Allenport steel plant sale off

Joe Napsha
| Wednesday, Aug. 5, 2009

A deal that would have given jobs to about 90 laid-off workers at a closed steel mill in Allenport in Washington County fell through Tuesday, leaving the prospective buyer of the mill and a union in disagreement over what killed the sale.

"We're walking away from the deal," said William "Russ" Kingston of Chino Hills, Calif., who was unable to reach a labor contract with the United Steelworkers, whose Local 1187 represented workers at the plant.

Reaching a contract with the USW was a requirement to purchase the plant from Severstal North America Inc. of Dearborn, Mich., Kingston said. Severstal had expected to close on the sale this month.

Kingston said he could not resolve differences with the USW over his plan to hire the workers he wanted from the union's roster and the union's demand that hiring be done by seniority. The initial round of hiring would have included about 20 workers, each of whom had about 40 years of seniority, Kingston said.

"It's due to a difference in a fundamental philosophy. Neither one of us is going to budge on that," Kingston said.

"This is a new company. I want to hire the people I want to hire ... for the radical change that we need to make at that plant, in terms of work, new equipment and the change in the product mix instead of the old line steel sheet mill," Kingston said.

But "it's much, much deeper than that," USW spokesman Tony Montana said.

Kingston "has chosen to blame the USW for his own lack of a sound business plan, ignorance of our collective bargaining agreement with Severstal and severely limited cash flow as it pertains to any potential purchase of Allenport," said USW District Director David McCall, who chairs union negotiations with Severstal, in a statement.

"We remain hopeful that a qualified, fiscally responsible employer will emerge with the business sense to put our members back to work," McCall said.

Kingston disputed the union's assessment, saying he had sufficient financing and the USW would have seen it had an agreement had been reached.

Severstal spokeswoman Elizabeth Kovach in Dearborn, Mich., said the company had no comment. A Severstal representative served as an intermediary in the negotiations, Kingston said.

Kingston's North American Trading Co. proposed reopening Allenport's cold rolled steel sheet finishing mill this fall, then introducing a new process to produce carbon steel clad with a thin coat of stainless steel. Kingston said he has a patent pending on special coating process that would make the steel cheaper than competitors.

Instead of reopening the Allenport plant, with plans for about $400 million in upgrades and a work force of about 250 in about three years, Kingston said he will look to locate an operation in Asia. He declined to be specific, but he said he hopes to start work this fall.

The Allenport plant has not operated since May 2008. About 235 workers were laid off when former owner Esmark Inc. shut down the mill because of high production costs. It was closed when Severstal bought Esmark last June.

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