By Mike Boyer
The Cincinnati Enquirer

Middletown's AK Steel is making headway in returning to profitability, but it needs help from its unions, the company's president and CEO said Tuesday.

"Now's the time to act," said James L. Wainscott in a quarterly conference call with analysts to discuss first-quarter results.

AK Steel, which has lost more than $1 billion over the last three years, reported net income of $165.4 million, or $1.52 a share, after a gain of $174.9 million, or $1.61 a share, on the sale of its Douglas Dynamics unit. In the year ago period, the company reported a net loss of $40.8 million, or 38 cents a share.

On an operating basis, the company managed its first profit since the third quarter of 2002. In the three months ended March 31, AK said it had a operating profit of $1.5 million, or $1 a ton. That's a sharp improvement from the operating loss of $124 million, or $82 a ton, in the third quarter last year.

Since replacing Richard Wardrop last October, Wainscott has maintained the company's pension and retiree health care costs are about $30 a ton higher than its industry rivals. While vowing not to seek bankruptcy reorganization like some steel companies to get out from under that burden, the company has been talking privately with unions at its seven plants about new labor agreements to offset those higher costs.

"We need to be competitive and while we're improving, we're not there yet," he said. "We need the help of our unions."

Wainscott said the three-year agreement reached this month with 460 members of the United Auto Workers at its Coshocton, Ohio, plant, is the kind of deal the company is seeking with the others.

If the company could achieve similar deals at its other plants, it would save about $200 million a year, he said.

The agreement in Coshocton trims head-count, cut the number of job classifications from 130 to seven, and implements a defined-contribution pension plan and cost-sharing for health insurance.

He said he was hopeful the company would reach a similar agreement with UAW at its Rockport, Ind., mill this quarter and possibly with unions at its Middletown; Butler, Pa., and Zanesville, Ohio, plants.

Wainscott said he believes the company can achieve the $200 million cost savings through normal worker attrition and "without changing our existing compensation structure."

The company said it expects to save $38 million annually through the elimination of 475 salaried positions, including about 200 at its Middletown headquarters since late last year.

"We have a window of opportunity to fix our employee-cost gap," Wainscott said.

Ed Shelley, president of the Armco Employees Independent Federation, which represents hourly employees at Middletown, couldn't be reached for comment Tuesday.

The maker of carbon, stainless and electric steels reported a first-quarter loss from continuing operations of $16.4 million, or 15 cents a share, about 28 cents a share better than analyst expectations. AK's shares closed down 46 cents Tuesday at $5.80.

The company said higher shipments and higher prices resulted in total revenues of $1.13 billion in the three months ended March 31 compared with $985.3 million a year ago. Shipments totaled 1.51 million tons, up from 1.37 million tons a year ago.

E-mail mboyer@enquirer.com