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.