Gerdau Ameristeel confirms lockout at Beaumont plant
In a letter sent Thursday, May 26, to customers, Gerdau Ameristeel management confirmed that the company would cease operations at its plant in Beaumont, Texas, for the time being because labor negotiations had come to a standstill. The letter informs customers that on May 9, 2005, Gerdau Ameristeel presented the companys preferred Last, Best and Final proposals to United Steelworkers of America. The letter goes on to explain that because Gerdau Ameristeel negotiated in good-faith with the union, the company would exercise its right under the National Labor Relations Act (NLRA) to lockout the represented employees in an effort to end the uncertainty of protracted negotiations. Gerdau Ameristeel management concludes its letter by emphasizing that they are eager to get the mill reopened as soon as possible, but that they regret the inconvenience that the shut down may cause to its customers. Since demand for wire rod in the US is currently weak, the timing of the closure probably could not be better for Gerdau Ameristeel. The market is unlikely to notice the production drop-off, and the threat of a shortage situation is miniscule. Furthermore, if the lockout continues for several weeks then it may even help stabilize the nose-diving wire rod prices in the Gulf.