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Notice of layoffs issued to Sparrows Point steelworkers

RG Steel put WARN notices in employees' pay envelopes. Some operations set to shut June 4.

Sparrows_Point_Steel_Plant

RG Steel is issuing notice of potential massive layoffs at the Sparrows Point steel mill in Baltimore County, pictured here in 2007.

Photo by: Wikimedia Commons

(UPDATED) RG Steel, the embattled owner of the Sparrows Point and several Midwest steel mills, has sent out WARN notices to employees in a further sign of potential large-scale layoffs and/or temporary closure of its steel operations.

Barring a last-minute reprieve by RG’s bank lenders – June 4 is the current date when operations at RG Steel are expected to close.

Several well-informed employees have confirmed this date to The Brew, which is subject to change if the company gets a cash infusion, as happened last January when Cerberus Capital Management stepped in with $130 million.

Already a small number of layoffs were put in place at the Sparrows Point cold mill this week.

Earlier today, RG Steel confirmed a report in the TimesLeader news website in Ohio that Worker Adjustment and Retraining Notification (WARN) letters have been included in paychecks mailed to employees.

Such letters do not necessarily mean that there will be massive layoffs or plant shutdowns at Sparrows Point. But they are a warning that such an occurrence is a real possibility. The notice is required by federal law 60 days before layoffs take place.

Lenders Don’t Want to Extend Credit

In a statement released this morning, the company said, in effect, that its lenders were pulling the plug on its credit line and it didn’t have time to issue the WARN notice within the 60-day time frame.

The company hopes to sell some or all of its assets, but whether that can be accomplished in the current environment is questionable.

Here is the company’s media statement:

“RG Steel has issued the WARN Notices in order to insure good-faith compliance with the law and to provide advance notice to our employees of potential layoffs. Since there is continued uncertainty regarding [the] outcome of discussions with our lenders as to the required level of funding to support the working capital necessary to sustain business operations, we felt it prudent to issue the WARN Notices at this time.”

The notices cover the 1,800 unionized workers at Sparrows Point and 1,200 workers at Warren, Ohio.

About 250 salaried employees at Sparrows Point are also being issued WARN letters.

More than 1,000 RG Steel employees will remain on long-term layoff at the former Wheeling Pittsburgh Corp. mills in the Ohio Valley.

RG Steel’s Yorkville and Martins Ferry, Ohio, facilities (the former mill rolling tinplate that was transferred  from Sparrows Point) are also set to be idled and workers will be laid off starting June 4.

Chris MacLarion, vice president of Sparrows Point USW Local 9477, has not yet responded to queries by The Brew.

Confirms Brew Reports

This website broke the news on May 14 that RG Steel was in a “liquidity crisis,” had undergone a sharp drop in customer orders and was privately seeking to sell its plants.
____________________________
“Confronted with an unexpected immediate liquidity crisis” – RG Steel official says in May 23, 2012 letter to United Steelworkers President Leo Gerard and District Director David McCall. Here’s text.
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The Brew’s reporting was met by a push-back by company and union officials, who denied the company was experiencing a liquidity problem or loss of sales. This was followed by confirmation late last week that the company’s assets were, indeed, up for sale.

In subsequent reports, The Brew has reported that layoffs began last Sunday at the Sparrows Point cold mill and that the mill’s major production unit, the L blast furnace, has been idled twice in two weeks in part because of a shortage of raw materials caused by the company’s inability to pay vendors.

Customer orders at Sparrows Point have dropped precipitously in recent weeks, and there are few sales booked after June 1. In Warren, the mill is expected to finish up its current order book by early next week.

Workers at Warren said this morning that they were informed by management to expect the Warren blast furnace to be shut down next Wednesday.

Reports are surfacing that many of the Warren workers will be laid off on or near June 4, with a few operations scheduled to remain open until June 17.

The same date of June 4 was the announced closure of the Sparrows Point mills by senior management, although some staff will remain to idle equipment and ship final orders.

The situation very much remains in flux.
____________________________________
TEXT OF LETTER TO USW MEMBERS AT SPARROWS POINT:

The leadership of Local 9477 was officially notified today, 5/24/12, that a WARN notice has been issued for the Sparrows Point plant. The company has stated that a layoff will virtually affect all of Sparrows Point’s employees, commencing on 6/4/12 and continuing within a 14 day period, due to an unexpected liquidity crisis. To the extent that the layoff does not affect all bargaining unit employees, affected employees may have bumping rights based on their seniority in accordance with the basic labor agreement.

The Union is diligently working with the company to find capital to fund day to day operations and pursue a buyer to buy all or some of the company’s assets.

While the WARN act requires 60 days notice, the company is sighting the exception of “unforeseen circumstances” of the WARN act in order not to give 60 days notice.

