RG Steel to cut salaries in cost reduction initiative
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Late Tuesday, Sparrows Point, Maryland-based flat-rolled steel producer RG Steel announced that it intends to accelerate its strategic cost reduction program in order to reduce operating expenses and cost of goods sold. Local news reports indicated that the cost reduction plans include cutting pay and benefits for all management and salaried employees; union members will not be affected by the cuts.
John Goodwin, President and CEO, commented: "Since our formation one year ago we have made tremendous progress toward improving our cost structure, especially at our Sparrows Point facility. However, given the uncertain economic outlook we have decided to accelerate our efforts to strengthen our long-term competitive position aimed at further reducing our costs."
He added, "While there have been occasional signs of industry conditions improving, the fact is the economy and the steel industry has been unable to sustain a meaningful recovery. These cost reduction efforts while difficult are needed to ensure that our cost structure is appropriate for today's business conditions and that our operations are competitive."
Back in March, RG Steel confirmed it would idle its tin mill line at Sparrows Point as a result of unfavorable market conditions. A few months earlier, RG issued temporary layoff notices at the mill until it received a cash infusion in January from Cerberus Capital Management, L.P. and RG's parent company, The Renco Group, Inc.