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Kentucky Electric Steel union ratifies deal

Keywords: Tags  Kentucky Electric, labor contract, United Steelworkers union, John Scheel, ALJ Regional Holdings, Optima Specialty Steel, Michael Cowden, Corinna Petry

CHICAGO — Members of United Steelworkers union Local 7054 have ratified a new labor contract with Kentucky Electric Steel LLC (KES) in Ashland, Ky.

The seven-year-plus agreement, which covers 117 hourly workers at the mini-mill, replaces a contract that was set to expire May 3, 2013. The deal includes pay increases, the company said.

"It is very popular these days to use labor unions as scapegoats for deficiencies in U.S. manufacturing. Witness the many ‘right-to-work’ efforts underway. It has also become popular for the parties on opposite sides of issues to take extreme and unyielding positions and then to doggedly hold to them, thereby fostering gridlock. All of this is wrong and counter-productive," plant manager John Scheel said in a statement.

Instead, the company and the union recognized "that we must work together to continue to support a business that is focused on customer service," he said. "At the same time, we realize that superior customer care and manufacturing productivity are the drivers that allow sustainability and growth of employment security, wages and benefits."

Scheel termed the length of the agreement "unprecedented," noting that it will give the steelmaker’s customers a very long period "of stable supply, as well as security and support for our employees."

News of the labor deal comes less than a week after parent company ALJ Regional Holdings Inc. said shareholders had approved the steelmaker’s proposed sale to Optima Specialty Steel Inc. for $112.5 million, although the fate of the deal still depends on other closing conditions, including Miami-based Optima’s ability to secure financing for the transaction. The company said it could not estimate when Optima would secure financing.

If Optima does not obtain financing by Feb. 28, it must pay ALJ a termination fee of nearly $3.38 million (, Dec. 17).

Optima has said it plans to modify Kentucky Electric Steel’s special bar quality (SBQ) and merchant bar quality flats mill to make SBQ rounds, the feedstock for seamless tubular products manufactured by Michigan Seamless Tube LLC and the cold-finished bar products made by Niagara LaSalle Corp. (, Nov. 26), the two companies that were brought together to form Optima (, Dec. 13, 2011).

Michael Cowden, Chicago, contributed to this story.

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