Sparrows Point called lifesaver for ailing mill

Wheeling-Pitt workers favor sale

By Allison Connolly | Sun reporter

December 20, 2007

The steel slabs made at Sparrows Point are lifeblood for this mill in Mingo Junction, Ohio, owned by twice-bankrupt Wheeling-Pitt. (Alex Kozlowski/Special to The Sun / December 18, 2007)

MINGO JUNCTION, Ohio - Each day, rail cars carrying steel slabs minted some 300 miles east at Baltimore County's Sparrows Point mill arrive at Esmark Inc.'s Wheeling-Pittsburgh plant here.

Huge trucks with claws in their underbellies grab the slabs and haul them to Wheeling-Pitt's 80-inch hot strip mill, where they are fed into a furnace and heated to a red-hot 2,200 degrees, then rolled, flattened and wound into huge coils.

The coils are loaded onto conveyor belts to be sent either to Wheeling-Pitt's finishing mills or to customers who will hammer, cut and bend the coil for use in products such as auto chassis and appliances.

The slab from Sparrows Point is lifeblood for twice-bankrupt Wheeling-Pitt, which last month was merged into Esmark, a Chicago Heights, Ill., company founded by brothers James and Craig Bouchard.

Now the union representing steelworkers at Sparrows Point says that a merger of the two also represents the best future for the Baltimore County plant.

Officials of the United Steelworkers said yesterday that it was backing Esmark as it readies a second bid to gain control of Sparrows Point.

The company's initial effort collapsed this week when Sparrows Point owner ArcelorMittal terminated an agreement to sell the profitable mill to an Esmark-led investment group, E2 Acquisition Corp., for $1.35 billion.

David McCall, negotiating chairman for the United Steelworkers, and John Cirri, president of Local 9477, which represents 2,100 workers at Sparrows Point, gave Esmark's plan to absorb Sparrows Point a vote of confidence.

The merger, McCall said, "really does make a long-term, stronger company."

Esmark envisions ramping up production at both plants, with Sparrows Point feeding 850,000 tons of cheap slab to Wheeling-Pitt each year. Wheeling-Pitt would churn out more finished product, with the goal of attracting new customers and burnishing the steelmaker's bottom line.

Such a combination would link the profitable Sparrows Point complex to one that has been hemorrhaging money since Esmark won control of Wheeling-Pittsburgh Corp. in December last year after a proxy fight.

For the first three quarters of 2007, the company lost $158 million; in the first three quarters of 2006, it made $24.6 million, though its finances were deteriorating, resulting in an $18 million loss in the final quarter. "There is substantial doubt about the company's ability to continue as a going concern," auditor PriceWaterhouseCoopers warned in the company's 2006 annual report.

In contrast, Sparrows Point has been profitable under Mittal Steel Co. NV of the Netherlands, which bought the plant in 2005.

Mittal is being forced by the Justice Department to sell Sparrows Point to satisfy antitrust concerns related to its merger with Luxembourg-based Arcelor SA, creating the world's largest steelmaker.

Workers disliked the way Mittal pitted its plants against each other, awarding work to the most efficient. But Sparrows Point benefited from the system, winning work from a sister plant in Weirton, W. Va., across the river from Wheeling-Pitt. Sparrows Point began shipping slab to Wheeling-Pitt in late September.

Under a small company like Esmark, Sparrows Point would be much more vulnerable to losses at a sister plant. At the union hall on Third Street in Steubenville, Ohio, at least one member wondered why Sparrows Point would want to merge with Wheeling-Pitt.

"We're like the fat girl at the dance," said Ron White, vice president of Steelworkers Local 1190 and a 19-year veteran. "Nobody wants to dance with us."

It's tough being a steelworker in this area with a history of strikes and layoffs at both Wheeling-Pitt and nearby Weirton. It's also tough to own a bank, store or restaurant here because the businesses depend on the steelworkers' paychecks.

"If it weren't for these guys, we'd shut down," said Dennis Gorlock, proprietor of the Town House lounge on Commercial Street in Mingo Junction.

Inside his bar hangs a poster of the Wheeling-Pitt plant. Outside, the plant looms large and noisy behind it. Workers cross the railroad tracks and descend a flight of stairs next to the Town House to get a bite to eat before their shift and a drink after it ends. Gorlock's hours are 5:30 a.m. to 2:30 a.m. to accommodate the steelworkers' schedules.