Bethlehem Steel Corp. Chairman Donald H. Trautlein said today his company may not be able to raise the $400 million needed to modernize its plant at Sparrows Point, Md., if the union rejects work-rule changes proposed by the company.
"The truth of the matter is that the economics of Sparrows Point would not justify that investment. That's what we've had to tell the union," Trautlein said, referring to his company's three-month old talks with United Steelworkers negotiators at the Maryland plant.
"An investor doesn't have to put his money into Sparrows Point. He's going to put it wherever he's going to get paid. So, if we don't do this stuff at Sparrows Point, we just may not be able to borrow the money," Trautlein said.
The proposed rule changes, some of which could reduce employment at the plant, "are a matter of necessity," Trautlein said. "If you clearly need only five people to do a job, and you got six people, you've got to change that," he said.
However, Trautlein said he had told the union and Maryland officials that Bethlehem has no plans for layoffs at Sparrows Point as a result of work-rule changes. "We said that there would be no direct job losses, that all canceled jobs would be made through attrition," he said.
Both management and labor at Sparrows Point know that changes are needed to keep the plant viable, Trautlein said. But he said negotiations to bring about those changes often have been complicated by publicity. As a result, Trautlein said, he and other Bethlehem officials in the future will have little to say about those talks.
"It really doesn't serve anybody's interests to negotiate through the media. If you really want to make things more difficult, just keep playing them up in the press," he said.
Bethlehem--the nation's second largest steelmaker, behind United States Steel Corp.--announced in 1981 that it would invest $750 million in six modernization projects, three of them at Sparrows Point. But last year, Bethlehem lost about $1.5 billion of the $3.5 billion in total losses for the domestic steel industry.
Trautlein said his company still wants to continue its modernization program, which was to have been completed by 1986. But he said that last year's disastrous performance, coupled with difficulty in raising the necessary capital, has pushed back the completion plan by at least six months. At the same time, the $750 million price tag is now in the neighborhood of at least $800 million, Bethlehem officials said.
Bethlehem wants to install a continuous casting steelmaking machine, and to upgrade its hot strip operation and plate mill at Sparrows Point. Of the three projects, the continuous casting machine, pegged at a cost of about $250 million, is the most important.
Continuous casting eliminates several expensive steps involved in turning molten steel into steel slabs. With continuous casting, steelmakers generally are able to use 95 percent of their molten steel for slab making, compared with 75 percent with the more conventional steelmaking processes.
"It isn't a matter of should we have a continuous casting machine. The point is that without continuous casters, neither Bethlehem nor other steelmakers would be able to stay in business," Trautlein said.
Other facilities to be upgraded by Bethlehem Steel are at Bethlehem and Steelton, Pa., and Burns Harbor, Ind.