The acting president of the United Steelworkers union at Sparrows Point today told members that RG Steel is reducing operations over the next four to six weeks in order to conserve cash. The statement suggests that normal operations will resume once the mill achieves positive cash flow.

RG Steel yesterday suspended operations at the sprawling plant in Baltimore County as a result of a liquidity crisis brought on by its failure to pay suppliers and contractors in a timely manner. Layoffs have begun in some departments as nearly all mill operations are shut at least through New Year’s Day.

The Brew has learned that Sparrows Point has been losing as much as $1 million a day since steelmaking operations resumed last June, which followed the mill’s acquisition by RG Steel from Severstal.

Dependent on Bankers

RG Steel has not yet issued any announcement of its future plans, which are dependent on convincing a banking syndicate, led by Wells Fargo Capital Finance and GE Capital, that the mill will not continue to lose money.

RG Steel is owned by billionaire Ira Rennert, but financed chiefy by the banking syndicate.

Sources stress to The Brew that the situation is highly fluid and subject to day-to-day changes.

Here is this morning’s message to USW members by Chris MacLarion, acting president of Local 9477. MacLarion has not responded to requests for comment by this website.

Brothers and sisters

Many of you will see the newspaper today. I said “No Comment”  for the news article and the paper makes it look like the Union isn’t putting out information. Clearly we are. This is not the time to help the newspapers run rampant with rumors about our plant.  

Here is our official statement:

“RG Steel is doing their best to conserve cash by reducing operations over the next 4 to 6 weeks, by the end of January we expect the business to be cash positive and we can resume operations and meet customer demand. Until then we need to continue to perform our jobs in a safe, efficient and productive manner.”

Please do what you can to stick together and stay focused during these next few weeks…..times will be tough but we will persevere.