Buffalo News (New York), December 10, 2008, Wednesday

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Buffalo News (New York)

December 10, 2008, Wednesday
CENTRAL EDITION

SECTION: NEWS; Pg. A1

HEADLINE: 260 jobs lost in plant closing; ArcelorMittal was last direct connection to Bethlehem Steel's former operations

BYLINE: By Matt Glynn - NEWS BUSINESS REPORTER

BODY:
The region's last direct connection to Bethlehem Steel's former operations is disappearing, with the impending closing of ArcelorMittal's plant in Lackawanna.

The shutdown will eliminate about 260 jobs, the company said Tuesday. The operation will be phased out by the end of next April.

The galvanized steel plant was part of Bethlehem Steel until 2003, when Bethlehem dissolved and the site became part of International Steel Group.

In 2005, ISG sold the operation to Mittal, which merged with Arcelor the following year. The Route 5 site has op-erated as a roll steel finishing operation since the early 1980s.

Steelworkers said Tuesday they were aware the plant was under pressure but were surprised the company had de-cided to close it.

Anthony Fortunato, president of Local 2604, United Steelworkers of America, which represents nearly 220 workers at the plant, said union leaders were told during recent contract talks to form a "viability team" with managers to find ways to make the site more competitive.

"It came as a big shock to me," Fortunato said of the closing announcement. "I thought we would have another two or three years at it."

William Pienta, the USW's district director, said ArcelorMittal's decision is symptomatic of the country's economic woes.

"This is a direct result of the financial crisis we're in," he said.

The Lackawanna plant's business depends heavily on the automotive industry, which is mired in a severe slump.

Pienta said USW members everywhere are feeling the impact of the auto slowdown. "They don't need our steel, they don't need our tires, they don't need our glass," he said.

ArcelorMittal called closing the Lackawanna site "purely an economic business decision." It said the plant was at a disadvantage because of its distance from its steel supply and from many of its customers and because of the nature of its manufacturing processes.

"All these disadvantages lead to higher costs, longer customer lead times and higher inventory levels than other ArcelorMittal facilities in the USA," the company said.

But Fortunato faulted the company for not investing in the facility and said it didn't give the viability team time to develop cost-saving plans. "I think they pretty much had us labeled for the last two or three years to shut us down," he said.

The company said Tuesday that it would make "every effort" to relocate unionized and salaried workers to other jobs within ArcelorMittal. James Hickey, a longtime employee, said that is not much of an offer at the moment.

"The only bad thing is, all the other plants are laying off [workers]," he said.

The company also pledged to help workers unwilling or unable to transfer to other plants in trying to find other jobs in the area.

Fortunato said workers who choose to take a severance package from the company, in exchange for cutting all ties and giving up the chance to take another job within the company, would receive $3,000 for each year of service, with a minimum payment of $25,000.

The Lackawanna plant now run by ArcelorMittal can draw a line back to its days as a Bethlehem operation. An adjacent bar mill, now known as Republic Engineered Products, also was a Bethlehem operation in the past, but it was closed by Bethlehem in the early 1990s before new ownership revived it.

The loss of the ArcelorMittal jobs will give the region an outsized economic punch because those jobs tended to pay more than the typical job, said George Palumbo, a Canisius College economist.

While the overall economic clout of the once-powerful local steel industry has dwindled as its employment has plunged from its peak of more than 20,000 in the 1950s to just a few hundred today, the jobs still pay better than the service jobs the region now is adding.

The typical primary metal manufacturing job, which includes those at ArcelorMittal and other companies, paid an average of $61,907 last year, roughly 60 percent more than the $38,667 of the region's average job.

Over the last eight years, slightly more than one of every four durable-goods manufacturing jobs in the region have vanished, according to state Labor Department figures.

"When you look at the decline in manufacturing, it's been rather stark," said John Slenker, the Labor Department's regional economist in Buffalo. "But the service area has been growing rapidly."

Lackawanna Mayor Norman L. Polanski Jr., a former Bethlehem employee, said the shutdown will be felt beyond his city. "Yes, it's Lackawanna, but these are people who live everywhere, not just Lackawanna."

Polanski lashed out at what he sees as a lack of economic-development support for the area from the state and federal level. "Everybody talks a great game, and there's nothing here," he said.

The Lackawanna plant and the Steelworkers in 2007 received the "Champions at Work" award from the Cornell School of Industrial and Labor Relations in Buffalo. The award highlights labor-management cooperation.

Art Wheaton, director of labor studies at the Buffalo school, said the local work force's performance wasn't the reason for the closing.

"I'm sure there's no way it would have lasted this long if they didn't have good labor-management relations," he said.

The company said it will evaluate the "most appropriate use of the facility's assets," which may include the clearing of land for new development, the reuse of existing assets or a combination of both.

News Business Reporter David Robinson contributed to this report.
e-mail: mglynn@buffnews.com

GRAPHIC: Sharon Cantillon/Buffalo News ArcelorMittal's galvanized steel operation in Lackawanna will be phased out by next April, the company announced Tuesday, and with it will go 260 jobs.

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