The Sparrows Point steel mill will offer voluntary temporary layoffs after its owner announced it would cut production at its U.S. plants by 30 percent this month and lay off more than 800 workers at other plants, the plant’s union president said.
Russian firm OAO Severstal and the union agreed on the layoffs Friday afternoon, and it is unclear how many will be available, United Steelworkers Local 9477 President John Cirri told The Examiner. He said the union and Severstal hope to limit the layoffs to 10 weeks, and avoid involuntary layoffs for the more than 2,000 workers at the plant.
Severstal, which bought the Baltimore County plant in March for $810 million, announced the production cuts Friday, two days after temporarily laying off 800 workers at two Ohio plants because of the slumping worldwide economy and decreased demand for steel.
“The way the economy is, all the steel facilities have had to cut back,” Cirri said. “Right now we’re going to try to cut costs through voluntary layoffs, and hope that works.”
The layoffs will be given to those applying based on seniority and the importance of their job to the plant’s operations, Cirri said. He wasn’t sure how widespread interest in applying for them would be.
“The last time we did voluntary layoffs we had people waiting in line,” he said. “But the economy wasn’t like it was now. I don’t know if the economy will change their mind.”
Cirri said the plant’s blast furnace would undergo scheduled maintenance in November but may be kept offline longer than planned, for up to 45 days, because of the economy. Workers could be employed in extra maintenance to help avoid layoffs, he said.
“There are always things you can do, though it could be make-work,” said Chuck Bradford, a steel industry expert with New York-based Soleil Securities. “But depending on the union contract, that might be cheaper than laying off workers for a period of time.”
In a release on the production cutbacks, Severstal said it would continue to balance steel demand with workers’ needs.
“We consider these measures to be prudent management in a time of rapidly changing market conditions,” Severstal Chief Financial Officer Sergei Kuznetsov said in the statement.
Cirri said he believed the company has workers’ interests in mind, with the holiday season approaching.
“I think they are honestly trying to do whatever they can do to avoid layoffs,” he said. “But I guess when it reaches critical levels, there’s no choice.”
