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Scrapping the Sparrows Point Steel Mill


Deindustrialization’s end game is playing out for the Sparrows Point steel mill in Baltimore, and smaller plants in West Virginia, owned by RG Steel, a now-bankrupt concern backed by billionaire Ira Rennert.

Sparrows Point was once the largest steel mill in the world, employing on the order of 50,000 workers in the mid-twentieth century.  Its operator, Bethlehem Steel, started to decline in the face of foreign competition, and itself went bankrupt in the late 1990s.  A series of concerns took over the plant in the ensuing decade, with RG Steel being the last.  By this time, the plant was a shadow of its former self, employing no more than a few thousand people when it was operating.  At least most of these workers were members of the United Steelworkers (USW) union, with benefits and a contract.

When RG Steel filed for bankruptcy in late May, there was hope among those sympathetic to the union that a new operator would purchase and operate the plant after negotiating an agreement with the USW.  The bankruptcy proceedings have not played out this way, and a scrap dealer has purchased Sparrows Point for a fire-sale price.  It may be able to liquidate the plant, or flip it to a business which would operate it.  Either way, it is pretty much assured of a handsome profit. 

The union members who worked at Sparrows Point are out of jobs and the benefits that came with them, like health insurance; but lucrative “retention bonuses” of up to $20 million in total were approved by the bankruptcy judge in Delaware for several top executives of RG Steel.  It is expected that millions of dollars in fees for the law firm that represented the company in the bankruptcy will be approved by the same judge.

While the USW received attention for promoting a worker-ownership initiative earlier this year, it did not push the issue with regard to Sparrows Point.  Nor did workers or others make a strong call for worker-ownership, as happened in Youngstown, Ohio in the 1970s.  Although this call was unsuccessful in terms of saving the Youngstown Sheet and Tube plant, it laid the seeds for a vibrant worker-cooperative movement which has built businesses around Ohio, including the Evergreen Cooperatives in Cleveland. 

As a sign of things to come for Sparrows Point, the Baltimore County Executive has appointed a blue ribbon commission chock full of business executives, professionals, and business-friendly government officials to discuss the future of the area, which lies near the confluence of rail lines, the I-95 corridor stretching from Maine to Florida, and the Chesapeake Bay.  The commission lacks representation from labor or grassroots community organizations.
 
For further background, see the business/economy page of the Baltimore Brew, where Mark Reutter has provided good coverage of the RG Steel bankruptcy proceedings, with extensive comments by workers and others concerned with the unfolding saga.

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