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Buyer disputes prediction of big layoffs at Beth Steel

THE BALTIMORE SUN

Bethlehem Steel Corp.'s top executive estimated that the company's work force will be reduced by up to 4,000 - more than one-third of its 11,000 employees - in a sale of the company to Cleveland-based International Steel Group Inc.

Robert S. Miller Jr., Bethlehem chairman and chief executive, said on a recorded employee hot line Wednesday that there will be "about $100 million in transition adjustment assistance to the 3,000 to 4,000 people who will be leaving."

But ISG and union officials, who were caught off-guard by Miller's statement, characterized his estimate as speculative. They said final work force numbers must still be negotiated between ISG and the United Steelworkers of America.

Wilbur L. Ross Jr., ISG's chairman, called Miller's statement on work force reductions "an inadvertent error."

"He could make whatever estimates he wants, but it's really not for him to decide," Ross said yesterday.

Rodney Mott, ISG's president, said Miller's estimate was "speculation on the part of Bethlehem management" and ISG has not "even started considering how many people will be needed at each plant."

Mott said he expects "that an extremely high percentage of workers that want to work for ISG will have jobs."

"The size of the numbers, that's speculation on the part of Bethlehem management based upon what they saw ISG do with LTV," he said. ISG bought and reopened bankrupt LTV Corp.'s steel mills last spring and rehired about 3,500 of the 9,000 workers who had lost their jobs.

The United Steelworkers of America dismissed Miller's estimate as "irrelevant speculation" in a statement yesterday.

Leo W. Gerard, the USWA president, said that "apparently the reality hasn't yet sunk in on Bethlehem's management that it will have little to say about manning levels at the assets being purchased by ISG as negotiations between the union and ISG move forward."

Bethlehem, which employs 3,300 at its Sparrows Point plant in Baltimore County, agreed Saturday to be acquired by ISG in a deal valued roughly at $1.5 billion. The company, which has operated under Chapter 11 protection for the past 16 months, still needs to file the terms of the deal with the U.S. Bankruptcy Court in Manhattan.

Possible competition

The deal could also face competing offers from other bidders in a court-mandated auction. If ISG's bid wins, though, Bethlehem officials have said they expect the sale to close in the second quarter, creating the country's largest integrated steel maker, with an annual shipment capacity of 16 million tons.

In a telephone interview yesterday, Miller said his estimate was based on comparing the defunct LTV Corp.'s staffing levels with ISG's lower staffing levels at the same facilities. But final decisions on Bethlehem's staffing levels will be made by ISG and the union, he said.

"The intention is to achieve as much as possible [in job reductions] through voluntary retirements and as little as possible through layoffs," Miller said.

For several months, Bethlehem has repeatedly warned that significant reductions will be required at its facilities, regardless of whether Bethlehem emerged on its own from bankruptcy or was bought by a rival.

"We've been very up-front with our employees that whether Bethlehem would be a stand-alone company or a consolidation candidate, that our work force is too large to support a successful enterprise," Bethlehem spokeswoman Bette Kovach said.

ISG and Bethlehem officials declined yesterday to estimate how many jobs would be cut at individual facilities, including Sparrows Point, Bethlehem's second-largest steel mill after its plant in Burns Harbor, Ind.

Mott, ISG's president, said his company would offer more than $100 million through a transition assistance program for hourly workers who want to leave.

ISG will work with the USWA, which represents about 80 percent of Bethlehem's workers, to find "people who want this assistance, and not that they're being forced to leave," he said.

Moving on with lives

The program "is going to allow a lot of people who are ready to leave the steel industry to move on with their lives," Mott said. "As far as a firm plan to cut thousands of people, I don't know where that's coming from."

But Mott said he wouldn't be surprised if there were 400 or 500 workers at Sparrows Point who would want to leave on their own, "just by looking at the listing of ages and years of service."

But, he added, ISG "hasn't even started considering how many people will be needed at each plant."

Bethlehem will pay for a separate transition assistance program for salaried workers, said Kovach, Bethlehem's spokeswoman. But she declined to estimate how much such a program would cost.

Workers at Sparrows Point said yesterday that word of Miller's statement began sifting through the plant early in the day, touching off speculation and rumors about which jobs might be first to go.

While workers confessed to some anxiety about the possible layoffs, few seemed surprised to hear that yet another blow might be suffered by the local work force.

"These days we all figure we're going to get screwed, some are just going to get screwed more than others," said Bob Barrett, 61, an ironworker from Reisterstown who has worked at the mill for 38 years.

"Right now I'd like to see it all come to a head just so we can get it over with. Everyone's lives are in a holding pattern."

Coming, as they did, just days after Bethlehem Steel announced that it would try to stop paying for health and life insurance for retirees, Miller's comments also seemed to fuel concern among workers about the steel-working trade's uncertain future and the deteriorating way of life.

"A lot of us have small kids and a house and 25 or 30 years in over there, and now we're not even sure we're going to have a job next month," said Roger "Yogi" Elliott, a 47-year-old maintenance services coordinator who has worked at the mill since he graduated from Sparrows Point High School 30 years ago.

"We all used to have this dream of being able to retire and get a pension while we were still young, then getting another job to pull in two paychecks - that's why a lot of people stayed so long. Now everyone's just worried about what's going to happen tomorrow."

In addition to Sparrows Point and Burns Harbor, ISG plans to acquire smaller Bethlehem plants in Lackawanna, N.Y., and Coatesville and Conshohocken, Pa., as well as such nonoperating assets as the company's headquarters building in Bethlehem, Pa.

Estimate called low

Charles Bradford, a steel industry expert, said Miller's estimate was lower than he would have guessed.

"But there's a more sophisticated product line at Bethlehem than what they're running at ISG, so that might make the difference" in keeping more jobs, he said. "It's never good news, but if you're not competitive, all jobs are at risk. It's probably better to save 8,000 than to lose 11,000."

Donald F. Barnett, a steel industry consultant and president of Economic Associates Inc. in Great Falls, Va., said the job reductions at Bethlehem are necessary if ISG hopes to compete in the steel market.

Bethlehem is "not competitive with domestic mini-mills, they're not competitive with foreigners, and they're certainly not competitive with ISG," he said.

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