By Mike Boyer
The Cincinnati Enquirer

MIDDLETOWN - AK Steel, struggling to restore profitability, has notified the union representing 3,100 hourly employees that it is suspending a contract provision guaranteeing a minimum number of workers at the Middletown Works.

The Armco Employees Independent Federation said the company hasn't indicated that it plans layoffs, but the effect of suspending the minimum staffing guarantee, part of contracts since 1995, allows employment at the mill to shrink through attrition.

Alan McCoy, AK's vice president of public affairs, Wednesday confirmed that the company was suspending the so-called employee security plan.

"Simply put, we're doing everything we can to reduce costs and restore the company to a sustained profitability,'' he said.

Ed Shelley, federation president, said the company notified the union Tuesday that it was suspending the provision in the union contract, which runs through Feb. 28, 2006.

The contract allows the company to suspend the minimum staffing level under certain conditions, Shelley said. He said the union was considering its response and could file a grievance, which could eventually put the move before an arbitrator.

"We have a contract and want to see it enforced,'' Shelley said. "And we also want to understand the situation.''

The provision sets a minimum staffing level in the mill of 3,114 union members. In December, the staffing fell about seven jobs below that number; projections are it could fall as much as 60 below that figure this month with retirements and other departures.

AK, which will report year-end results Jan. 30, announced in October that it was cutting 475 salaried jobs, including more than 200 in Middletown. It's part of a cost-cutting effort to reverse almost $1 billion in losses over the last three years.

James Wainscott, AK's CEO, indicated in October that the company would seek similar concessions from the 7,000 hourly workers at its seven steel plants.

The company and the AEIF have had confidential discussions off and on over the last year, but the union hasn't agreed to reopen the contract or make concessions. Without providing specifics, Shelley said the company has proposed cost-cutting moves several times.

Shelley said the union is forming a team to assess the company's financial situation before making a decision on the contract.

Wainscott, who succeeded Richard Wardrop in a September management shake-up, has said AK faces a significant cost disadvantage to some of its competitors in the wake of industry consolidation.

He has also indicated that the company doesn't want to end its steel-making operations in Ashland, Ky., and Middletown, and doesn't want to seek bankruptcy reorganization.

E-mail mboyer@enquirer.com