The Local Union will have an emergency meeting on Wednesday, 5/30/12, at the Union Hall located on 540 Dundalk Ave. at 1:00 pm and 4:00 pm.

Sparrows Point people are tough and we’ve been through tough times before. Please don’t panic or react to unfound rumors. This is a fluid and dynamic situation and we will make every effort to keep you informed.

In Solidarity,
Joseph Rosel,
President
USW-Local 9477

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  • Dr Raymond Boothe

    First of all, Georgie and Walter need to share a room in the local looney bin because their version of the collaspe of RG Steal is beyond funny. Everybody is getting WARN notices now, which means What Asses Ran this place Nowhere! However we know which a–es did it-Ira Rennert, Mr. Goodbar, Crow McCall, the USW (Underdedicated Steelworkers Union) and the host of industrial workers on the Moon. As I have said before Sorrows Point is dragging the entire operation down like a big iron anchor. Unless someone enterprising comes along to let the Point sink to the bottom, nobody has a chance. It is a sad but true fact.

    The good people of the West have suffered long enough because of outside forces. Starting with the Boobie Brothers, we ended up with the Ruskies and finally RG Steal and the biggest anchor-Sorrows Point. The Western Plants tried to hold SP up as long as they could, but SP’s stupid bumbling and leadership just was too much. They pulled everybody into Baltimore Harbor.

    Walter and Georgie you have been told about how RG Steal is selling off all their inventories at rock bottom prices to pay their bills and raise cash. Your ships are cashing in on the remains of the unused stock. The company is in a total mess at every level-and I mean every level. 

    So all of your little boat and Ira support stories went for naught. Ira is a crook-at almost all his operations he has laid off employees, hurt communities and has created general mayhem.

    You did not listen-and now the clock has struck TWELVE.

  • CasualObserver1

    George,  about this:
    > Our Maryland Gov. O’Malley will not let the hotside at SP be idle. This is an election year > and President Obama could step in to lend the Maryland steelworkers a helping hand.

    What do you think he can do?  He apparently convinced investors to prop up SP over the winter. They all lost. All the other investors watched and learned.   How do you think he has any power to do that over again?  Raise MD’s taxes?  Obama introduce a new SP tax credit in this election year?

    State and local government has gotten bloody and bruised from the last few years of trying to subsidize and prop up numerous businesses that could not compete.  SP is not a one-of-a-kind national capability like say, several years back when the last two companies that could build US Navy submarines, were both on the ropes. The govt ensured they had two.

    re: this:  “I cannot believe that one of the world’s largest mills will be left out in the cold.”  THAT is a failure of your imagination.  The US national security apparatus thought that about hijackiing passenger aircraft and taking down skyscrapers.  Even Bin Laden didn’t think that would happen.  Politicans cannot defy global economics for long, though they may wish to, as you do.

    I’m sorry to see this fate befall SP and the steel industry overall.  But do not wish for the global industry to turn back the clock to the 1950s for your sake.  That is fantasy.

    It is too much to expect Walter and George and other SP loyalists, for you to change your tune for this audience; you are loyal to SP.  But you, personally, must sink or swim.  Waiting for RG management to reverse this is a sinking choice.  They are liquidating.  Did you get WARN notices?

  • Pitt

    Mr. Cockarolla, Go cry to your money sump mommy while your unemployed!

  • BeenThere2020

    I think it is a joke, every time bad things are announced George chimes in with his, we are doing just great and everyone should calm down because he is in the mill watching the greatest show on earth. Truth be told, George has not seen the inside of the mill in years, ever since his appointment to the cushy job he has with the international. People that buy in to his propaganda will be the ones left out with nothing but misery and worries about where they are going to get their next meal for their family while he sits back and eats his 3-5 meals a day, paid for by the same workers that are being displaced. Everyone needs to face reality and start trying to plan their future, whether it be going back to school or finding another job before it becomes too late. A bunch of you guys bashed Dr. Boothe when he was telling the truth about what was going on with the company, because it was not what you wanted to hear and George would post his fairy tale that made everything seem ok. SP is not too big to be closed and not one investment firm cares how long they have been in business, bigger companies have been shut down for less debt and SP will be no different. Your next career awaits you somewhere out there, you just need to open your eyes and welcome the challenge.     

    • rkolberg

      The Baltimore Grand Prix needs George. Just imagine how many major sponsors he’d already have lined up, and how many tickets he’d report as sold. Plus he’d get along just fine with the boss.. Ira Rennert, Stephanie Rawlings-Blake… same difference, both enjoy playing fast and loose with other people’s money.

  • Blast Fce Man

    Did anyone take a look  at the picture next to George’s posts ? Kind of looks like Bernie Madoff. George has been pushing the everything is all right “ponzie scheme” about as far as it will go. Most people didn’t buy into it & those who did  now realize they were taken. So sad!!!!

