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Judge Won’t Consider Steelworkers’ Bid For Their Troubled Plant

December 14, 1985

WASHINGTON (AP) _ A federal judge, turning aside a unique bid by steelworkers to buy their troubled plant, approved instead the offer of an Ohio group for ownership of Gulf States Steel Corp. of Gadsden, Ala.

U.S. District Judge John Pratt on Friday accepted the offer of The Brenlin Group of Akron to take over the plant, a subsidiary of LTV Corp. of Dallas.

″We’re going to approve the recommendation of the (court) trustee that the sale to The Brenlin Group go through,″ Pratt said. He said testimony about possible labor unrest resulting from the group’s bid did not provide a basis for rejecting the proposal.

The workers expect to appeal the decision, according to their attorney, Richard Wertheimer. Pratt denied Wertheimer’s request for a stay of the decision pending the appeal.

During the five-hour hearing, Pratt refused to consider a plan for employee stock ownership of the plant, saying the plan ″is not an issue in this case.″

The plant’s workers voted overwhelmingly last month in favor of the employee purchase proposal and a five-year contract. Attorneys for LTV and the employees testified that the workers’ plan was in the best interest of the plant and the community.

Officials expect the plant to lose $33 million this year.

The Justice Department endorsed the Brenlin offer in November, saying there was a ″reasonable likelihood″ the proposal would result in a strong Gadsden plant that would be able to compete with rival steelmakers.

Divestiture of the plant was required by the Justice Department as a condition for approving the 1984 merger of Republic Steel Corp. and LTV. Republic owned the plant at the time of the merger. Following the merger, LTV established the plant as a subsidiary named Gulf States Steel.

Eugene Keilin, the workers’ financial adviser, said the employees’ plan was viable.

″We think he (Pratt) is overlooking what we considered to be significant evidence,″ Keilin said.

James W. Smith, assistant to United Steelworkers President Lynn Williams, said The Brenlin Group’s proposal contained uncertainties about how many workers would remain employed and whether their wages and benefits would be uniform with other integrated mills.

″Our members will expect to achieve the same benefits and wages that are paid 60 miles down the road at U.S. Steel,″ he said.

Walter Weeks, president of the plant, said he was told that under The Brenlin Group plan, the plant would be shut down during a transitional period and the workers dismissed.

Brenlin attorney Betty Southard Murphy told Pratt that all the jobs available would be offered to the present work force. The plant employs 1,850, Smith said.

The Brenlin Group has said it would employ about 1,500 workers.

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