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“We have no inkling on how it will turn out,” says steel union president

Layoffs to continue at Sparrows Point as operations wind down. Meeting closed to the media, but Brew has exclusive details.

Above: Signs at the steel mill point to its succession of owners, from former Bethlehem Steel to current RG Steel.

((UPDATE, 1/6: A group representing the banks that issued a $750 million credit facility to RG Steel toured the Sparrows Point mill today. The group is renegotiating the terms of the loan to the cash-strapped company. Ned Reynolds, spokesman for GE Capital, a co-agent of the facility with Wells Fargo Capital Finance, declined to comment. GE is under pressure by Maryland Gov. Martin O’Malley to ease the terms of the loan. Other lenders include Bank of America and UBS.))

The president of Sparrows Point Local 9477 told a packed audience of steelworkers late today that he had no idea how long layoffs will continue at the Baltimore County mill.

“I wish I had good news,” Jeff Mikula told more than 300 employees – many of them already laid off – at the United Steelworkers Union Hall on Dundalk Avenue, according to sources who attended the meeting, which was closed to the media.

“We have no inkling on how it will turn out,” he said, because owner RG Steel has refused to talk to the union about its liquidity problems that resulted in the unexpected suspension of the plant’s operations three days before Christmas.

RG Steel has not publicly confirmed the shutdown, but told customers this week that it hopes to resume normal operations once “issues associated with this unexpected outage” are resolved.

Those issues, The Brew has reported, involve losses of up to $1 million a day since the mill reopened last June.

The losses have resulted in the pullback of credit by a consortium of banks lead by Wells Fargo and GE Capital, plus a shortage of raw materials due to suppliers withholding shipments because of unpaid bills.

Sources tell The Brew that the company is attempting to recapitalize and tap into a $750 million revolving credit facility controlled by the banks under more favorable terms.

The company is also pressuring the union to agree to a restructuring plan that will streamline job categories and farm out more jobs to outside non-union contractors.

Mikula did not discuss the company’s restructuring efforts at the informational meeting today.

Hot-Strip Mill to Shut on Saturday

With steelmaking operations halted at 4 p.m. on December 22, Sparrows Point is currently running off its inventory of “slabs,” or semi-finished steel, in the processing mills.

On Saturday, the 68-inch hot-strip mill will close after rolling the last of the slabs into coils of raw steel. The coils will then be processed into coated, annealed and galvanized products – taking another two or three weeks – until the supply of steel is exhausted.

After that, Mikula acknowledged, no one has any idea what will happen except for the company that, he said, has refused to talk to the union about its financial plans. RG Steel is a privately-held subsidiary of the Renco Group owned by billionaire financier Ira Rennert.

More than 500 Layoffs Expected Next Week

Mikula said that Gov. Martin O’Malley and Baltimore County Executive Kevin Kamenetz have not gotten responses from RG Steel regarding their questions about the future of the mill, or the number of layoffs to be expected.

Mikula also said he could not explain why the company has not issued Worker Adjustment and Retraining Notification (WARN) notices to the workforce, as apparently required under federal law.

Messages to RG Steel spokesperson Bette Kovach from The Brew have not been answered.

Mikula also provided information on layoffs at the mill. In the last week of December, 814 union members were placed on layoff. This week, with the hot-mill returning to temporary production, there were more than 400 layoffs.

Next week Mikula said the union expects more than 500 on layoff. The USW represents about 1,800 employees.

“Is it Ever Going to End?”

The current stoppage is eerily similar to the shutdown by Severstal North America, which sold Sparrows Point to RG Steel last March.

For six months in late 2010 and early 2011, steelmaking was closed, but steel slabs – supplied by other Severstal mills – were used to meet customer orders. Sparrows Point is the only integrated steel mill in the Northeast and is one of the country’s major suppliers of tinplate and galvanized sheet steel for the container, consumer products and construction industries.

Baltimore County Executive Kamenetz today announced that the division of workforce development will host an “expo” at the union hall next Thursday (Jan. 12) to provide steelworkers with information on emergency aid for families, house foreclosure prevention, unemployment insurance and career development.

State Sen. Norman R. Stone, who attended today’s meeting, said local government is trying to help steelworkers get through another period of hardship.

Stone spoke of the Point’s succession of owners since Bethlehem Steel Corp. went bankrupt in 2001.

And he expressed a thought no doubt on many minds in the union hall: “Is it ever going to end?”

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