Baltimore Sun reported that all is not well at RG Steel's Sparrows Point plant as it is still scrambling to regain customers that vanished after it was all but mothballed last year.
Analysts said that it's probably losing millions of dollars a month and it seems to have severe cash problems and suppliers said that they can't get paid.
To save money, employees and vendors say, management is shutting down the plant's main machine shop, the metalworking heart of the maintenance operation that keeps the mill in business. The work is being outsourced contrary to the union contract. And the shop's expensive lathes, grinders and boring mills are getting sold off.
Mr Robert Henry, a machinist who's dismayed that he and more than 30 co workers in the shop are being reassigned, said that "I've never, never seen anything like this, what they're doing here. Just right in front of your face, taking your work away from you."
Vendors aren't any happier. RG Steel owes Sherwin Williams USD 24,000 for paint and supplies, according to a lawsuit filed in Baltimore County District Court.
RG Steel is also overdue on bills from Kinder Morgan, a critical supplier of iron ore and coke, the raw materials of steel. Kinder Morgan spokesman Mr Joe Hollier wouldn't say how much, adding that "They are making payments, and they are getting ready to be current."
A Tech owner Mr Ron Forster said that the mill not only owes USD 48,000 to maintenance contractor A Tech Hydraulics. It also evicted A Tech as a Sparrows Point tenant after ending a deal in which Forster's company agreed to be paid for plant maintenance via rent subsidies rather than cash. He added that "They said, you need to pay us all the back rent. I said, you need to pay me what you owe. The arrogance of these people is alarming."
Economic development officials hoped that billionaire Rennert, who built a house on Long Island with more square footage than many supermarkets, would invest in the Point. Instead he's doing the opposite, selling off capital equipment.
Mr Charles Bradford industry analyst said that steel plants elsewhere have outsourced machining work as they try to cut costs. At Sparrows Point, management has contemplated idling the machine shop for years. Mittal Steel moved to downsize the shop when it owned the plant in 2006, but it was blocked by the union.
Several factors hurt Sparrows Point. Until construction picks up, it will face limited demand for one of its most important products. There is far too much global steel manufacturing capacity. Without its own iron mines, RG Steel has to bear high costs on the wholesale market. To woo back customers, it must slash prices.
(Sourced from www.baltsun.com)
