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Sparrows Point is in a “liquidity crisis,” union president says

Some layoffs are expected next week as the steel plant suffers a large downturn in orders.

Sparrows_Point_Steel_Plant

An aerial view of the sprawling Sparrows Point steel mill in 2007.

Photo by: Wikimedia Commons

Members of United Steelworkers Local 9477, Sparrows Point, received sobering news tonight that the steel mill is in a “liquidity crisis” and “running day to day” because of a credit crunch.

The statement by local president Joe Rosel confirms reports in The Brew and elsewhere that parent company RG Steel, owned by billionaire financier Ira Rennert, is in dire financial condition.

According to well-informed sources (the media was banned from the meeting), Rosel likened the company’s condition to its status at the end of last year, when it was forced to shut down the blast furnace because it could not secure raw materials from unpaid vendors.

The blast furnace was reopened in January when the company received an emergency $130 million cash infusion from Cerberus Capital Management. Last week, the blast furnace was shut again for routine maintenance, according to the company. The furnace is currently running.

No Cold Mill Orders After May; Layoffs Expected

In an email tonight reviewed by The Brew, another union official, David Dearborn, told members that the plant’s main finishing operation, called the cold mill, has 32,000 tons of orders for May – and no orders beyond that at present.

“Starting next week, cutbacks will begin,” Dearborn wrote. Layoffs are expected at the coated line and other departments.

“Bottom line is, this company is out of cash again and now apparently out of orders,” he wrote. “Bills are not being paid again and the company is back to penny-pinching mode.”

The email continued: “The press has addressed our financial problems publicly and customers appear to be leary [stet] of dealing with RG. With any luck and hope the company will be able to successfully find customers to place orders with us to keep us running.”

“The bankruptcy rumors are premature as of now and have no truth or validity as of now,” the email concluded.

RG Asks Permission to Sell Sparrows Point

In another key development, Rosel confirmed tonight that RG Steel has asked for – and received – permission from the USW to put Sparrows Point and its two other operations in Ohio and West Virginia on the market for sale.

Under a unique contract with the union, RG Steel may negotiate a sale of the company to new owners, but the International USW has veto power over any transfer.

There are no confirmed reports that the company has taken steps to sell the mills (although it’s been widely rumored that Rennert is seeking a buyer from overseas).

RG Steel also talked to the USW about wanting the union to find a buyer.

At a meeting last week in Columbus, Ohio, the company called on the union for wage and benefit concessions, which were flatly rejected, Rosel and USW District Director Billy Thompson said tonight.

Wage rates at Sparrows Point and other RG mills at Warren, Ohio, and the former Wheeling Pittsburgh mills are below those of U.S. Steel, ArcelorMittal and other USW-represented mills.

Rosel, who officially became president of Local 9477 today following an election monitored by the U.S. Department of Labor, blamed the downturn of orders on a stalled economy – and also said layoffs are a distinct possibility.

The Baltimore County mill employs about 1,600 union workers and more than 400 contract workers.

RG Steel’s spokesperson, Bette Kovach, was out of the country and did not respond to a request for comment tonight.

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  • Chris_herren09

    WITH ALL OF THE UB AND SAFTY MEETINGS WITCH IS OVER TIME AND  ANYTIME  SOMTHING NEEDS FIXED ITS NOT DONE ON REG TIME ITS ALLWAYS OVERTIME  SO JUST THESE THINGS ADD UP BIG TIME  SO FOR ANY PROFIT  THAT I MAKE FOR RG STEEL JUST THESE THINGS ALONE TAKE IT RIGHT AWAY AND PEOPLE WILL BE OUT ON THE STREET AND THE SAFTY MEETINGS WILL GO ON AND THE UB WILL

  • Bethsteel76

    hey jason put your real name on here if you only want to tell the truth what is your name

  • ohio

    Warren BF starting up tonight after 48hr outage because of lack of orders,materail, and money! same old s**t.

  • Dr Raymond Boothe

    Ira has been shopping SP for months. That is widely known throughout the steel industry. Betty Duct Tape’s vacation has not resulted in any perspective buyers, especially for Sorrows Point. Nobody is looking for overcapacity right now. Ira “the Flipper” is still swimming around Baltimore Bay looking for any big and stupid fish he can grab. I do not know what “plan” she is talking about,” but it isn’t working.

  • Outside Looking In

    How can that be?????? Not what was reported…..Wheres the Dr to get to the bottom of this……..

  • Tableclocks moe moe

    i dont know….maybe  severstal  take  us  back….all the  steel  mills  dowm   not  just  rg….
    so  what  happen  to  rebuilding  america   obama

    • Anonymous

       He subbed it out to the Chinese, Moe

  • Tableclocks moe moe

    you  can  bet  ur  ass  the  welfare  cks   and  independance  cards   wont   stop

  • Kumonster

    Tick,tick,tick,won’t be long now!!!!

  • Tableclocks moe moe

    so is the  furnace  hot  idel  or  shut  down  ?

  • msc#1operator

    msc insiders reporting that tommy lallone leaving msc for either us steel or a scrap plant in beaver pa…..this is further proof that rg steel is about to fold….this will leave absolutely no top management at msc….will superman aka mark dziak be able to handle all this new responsibility? severstal better be calling ron boretzky asap and asking him to come back….

  • Xavier Byrd

    This sounds like a little girls party. All of this whinning and ranting about things that are out of our control. Whatever gonna happen will happen and there’s nothing any of us can do about it. By the way GROWN men don’t act this way.

  • Blast Fce Man

    George, I think for all of your support of ” Mr. Ira” he should reward YOU! A classy fellow like him with all of his resources it would not be a problem. I have heard the fishing, crabbing is great this time of the year in La Oroya, Peru. I’m sure he would not mind sending YOUR grandchildren so you could spend even more time with them. I KNOW there is a GOD and i would not be Ira Rennert for 1000 times what he is worth on the day of judgement.for what he has done to those people and more so those children my GOD will not ignore. We should be ASHAMED to work for such as him. Mr. Mordashov is a good man by comparison. You said Ira is not going to hell you are right it would be too good for him. If you have not watched that segment on you-tube the house of lead maybe you should, unless you are afraid that what you see will forever haunt YOU!!!

  • Lmarkle4

    i have a question since u all use fake names how many of u all r double dippin be honest and answer if u have the balls cause i would b willing to bet 85% of u got 40+yrs and r double dippin

    • Warpig

      i am not a double dipper.

  • Dr Raymondboothe

    It  would be well for RG Steel to completely close down Sorrows Point, and continue to operate Warren and the Wheeling downstreaming plants. Then they should fire Goodbar and restart Mingo. Then they could begin to become a real steel company.

  • Last Chance

    RG Steel should sell off the land to a Developer that can turn the place into a Casino and Cruise Ship Port.  Problem solved.

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