The Herald, Sharon, Pa.

Local News

June 10, 2009

Union VP rips Duferco over ‘Buy American’

Company angling for exemption, USW says

By Michael Roknick

A top officer of the International United Steelworkers on Tuesday accused Duferco Farrell Corp. of using “despicable’’ and “blackmail’’ tactics to escape the Buy American provision of the federal stimulus package.

In a letter to the editor appearing in Tuesday’s American Metal Market, a trade publication, International USW Vice President Tom Conway said Duferco has been complaining the Buy American provision is placing a tremendous burden on the company and will force the layoffs of its 600 USW workers.

“This unnecessary and unwarranted threat is despicable,’’ Conway wrote.

Duferco’s Farrell plant buys slabs overseas — mainly in Russia — and then rolls them into steel coils. The company has said it does that because the slabs it needs are generally not available in the U.S.

The Buy American provision of the $787 billion stimulus package specifically calls for steel used in public works projects to be poured in the U.S. For months Duferco has been trying to secure an exemption — so far without success.

For most of the year the company has had rolling layoffs at the Farrell plant due to a severe decline in orders. Production and maintenance workers at Duferco are represented by USW Local 1016.

In a phone interview from his Pittsburgh office, Conway said Duferco is using the threat of employee layoffs as a way to squeeze the government into giving them an exemption.

“I really think this is a form of blackmail,’’ Conway said.

Messages left at Duferco were not immediately returned on Tuesday.

Conway noted the plant is a joint venture between Duferco Farrell and OJSC Novolipetsk Iron & Steel Works, better known as NLMK of Russia. NLMK, Conway said, owns an electric furnace shop at the Port of Indiana operating as Beta Steel Corp. and melts steel into slabs which Duferco can use to meet the Buy American requirements.

However, Conway said Duferco contends that’s not the best solution as it prefers 10-inch slabs rather than the 8-inch slabs produced by Beta Steel. Another American steel producer, which he declined to identify, also is willing to sell Duferco 10-inch slabs, he added.

“I’ve talked to American steelmakers willing to sell them (Duferco) steel at market prices,’’ Conway said. “I know what prices these companies are offering Duferco because the companies have told me what they are. The prices are probably below the cost of production because people just want to generate volume right now.’’

He acknowledged a 10-inch slab is more efficient for Duferco.

“But that doesn’t fit their model of rolling which is based on cheap Russian slabs,’’ Conway said.

American steel producers are in bad shape now with less than a third of all U.S. blast furnaces currently in production, he said. Duferco’s latest complaint that shipping expenses for steel from Indiana, Maryland and Alabama are so costly that it’s better for them financially to import slabs from Russia “doesn’t pass the smell test,’’ Conway said.

“To blame all of this on the Buy American provision is just a terrible thing to do to the (Duferco) workforce and the people in the community,’’ Conway said.

Separately, Conway said Wheatland Tube Co. has agreed to buy steel from Duferco for certain products. The pipe and tubemaker said in May it couldn’t buy steel from Duferco because of the Buy American provision. Wheatland was one of Duferco’s best customers.

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