in status?
As previously announced, the primary operations at the company’s Sparrows Point facility will remain idled until there is an improvement in market conditions to warrant their restart.
Can you provide a number, or estimate, of employees currently on layoff at the steel mill?
The current numbers are in line with the WARN notices issued in November 2010.
Reach Mark Reutter at [email protected].