Flimsy Geneva Steel has begun scaling back its work force to give itself some muscle in the highly competitive steel industry.
The company laid off 40 union workers the past few weeks and intends to cut a total of 200 plantwide by the end of the summer."It is something that we are working on," said Carl E. Ramnitz, vice president for human resources. "We'll have more news in a week or two."
Ramnitz wouldn't reveal what's in the offing, but another big layoff or restructuring would be a safe bet. Geneva let go 100 administrative employees and 80 steelworkers in January.
Geneva's ability to release workers to reach a yet-to-be determined financially viable number diminishes after Sept. 1, according a three-year labor agreement the company reached with United Steelworkers of American Local No. 2701 last month.
An employment security provision in the contract prevents the company from laying off anyone with more than three years experience after that date, barring a collapse of the steel market, Ramnitz said. Geneva also must guarantee workers 40 hours per week.
"If the market really goes south, we can lay off and the agreement goes into suspension," he said.
The job cuts will reduce the number of union steelworkers to about 1,800, which will be only a plateau in management's ongoing effort to transform the mill into a lean, more productive operation.
Ramnitz said officials believe the plant can operate with even fewer employees, but haven't come up with a specific number. "We're going to work until we hit it," he said. There was talk during labor negotiations this spring of trimming the work force by as much as a third over the next few years.
Union leaders were unavailable for comment Friday. Officers, however, have acknowledged Geneva's need to reduce the work force. Union President Dennis Kujala earlier said the union could live with job cuts if they weren't made all at once.
Despite Geneva's financial troubles, the company's order book is full, indicating demand for its plate, sheet and pipe products.
"Basically, the industry is just roaring for both sheet and plate," said Michael Locker, president of Locker Associates, a New York City-based consulting firm that tracks the steel industry. "We're going to have a record year again."
The robust outlook, however, hasn't done much to help Geneva's bottom line, although the company reported a $3.4 million net income for the second fiscal quarter. It lost $.27 million in the first quarter.
Steel prices, not volume, is hurting Geneva, Locker said.
The company has fought "dumping" of low-priced foreign steel, especially from Asia, into the U.S. market the past few years. Filing anti-dumping petitions against those countries is Geneva's only protection, Ramnitz said.