Friday, July 30, 2004

AK Steel to lay off 15 more workers

'Slap in the face,' union leader says

By Mike Boyer
Enquirer staff writer

AK Steel, which posted its largest operating profit in two years last week, is laying off another 15 hourly workers at the Middletown mill next week, its second involuntary cut in as many weeks.

The new cuts, reflected in work schedules posted Thursday, are in addition to 15 workers laid off this week and reflect the steel maker's effort to sustain its recent return to profitability, a spokesman said.

"We've made significant progress, but we've not reached the level of sustained profitability,'' said company spokesman Alan McCoy.

The job cuts don't sit well with the independent union representing Middletown workers.

"I don't see the need,'' said Ed Shelley, president of the Armco Employees Independent Federation.

He said the company maintained its hourly work force through losses exceeding $1 billion over the last three years and now that it has achieved profitability, it's laying off workers.

"Where's the loyalty to the workers who helped you through the tough times?'' Shelley said. "This is a slap in the face.''

Middletown's hourly work force has declined by about 190 jobs to approximately 2,920, down about 6 percent since the company suspended a minimum work force provision in its contract with the union last January.

Until the recent layoffs, the reductions have been handled through retirements and attrition.

The job cuts affect employees with less than two years service, who aren't covered by the work force guarantee, according to an arbitrator's ruling in May.

The union says the arbitrator's ruling is temporary and will require the company to rehire the workers starting next May.

Last week in reporting a second-quarter profit of $92.7 million, or 95 cents a share, including operating earnings of $56.4 million, CEO James Wainscott expressed frustration that several unions haven't responded to the company's request for greater labor contract flexibility.

Shelley said Thursday, "We'll respond when we're ready.''

Wainscott, who was named CEO last September in a management shake-up, says AK Steel faces a $30-a-ton cost disadvantage with its largest competitors who have reorganized through bankruptcy or negotiated more flexible agreements with their unions.

He says the company wants to maintain its pension and health-care commitments to its 30,000 retirees and doesn't want to reorganize through bankruptcy.

"We're seeking 20 percent head-count reductions, and most of that can come through attrition,'' Wainscott told investors.

Besides the Middletown union, AK Steel hasn't gotten a response from the United Auto Workers local that represents about 1,500 employees at its Butler, Pa.. mill.

The company has reached new labor agreements with workers at its Rockport, Ind.; Coshocton, Ohio; and Mansfield, Ohio, plants and is opening talks with the union at its Zanesville, Ohio, plant.

McCoy said he wasn't aware of layoffs at any of the company's other plants but couldn't rule them out in the future.

He said the company, which has benefited from the strongest steel market in recent memory, has done all it can to cut its costs short of reducing its hourly wage expenses.

The company last fall cut its salaried work force by 20 percent and trimmed maintenance and operating expenses as well.

Shares in AK closed Thursday at $6.52, up 16 cents.


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