Posted 3/7/06

Bill Barry, director of the CCBC Labor Studies Program, took notes of the talk and discussion on March 1, 2006, between Mark Reutter and steelworkers enrolled in Barry’s Grievance and Arbitration class.

Reutter outlined events at Sparrows Point “from Wood to Mittal,” meaning from Frederick Wood, founder of the once sprawling plant, to Lakshmi Mittal, its current owner. The mill has been part of the global economy since steelmaking began there in 1890, Reutter said, but with a major difference. Until the 1970s, U.S. steel manufacturing dominated the world economy. Today, it is being threatened by it.

Reutter also emphasized, as he did in his book, that the greatest challenge for the steel industry is to capture new customers. The industry let aluminum and plastics companies take away business and needs imagination and investment to recover.

Reutter summarized recent events at Sparrows Point as an example of how to get around a union contract by co-opting the union instead of trying to break it. Robert Steve Miller, Wilbur Ross, Bethlehem Steel’s board of directors, and a willing bankruptcy judge stripped retirees of their health-care and pension benefits. Wilbur Ross created International Steel Group (ISG) to buy the suddenly valuable Beth property and then sold ISG to India's Mittal family.

For decades, the USWA’s defense of the industry was to oppose imports of foreign steel. “Now you guys are owned by foreign steel,” Reutter said. “Mittal can do whatever he wants.”

The current controversy over the sale of U.S. port facilities to Dubai Ports World was rather ironic, Reutter said, given that members of Congress did not raise any national-security alarms when a big chunk of America's steel-making capacity was sold to a foreign corporation a year ago. Mittal’s takeover of ISG sailed through the Bush Administration’s Committee on Foreign Investments in the U.S. (CFIUS), the same group that has been blasted for its shoddy investigation of the proposed Dubai ports takeover.

In a lively Q&A period, the class agreed that investment by Mittal Steel at Sparrows Point has been minimal – a critical concern because the “L” blast furnace will require $300-plus million rebuild in a few years. Reutter worried that Mittal could simply start importing slabs into Sparrows Point, shutting down “L” furnace and reducing the work force.

One student noted that Sparrows Point was exporting steel when ISG owned the plant, but exports have ceased under Mittal. [ISG reported $337.9 million in export sales in 2004, pg. 4 Annual Report.]

Reutter also said that ever since Bethlehem declared bankruptcy in 2001, U.S. Senators Paul Sarbanes and Barbara Mikulski and Congressman (now-Gov.) Bob Ehrlich have taken little interest – and not even given much lip service – to saving jobs and retiree benefits at Maryland’s once largest employment site.

This has led to a power vacuum in both leadership and ideas, allowing financiers like Wilbur Ross to finesse incredible profits at the expense of local communities and workers, aided by the bankruptcy court process.

One student said that, while lobbying with the USWA in Washington, Sarbanes’ office consistently failed even to return phone calls.

Another student made a very important remark: “We only pay attention to our own little world. Other unions seem to be more active, but not our local.”

Reutter said that Mittal seems to be very sensitive to negative publicity, so that a pro-active union could wield power. When USWA Local 1010 in Chicago staged a protest against Mittal’s cutoff of widow’s death benefits, attracting media attention, Mittal quickly restored the benefits. Workers should seize their chance to voice their concerns through e-mails, blogs, and other forms of communication opened up by the Internet, Reutter said.

As an example of “Internet activism,” he cited the grassroots campaign by Soldiers of Solidarity (SOS) to counter efforts by Steve Miller, ex-CEO of Bethlehem and currently CEO of Delphi Corp., to slash autoworkers’ wages and benefits through bankruptcy court proceedings. [See http://www.labornotes.org/archives/2006/03/articles/g.shtml or contact Gregg Shotwell at GreggShotwell@aol.com]

Reutter wondered how much attention Lakshmi Mittal is really paying to production details when he is flying around the world doing mergers and charming influential friends like New York Senator Hillary Clinton, who recently flew with Mittal in his private jet to a celebrity wedding in India.

Mittal’s “clannish” style of management – naming his son the president of Mittal Steel and placing his daughter on the board of directors – is one of the main objections by Guy Dollé, CEO of Arcelor Steel, to Mittal’s hostile takeover bid.

Agreeing with this point, one student said that Mittal Steel is starting to look like “back to Bethlehem.” For example, management closed the tandem mill for repairs and then reopened it on New Year’s Day, so that all of the workers got overtime for working the holiday. Several of the students felt that ISG was more attentive to production details than Mittal Steel is.

Many of the students said that they had never made so much money, with overtime and bonuses, but it was pointed out that a lot of this money came from dumping the “legacy costs,” the pensions and health insurance of retirees, during the bankruptcy sale of Bethlehem to ISG in 2003.

USWA’s support of Mittal’s bid for Arcelor provoked discussion, especially the union’s insistence that there are too many companies in the industry. Reutter pointed out that when there were a range of steel companies, if one closed, workers still had a good chance of finding work at another mill. But thanks to mergers and mill shutdowns, there would be no work for Baltimore steelworkers if Sparrows Point closed.

One question was whether Weirton was shutting some of its operations because it was not a USWA plant. Reutter agreed that was likely, claiming that Mittal had reached an informal agreement with Leo Gerard not to lay off USWA members in exchange for Gerard’s support of Mittal’s takeover of ISG. One student said that he would trade some of the money he is making for a sense of job security.

Another student asked Reutter a very shrewd question: What would you do if you were CEO of Sparrows Point?

Reutter responded that Sparrows Point must become innovative once again and grow new customers and markets by taking on the aluminum and plastic industries. He outlined his vision for a state-of-the-art steel mill, with long-term plans for growth, investment, and expanded employment.

He recommended improving education in the Baltimore area, so that the next generation of workers could handle the new technology and not end up flipping burgers for a living.

Reutter said that economically Sparrows Point has become “a colony” – subject to the whims of an absentee owner – and needs both independence and leapfrog technology to return to world-class status.

Several students agreed that employees must look outside of their parochial concerns and learn more about the technological and economic challenges facing the industry.