  • SteelDude

    Yeah I believe that orders are still being placed.  When a mill is in the situation that we read about here, there are all sorts of steel buyers/traders out there who will do worse-than-down-and-dirty priced deals on speculation.  The mill takes the order because it is better than nothing, and the customer places the order because it is dirty cheap and they’ll broker or distribute the steel out later.

    These orders usually will barely cover the incremental cost of production, and if the mill is too desperate, inexperienced sales people can sell for prices even below that.

    But these sorts of orders are not taken for a customer’s “contracted” commitments.  So if the plant shuts down before the steel can be made, the buyer does not have a problem.  Products tend to be for plain-Jane, lower-grade products so the buyer does not have to worry too much about poor quality.

    It is all part and parcel to the death spiral that happens to a steel company with no cash in a weak market. When you start doing these sorts of deals, the Grim Reaper is standing at the door.

    • Pointworker

      Not true many orders are not plain jane items but for coated products and some of the orders are large. Business as usual?

  • RAVENS 55

    PARTY AT IRAS HOUSE  WE WILL HAVE TO CARPULL  CUZ  IRA ONLY HAS 200 PARKING SPACES AT HIS LITTLE  CRIB  AND THERE WENT MY NEW WORK BOOTS ALL OF THESE YEARS OF HARD WORK AND NOT TO HAVE TIME WITH YOUR FAMILY FOR WHAT THEY ALL CAN KISS MY TRIED ASS  GOD BLESS YOU ALL AND BEST OF LUCK !!!!!!!!!

  • Joe Harris

    Good article…but the substance of it was a little painful. No, actually very painful. But I’m not on here to point fingers, call anyone names or set the fault of it at any plants doorstep – though I will myself plant it on Ira’s and his partners. As far as I’m concerned the minute some guy starts a yelling match about his plant suffering because of anothers failure, I downgrade his comments in my mind to pointless.

    What I’m seeing here isn’t simply about north, south, east or west…it’s more about a loss of cohesion in an old American ethic – “We Stand Together and We Fall Together”. Yeah, this is painful for all of us, and maybe even a little more for me and those like me that don’t have isnsurances that will make up the pay difference. Over here in Maryland it’s what…$330 after taxes? Man, that’s gonna hurt with a family. But that’s not my point.

    We can blame each other, pull cute little epitaths outta our asses and call each other and respective plants nice derogatory names…but in the end we aren’t really lacking in blame either. Sure, we have no power over how a man like Ira runs his business…not alone. Yeah, the union made some mistakes and perhaps a few extraenious demands. Sure, a few of us rode the easy train while we could, and others didn’t. But a really simple point is that if we would have stopped all our ridiculous bickering and actually stood together as a real union, a real brotherhood of workers…maybe we could have made our union act a little differently. Or used our uncountable years of experience to influence the company to do things a little differently. But we didn’t.

    Its an end of an era…and I don’t just mean for steel, but unions altogether from what I’m seeing. No wonder its been so easy for government – nationally and even internationally – to chip away at the foundations of unions for so many years. There was a time when men stood and died together to get the ability to organize…the thing we simply received by filling out an application or knowing someone on the inside. Maybe not all of us appreciated the power that could have given us to influence conditions and decisions…maybe some of us never really got the idea or weren’t informed properly about the responsibilites shared by all members…maybe some of us are assholes (I’ll include myself for parity).

    The bottom line is that when we should have stood together we didn’t. I’ve seen fights between union members, arguments and disagreements that contained venom better saved for the company if at all…not to mention empty union halls and empty union meetings. If you want to blame the fine that’s fine. But I would argue that if they are out of touch with us, maybe the fact that we left it all to them and didn’t participate as we should have empowered them to make a lot of the wrong decisions. We were strangers to each other except for elections and grievances and contract time…easy to think of yourself when you represent an invisible body. Blame the owners but blame ourselves too cause in the end the company is about profits and we don’t count into that…we maybe could have but we couldn’t get along long enough to make any presence felt by Mr. Hamiltons and perhaps make him utilize our experience for all but running bare bones. In the end we ALL get to take home and into our job searches a bit of the responsibility.

    I wish to say to those that I worked with “Been an honor”, and to my fellow brothers out there “Good Luck”! If somehow we come through this, I hope we can learn to be brothers again. Take care.

    • msc#2operator

      The New 1190…….We’re Not Gonna Take It Anymore

    • 1190memberforjustice

      joe please tell me how we can stand together, our own local union reps wont even stand together, they have took everything away from us at 1190 to keep the younger person working with no seniority at all (the friends and family plan of 2008) a dirty shame they threw away seniority right into the river to protect themselves. so stick together at 1190 is not ever going to happen unless these new reps get our seniority back. and i dont see it happening, they will continue to protect themselves. this is in no way a union joe.

