Sparrows Point called lifesaver for ailing mill

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.

Steel is not only the best-paying job in town, it's one of the few.

"If they lose a $20-an-hour job, they're lining up for a $6-an-hour job. Lining up," Gorlock adds for emphasis.

During the 1970s, Wheeling-Pitt employed 11,000. Today it has about 3,000. The town's population has shrunk along with the plant, falling more than 20 percent since 1990 to about 3,400 last year, according to Census Bureau data.

The average income is $33,700 and the average price of a home is $73,000. A quarter will get you two hours of parking on the town's main street.

Workers have accepted a 27 percent pay cut and multiple two-year layoffs. And they'd do it again.

"You do what you have to do to provide for your family and keep this company going," said John Casey, the union's safety coordinator, who ticks off the years he was laid off as if they were Super Bowl stats.

"The only thing we haven't been through is a liquidation," said Steelworkers Local 1190 president Ken Aspenleiter, knocking on the wall for luck.

Many workers feel fortunate to still have jobs after a widespread consolidation in the late 1990s.

"I'm glad Esmark bought us, but I'm worried," said Ernie Gampolo, 59, a 38-year veteran who works at the hot strip mill. "The Bouchard brothers promise a lot of things."

Carl Thompson, a fifth-generation steelworker, was laid off from nearby Weirton in June 2005, shortly after Mittal took over and sent Weirton's hot work to Sparrows Point.

He was one of the lucky ones to land at Wheeling-Pitt and hopes to retire from here. But the 39-year-old knows he will be one of the first to be laid off because he has the least seniority.

With two young kids to provide for, Thompson is putting all of his faith in the Bouchard brothers.

James Bouchard has been running Wheeling-Pitt while Craig heads up the effort to buy Sparrows Point. He is impressed by how their father worked his way up from the mailroom to management at Inland Steel Co., and how the sons have built a company in just four years.

If they can buy Sparrows Point and ramp up production at Wheeling-Pitt, Thompson believes he will be able to keep his job.

"They're just like us," he said.


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