Unable to find a buyer for its bar, rod and wire division, Bethlehem Steel Corp. will start shutting down the operation, eliminating 350 jobs at its Sparrows Point steel mill in Baltimore County, the company said yesterday.
Officials of the United Steelworkers union, which represents the division's workers, said the decision was premature. They argued that they might have been able to present a proposal to buy the division if the union had been given another six to eight weeks.
"We figure if they gave us two more months, we could have put something together," said Raymond T. Jastrzab, a staff representative for the Steelworkers' District 15 in Johnstown, Pa.
EBut even though union officials think there is still a possibility of saving the division, their hope is dwindling.
"I don't see a lot of hope right now," said Donald E. Kellner, president of Steelworkers Local 2609, which represents workers the Sparrows Point rod mill.
He said he based his bleak assessment on the general economy and the fact that "everything is going overseas."
The bar, rod and wire division operates an electric steel furnace and production facilities in Johnstown, a bar mill in Lackawanna, and a rod mill at Sparrows Point.
The local rod mill has about 350 employees. The planned layoffs, expected to begin this month, would leave 5,600 employees working at the Sparrows Point plant.
There are also 800 workers at Bethlehem's shipyard, adjacent to the steel mill, and 250 employees working for the company's railroad, the Patapsco and Back Rivers Railroad Co.
The heart of the bar, rod and wire division is the Johnstown plant, which has a work force of 1,900. The Lackawanna operation has 350 workers.
In its announcement yesterday, Bethlehem said it will be gradually shutting down the division during the next three to four months and will try to sell its assets. The sales could be in the form of complete operations such as the Sparrows Point rod mill or specific equipment, said Bethlehem spokesman Henry Von Spreckelsen.
The company said it could reverse its decision during the next three or four months if it receives an acceptable purchase offer for the entire division.
But union officials said selling the assets could put such offers at a competitive disadvantage with companies that are willing to pay high prices for specific equipment. "It puts the buyer who wants to buy the whole thing in a bad position," Mr. Jastrzab said.
However, he said the union will continue to work on its proposal and cooperate with three other unidentified potential buyers.
As part of its effort, the union hired the New York consulting firm Keilan & Bloom to do a feasibility study of creating an employee stock ownership plan to buy the division. The study, which has not been completed, was funded with a grant from the state of Pennsylvania, Mr. Jastrzab said.
An employee stock ownership plan, known as an ESOP, allows employees to buy companies using pension funds, stock holdings or individual investments and then borrow additional money to complete the purchase.
Such plans have been used to rescue other operations, most notably the Weirton Steel Corp. in Weirton, W. Va.
Bethlehem said in late January that it would leave the bar, rod and wire business because of continuing losses stemming from its inability to cut labor and production costs, as well as intense competition from smaller mills and foreign companies.
As part of its struggle to improve the chances for the division, the company filed unfair-trade charges in April against producers of specially made steel bar and rod products in Brazil, France, Germany and Britain.
Bethlehem Chairman Walter F. Williams said yesterday in a statement that the company was forced to start closing the division because of continuing losses and the loss of customers to other suppliers.
"We were left with no choice but to make the painful decision to phase down bar, rod and wire operations," Mr. Williams said.
The Sparrows Point rod mill makes steel rods that are sold to other companies, which draw them down into thinner wires. Those wires can be used in steel cord for tires, musical wires, screws and other industrial fasteners, Mr. Von Spreckelsen said.
The 350 workers at the Sparrow Point rod mill have various options depending on their seniority and work history, Mr. Von Spreckelsen said, including transferring to other areas of the plant, taking early retirement, being put on layoff rolls or getting severance payments.