Eastern Stainless may close Swedish owner lays 'mothballing' to losses; Manufacturing


Avesta Sheffield AB, the Swedish stainless steel company that bought the struggling Eastern Stainless Corp. three years ago, yesterday said it likely will close the southeastern Baltimore County plant by early August.

Roy Cooke, president of U.S. subsidiary Avesta Sheffield East Inc., disclosed the shutdown two weeks after the company announced the mothballing of the stainless steel coil plate line at its Essex plant -- a move that will eliminate 27 of the company's 115 jobs in mid-July.

The shutdown of the rest of the plant, which awaits the company board's approval, would cut 73 more jobs, leaving a skeleton crew of 15 at the site.

Cooke said difficult market conditions forced the company to close the plant. "Most stainless steel businesses are not making money these days," he said. "We're in a cycle where stainless steel prices have reached probably all-time lows. We're plagued by imports. And the Far East situation is not helping the market."

He said the plant has lost money in every quarter since Avesta Sheffield bought Eastern Stainless from Armco Inc. in 1995. "We have to stop the bleeding at some stage," he said.

The company became embroiled in a feud with Maryland economic development officials last year, after the state accused Avesta Sheffield in a lawsuit of reneging on a promise to deliver 350 jobs in exchange for a $1.1 million grant. The company, which had repaid a separate $350,000 state loan, said the 350-job target was a goal -- not a promise.

Cooke and state officials would not discuss the company's differences with the state yesterday, saying negotiations were continuing. "We're trying to find an amicable solution," Cooke said.

Calling the closure a "mothballing," Cooke left room for the possibility that Avesta Sheffield might reopen the plant if the market turns around. James D. Fielder, acting secretary of the state Department of Business and Economic Development, said he viewed revival of the plant as a realistic possibility.

He said the company had spent $90 million for acquisition, cleanup and new equipment, and that it was not walking away and selling its equipment. "They made a long-term investment," he said.

Fielder also said those expenditures and high-paying jobs for workers justified the state's investment in Avesta Sheffield.

The shutdown means many workers in their early 50s, earning $14 to $17 an hour, will have to retire or look for jobs elsewhere.

"We don't want to see it closed," said Bill Harriday, staff representative for United Steelworkers of America Local 9116-20. "We're looking to see if we can find somebody to buy it."

Once an independent company, Eastern Stainless has been losing money since the mid-1980s. After filing for bankruptcy protection in 1986, it was bought by Cyclops Industries Inc., which in turn was acquired by Armco in 1992.

Eastern Stainless' work force declined from 1,500 in the early 1980s to fewer than 300 in the early 1990s.

To make Avesta Sheffield's $27.1 million purchase from Armco Inc. a reality, workers agreed in 1995 to a four-year contract that cut vacation time, weakened seniority rights and lowered guaranteed work hours.

The shutdown is scheduled to occur by late next month or early August. "But that could change," Cooke said. "We may actually stop some operations sooner than that."

The company and union officials are negotiating severance packages for workers, as required by the four-year labor agreement.

But he said a reversal in market conditions could prompt Avesta Sheffield to reopen part or all of the plant. "I live here in Baltimore," Cooke said. "I don't want to leave. We didn't come here to make a failure of it. We came here to make a success of it."

Pub Date: 6/04/98

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