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August 13, 2010

Nucor would have been a good owner for Sparrows

Andrea Walker reports that Sparrows Point, the big steel mill in Baltimore County, may change hands again. The trades are reporting and the Steelworkers are confirming that present owner Severstal send out bid packets for its U.S. assets. Last month Nucor CEO Dan Dimicco was asked by an analyst about buying the plant.

Q. Okay. Have you looked at the potential alternative instead of building -- that of buying Sparrows Point, which has one of the largest furnace on a deepwater port and also would take out 3.5 tons of capacity in the industry as well?

Dimicco: Certainly making a very good point, Michael, about the Sparrows Point facility in terms of it being on the deepwater port, pointed out a couple of the positives. There are a host of negatives as well and while we have looked at that, I will tell you over the years we have looked at that, but as you know, it's presented itself on numerous occasions, we don't believe that would be the best way to go. If we are to move forward as we plan on with an iron project in Louisiana.

Sparrows' integrated steelmaking (they smelt the iron from ore) and port would have blended well with Nucor's operations, which are dominated by minimills that melt scrap. For Nucor, one of the "negatives" cited by Dimicco is the presence of the United Steelworkers. None of Nucor's plants is unionized.

Posted by Jay Hancock at 8:55 AM | | Comments (1)
Categories: Manufacturing


The union is the reason Nucor would not be a bidder. My guess this is going to be the issue regardless. It might be better to shut it down and just sell the land and assets after the fact.
Nucor's business model is more a mini-mill than what Sparrows Point is.

Also Nucor has a culture that would never mesh with union rules. They all have shares in the company and the employees all feel like they have a vested interest.

Is a good example. In a union company, this would be a matter of, my work rules won't let me go out of my way to get another plant up and running.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.

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