RG's Sparrows Point Steel Plant to Be Idled

RG Steel announced Thursday it will place its Sparrows Point steel mill in "idle mode" early next month, a move that could result in the layoff of an estimated 2,000 employees.

"This is an idling," RG Steel spokeswoman Bette Kovach told Patch on Thursday. "RG will cease operations at all three of its steel plants in June."

In addition to Sparrows Point, steel plants will also be idled in West Virginia and Ohio.

Plans call for the shutdowns to begin on June 4 and then roll out over a two-week period, she said.

The idling could  cause the company to "lay off all or virtually all employees" at the affected plants, according to a letter RG Steel Vice President and General Manager Thomas Cera sent to United Steel Workers union officials Leo Gerard and David McCall—a copy of which was obtained by WTOV-9.

On Thursday, the company issued a Worker Adjustment and Retraining Notification Act notice required by law to give advance notice to employees about potential layoffs.

Company officials indicated that lenders and investors were no longer willing to supply operating capital to keep the plant running.

"Since there is continued uncertainty regarding outcome of discussions with our lenders as to the required level of funding to support the working capital necessary to sustain operations, we felt it prudent to issue the WARN notice at this time," RG officials said in a statement.

"Given the exigency and uncertainty of the situation, we do not know at this time whether the idling will be temporary or permanent," Cera wrote to the union officials.

RG Steel will continue discussions with lending institutions and will consider selling the plants, company officials said.

"We will certainly continue talking with parties that may be interested in some or all of the assets," Kovach said.

In the letter RG Steel's Cera sent to the steel workers union, he wrote that "completely unforeseen and unforeseeable turn of events"  have led lenders and equity investors to suspend funding of the company's day-to-day operations.

RG Steel is "actively pursuing a buyer of some or all of the company's assets," Cera wrote in the letter.

Kovach would not say how many people work at the Sparrows Point plant, but many reports have put the number at about 2,000.

"A lot of our people will be laid off, but I don't have any numbers that I can give you," the spokeswoman said.

While the plant will go into idle mode, it will also go into "asset protection mode," Kovach said. That means some workers will be retained to protect and maintain the plants.

In addition to Sparrows Point, RG Steel has steelmaking plants in Warren, Ohio and Wheeling, WV. It also has finishing plants in Yorkville and Martins Ferry, Ohio, according to its website.

The Sparrows Point plant was idled under the ownership of Severstal and reactivated by RG Steel after it bought the company last year, Kovach said.

The plant started as Pennsylvania Steel in the 19th century. After operating  under the ownership of Bethlehem Steel Corp. for nearly a century, the Sparrows Point steel plant has since been owned by four additional companies in the past 10 years.

International Steel Group bought the plant when Bethlehem Steel declared bankruptcy in 2002. Mittal Steel, which became Arcelor/Mittal, bought the plant from ISG and then sold it to Severstal, which then sold to RG Steel.