      • Joe Harris

        Brother I’m not disagreeing with you. I was just calling it as I see it. I just feel that if us little guys had really come together we could have made a difference, atleast in regard to our union. There are ways to unseat union officers that do not uphold their responsibilities or serve themselves…there are ways to upend the entire union if need be to remake it into what it was supposed to be. I’m not saying it will happen…just that it could be done. All it would take is a united front on our parts. Not easy I know. But we have to change our relationships and language, learn to change divisive concerns into ways to promote that unity. I think that as americans in this day and age we have all been so conditioned to be pessimistic and unbelieving in our own abbilities that we simply do not act. If that could be turned into positive action we could be a real union again. It calls for people to forget their gripes with each, start thinking about the benefit of the entire body and not just the individual. These are all ideas and could easily remain so…unless we turn it into action. I don’t know if it is too little too late, but if we come through this somehow I’ll be more than willing to give it a real go if others will join me. No, I’m not interested in running for any office – just in making those who hold office to act more responsibly to the body of the union, and be more proactive with their brothers concerns.

        Hopefully somehow we will all come through this. I guess the only thing I can wish for right now is that we forget our differences and shun those that would divide us with their language. In the end there are a great many things that can be done witfaith, an open mind, a little quieting of our own ego, and a firm friendly handshake. It starts withone, or two or ten people taking that first step Brother. I think we would all be surprised by the response such a reaching ou could accomplish. Again, hopefully we will get the chance to rectify these things. Until then, good luck Brother.

  • SteelDude

    Pointworker,

    There are plenty of plain-Jane coated specs.  A792 Grade 80 ’Lume, ASTM A653 galvanized .019 x 41-9/16″, .018 x 42 3/4″ Galvanized PBR panel,   A792 Grade D ’Lume bare standing seam roof stock .029 x 29 15/16″ to name just a couple.  Also .017 x 37″ wide ag panel, .029×22″ and .029×44″ to name just a few. 

    Those are universal sizes for various building panel applications and usually hard to screw up.  A trader (or even a metal building or component outfit) could easily place a big, bargain-basement order for these sizes to simple cost-average down.

    You’re arguing with a pro who has done these deals from both sides of the table, thankfully never with RG.

    • TACO

      Yes SteelDude these always in demand coated products from the Point will always have a market. I agree with you that Traders and the big service centers are stocking up on these SP products. These coated Galvalume products were invented right here in Sparrows Point. If Ira has found a way for us to supply the product at good prices – who cares as long as the Point’s hot side and finishing lines keep running?  I do not know why people are writing posts like Sparrows is already dead and buried?  We are running and all systems are go, so what is up with all these outsiders posting all this bull that the lights are out?  The WARN notice is just a piece of paper I tossed in the furnace because its only part of some game playing for more favorable terms or something.

      • Dr Raymond Boothe

        TACO BREATH-The clock has struck Twelve. No more bull. It’s over-adios amigo.

  • Jason

    It’s good to see an article that finally puts part blame on an out of touch union leadership. Leo Gerard is the biggest self promoter of himself claiming to represent Steelworkers as their international President. 2 years ago he made appearances on fox news of all places to fight for the auto industry. Now he remains silent on all the steel mills in his union closing their doors. That salary of $190,000 has affected his thoughts on how he feels for the Steelworkers now making $435 a week.

  • SteelDude

    Taco,

    Galvalume® may have been invented at Sparrows Beak, but in classic style, Bethlehem blundered this invention.  By the waning days of Bethlehem Steel, Beth did not even own the rights to licensing ‘Lume as it had sold them off to BIEC (BHP, now BlueScope)  long before.

    And long before that, National started clubbing Bethlehem over the head with Bethlehem’s own technology and was selling far more lume than Beth ever dreamed of.

    These days, ‘Lume is a commodity… made by mills all over the country and easily available.  More to the “point”, the ‘Lume line at Sparrows Beak is likely the most poorly located ‘Lume line in the country, being the farthest away from the core markets for this product.  That’s why Bethlehem had invested in the Double G galvanize/Galvalume® line in Mississippi, to get closer to the market’s epicenter.  ArcelorMittal owns that piece of Double G these days.

    Galvalume® is a commodity product these days and very price sensitive.  Not a good product to be selling if you are logistically challenged.  It is also a product aimed at commercial construction, which is a terribly slow market these days.  But an excellent product for vulture buyers to come along and swing big deals from a mill desperate to get orders.

  • Pointworker

    RG just filed chapter 11 which is better than 7 which at least leaves some options on the table.

  • harlyman

     You can bet the Union will try to organize anything that comes onto RG property and the hell with the people on the street.

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