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500 steelworkers laid off at Sparrows Point

Amid rumors of sale, company shuts down most of steel finishing operations until the end of August.

Above: Alexei Mordashov, Severstal CEO: shopping Sparrows Point around, laying off workers.

About 500 workers at Severstal Sparrows Point have been placed on layoffs that will last at least two weeks, according to union sources and statements by John Cirri, president of United Steelworkers Local 9477.

The furloughs represent the first forced layoffs at the mill, which until now has reduced union staff through voluntary layoffs (VLOs).

Despite some 300 employees currently on VLOs, Cirri told union members at a meeting Monday that Severstal laid off an additional 500 workers this week. There are about 1,800 hourly employees at the mill.

The forced layoffs have added to fears that Sparrows Point may be downsized in stages unless it is sold by Russian billionaire Alexei Mordashov, CEO and majority owner of Severstal.

The Brew reported last week that Severstal wants to sell Sparrows Point as well as the mostly idled former Wheeling-Pitt facilities in the Ohio Valley and its operations in Warren, Ohio.

The trade press has since cited New York businessman Ira Rennert, former owner of the Warren mill, as a potential buyer. Severstal has refused to discuss any possible asset sale, and a recent report by Bloomberg says the sale may be delayed until Mordashov receives an acceptable price.

Loss of Orders

Until recently, Sparrows Point handled orders diverted from Severstal’s Ohio mills. But Severstal recently reopened portions of the Warren mill and began making cutbacks at the Baltimore facility.

On July 24, the company closed the L blast furnace, ending what the Point has been doing since 1891 – making steel from scratch. The furnace won’t be re-opened until October at the earliest.

Then the company placed the finishing operations (except for the tinplate mill) on a half-time schedule beginning August 15.

According to plans still subject to change, Severstal will close the mills for two weeks, then open them for two weeks, between now and the end of September. The tinplate mill, which makes feedstock for the container industry, will remain in full operation.

Cirri told union members Monday that his “gut feeling” was that Sparrows Point would eventually be closed unless a new owner is found.

Relations between the union and Severstal management have so deteriorated that neither side is talking to each other. A new contract, slated to be signed September 1, has been put on hold. Employees are currently working under a contract that expired in 2008.

Severstal spokesperson Marika Diamond did not respond to an e-mail seeking comment about the layoffs or future prospects for the mill.

Mark Reutter can be reached at reuttermark@yahoo.com.

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