Mill to be flagship, workers told

The Baltimore Sun

Under ArcelorMittal's ownership, the Sparrows Point steel mill was put in constant competition with the company's other global plants to prove itself the lowest-cost producer.

At times, it lost, resulting in production cutbacks and temporary furloughs for hundreds of workers in periods of slow demand.

But when its new owners take over next month, the Baltimore County mill will move to first in the corporate lineup, Craig Bouchard, who will head the company, told employees yesterday. Once the deal closes, the mill will take on the name Maryland Steel Sparrows Point, he disclosed yesterday.

Speaking under a big-top tent outside the mill, Bouchard pledged that Sparrows Point will be the flagship of an upstart family of steel companies hoping to expand its footprint in the U.S. market, rather than fighting for relevance as part of a global steelmaking giant.

"What you are now is the mother ship," Bouchard told about 200 workers, some still in their blue hard hats and coveralls. "This is the place we are choosing to hang our hat as a company and expand and invest in and become the leader of our company."

The employee meetings, held in shifts throughout the day, were the first since a multinational joint venture led by Chicago-based Esmark Inc. won Justice Department approval to buy Sparrows Point from ArcelorMittal in a $1.35 billion deal. Bouchard, a co-founder of Esmark, is chairman and chief executive of E2 Acquisition Corp., the shell company set up to buy the plant.

As workers munched on hot dogs and drank sodas in the 90-degree heat, Bouchard pledged to quickly bring the mill's production to maximum capacity and start training, recruiting and hiring employees - an almost forgotten notion inside a mill that has seen four owners in as many years.

He also promised to find ways to make sure workers share in the wealth if the company succeeds. Union officials and workers said those promises were indicative of the cultural shift on display yesterday.

Bouchard spoke of his open-door management style and Esmark's close ties with the United Steelworkers Union. About half of the workers at Esmark's steel distribution centers in the Midwest are unionized, but the company says ultimately it expects all of its facilities to be under the Steelworkers' banner.

"I welcome that day," Bouchard said. "It's a new day."

The message resonated with workers, many of whom have been conditioned to be skeptical of management promises.

"I have a lot better feeling [about Esmark and Bouchard]," said William Elliot, who works in the mill's machine shop. "We've been fighting to add more jobs for the last four years, and now I believe we are actually going to do it."

Steelworkers at Sparrows Point often speak fondly of the collaborative relationship between labor and management in the days after International Steel Group bought Sparrows Point from the bankrupt Bethlehem Steel. The good will diminished sharply after Mittal acquired ISG and instituted a more centralized management style that left fewer decisions in local hands. But now the union sees the potential for Esmark to bring that spirit of cooperation back to the mill.

"Right now, [Bouchard] seems very genuine," said John Cirri, president of United Steelworkers Local 9477. "Of course, only time will tell, but it looks like that philosophy of partnership with the union is going to return under Esmark and we're looking forward to that."

In many ways, Bouchard's comments are payback for the union support Esmark received in the past year. The Steelworkers helped swing Esmark's hostile bid for control of Wheeling-Pittsburgh Corp. through a proxy battle with CSN of Brazil last year. Esmark rallied shareholders and the union to vote in board members who favored selling the steel plant to Esmark. The takeover is expected to close this fall.

The union stepped in again when the Esmark-led group faced off against CSN for Sparrows Point. The two companies were the final two bidders in a field of 14 that vied for the plant after ArcelorMittal put it up for sale under orders from the Justice Department's antitrust division.

Bouchard said Leo Gerard, president of the United Steelworkers International, met personally with Lakshmi Mittal, helping to persuade the steel company chief to sell Sparrows Point to Esmark despite CSN's superior bid. When the Sparrows Point and Wheeling-Pitt deals close, the combined companies will have revenue of more than $4 billion and will be the fourth-largest steel producer in the United States.

"Without the support of the USW, we would have never won Wheeling-Pitt, and without Leo Gerard himself going over to see Lakshmi Mittal and having discussions in support of Esmark, I know we wouldn't have won the Sparrows Point deal," Bouchard said.

Much of Bouchard's business plan calls for Sparrows Point to feed 850,000 tons of slabs annually to Wheeling-Pitt, with another 650,000 tons or so going to Mittal and other customers. The focus on slab, a basic commodity product, had some workers concerned yesterday about whether the new owners will also invest in the mill's more profitable steel-finishing business.

"That kind of scares me," said Larry Cheese, a third-generation Steelworker who works in the plant's new cold mill. "Are we going to make Sparrows Point just a slab mill?"

Bouchard said Wheeling-Pitt likely will be the company's primary finishing facility. But he added that plans for capital investment in Sparrows Point's finishing side are being debated. And other parts of the business are expected to grow, as well. In his comments to workers, he dismissed the notion that the slab business can't be highly profitable.

"The only steel mills that are successful are the ones that run at or near full capacity," he said. " ... That is what we're going to do."

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