Sparrows Point

For two decades the hallmark of the steel

industry has been change. Throughout this period the Sparrows Point Division has seen vast improvements in facilities and systems. But within the last few years the most astounding changes have been taking place in non-machinery areas.

These changes are being brought about by our employees - our foremost asset. Sparrows Point's employees are the heirs of priceless operating skills passed down for over a century. Added to this is their own computer age knowledge in process and information systems.

As strange as it might seem, however, the millions of dollars invested in

equipment did not seem to improve our employee safety statistics. That was before employee safety teams were formed which now cover every area within the division. These 22 enthusiastic teams involve about 300 people.

I am very pleased to report that, in 1995, Sparrows Point had its best safety year ever, and the credit for this achievement goes to the safety teams and every employee. There was a 34 percent reduction in the number of injuries

compared to 1994 as the all-injury incidence rate plummeted to 15.97 in 1995 from 21.10 in 1994. Our employees were thinking about safety. Injuries decreased in every month of 1995 compared to the equivalent months of 1994.

Safety has been our Number One Priority for the last two years and it remains so in 1996. This pursuit of a safer workplace has been time consuming, but it benefits everyone. In all, there has been a 50 percent reduction in injuries in the last five years. That's progress!

Sparrows Point also reached its goals in environmental control, which takes diligence on the part of all employees in their concern for regulations and our surroundings, and in studying, problem solving, reporting and quick action.

Employees are also improving communications, workplace atmosphere,

productivity, operations and, hence, competitiveness, through a nationally-

recognized "Partnership" between union and management. The USWA and many steel companies, including Bethlehem, agreed in 1993 to begin this employee involvement concept.

Since that time, Sparrows Point's area committees and numerous ad hoc problem-solving teams have moved to the forefront of the steel industry in bringing the benefits of the "Partnership" to fruition. The people doing this pioneering work are helping to lead us into the next century as a competitive, thriving steel manufacturer. A new initiative for the "Partnership" in 1995 saw the start of an important cost reduction program - The Sparrows Point Challenge.

We also have a partnership with our communities and a commitment to be a good citizen. Employees and retirees on our United Way committee worked hard to achieve a 25 percent increase over the contributions of the previous year. With the local contribution of $607,000, combined with the corporate gift from the Bethlehem Steel Foundation, donations to the United Way totaled $845,000. The union's 1995 Harvest for the Hungry campaign resulted in a record $29,000 contribution and truckloads of food.

Running through all operations in 1995 was something new to large businesses in the United States and to the steel industry. It is an operating philosophy that we call Throughput-Based Manufacturing (TBM). It focuses on "dollars" moving through the system rather than production or tons. We want to make sure that the products going through the system are the ones in demand. They represent dollars and profit to the division.

TBM has required exceptional coordination between marketing, production scheduling and operations. Several hundred employees were trained in this new philosophy in 1995. The benefits will be improved service for customers and greater profit for the Division. Using TBM, our employees have already cut cycle time for tin and coated products by at least one week.

To back up TBM, Sparrows Point in August became one of the first

integrated steel producers to use a new computer software system called "Rhythm" which identifies all of our operating units involved in an order and schedules capacity on the basis of time, not tons. Comprehensive yet flexible, this system will help the division reach unparalleled on-time deliveries.

These significant strides for Sparrows Point in 1995 were an important part of our every day jobs and our main business - making steel - and employees did a good job of that, too. The Division achieved its best operating profit since 1988. Total shipments were down slightly in 1995, at 3.2 million tons, compared to 3.3. million tons in 1994. Trade shipments, however, increased by 4 percent in 1995 over 1994, and revenue from those shipments increased by more than 7 percent. The increase in trade shipments included the export of some 400,000 tons of steel ranging across various product lines. The shipment of less semi-finished and secondary steel in 1995 allowed our product mix to move toward higher value products - one of our objectives.

Employee performance excelled at the production units. "L" blast furnace broke its own annual production record with 3,369,777 tons of molten iron for the year, and set a North American monthly record of 305,904 tons in May.

When it came on stream 10 years ago this past December, the twin-strand continuous slab caster had an annual rated capacity of 2.9 million tons. With 3,569,888 slab tons in 1995, the caster had it's best year.

Contributing to these production improvements was the basic oxygen furnace (BOF) shop's record percentage of heats that were okay to tap and long-life vessel linings. The refractory lining on one BOF vessel set a corporate record by lasting for one year and producing 6,530 heats.

The plate mill had its best year since 1988, producing 500,000 tons of prime plate. Early in 1995, the Division entered a service agreement with High Steel Structures, Inc. to supply 100 percent of this customer's plate needs on time. Before the end of the year, the mill was 100 percent with its delivery promises. This is one of our best examples of reliability and partnering with a customer. Also operating with 100 percent reliability is the new plate mill depot which opened in January 1995. Customers increased their purchases through the year and the depot moved from a 1,000 to 5,000-ton per month sales level.

The finishing mills saw improvements in 1995 with the hot strip mill having the best year since its 1991 modernization. The mill increased production to nearly 3-million tons annually and reduced rejects to a record low. The new Number 4 coating line, with a design capacity of 260,000 tons annually,

produced a record 313,000 tons in 1995. With record-setting performances from the cold mill picklers and tandem mills, the Division shipped the greatest amount of coated product in its history while experiencing its lowest rejection rate.

An area of intense focus in 1995 was the tin mill, where the Division produces a high-value-added product for the container industry. The tin mill had record yield, quality levels, claim performance, and on-time deliveries. In recognition of this, the Food Metal and Specialty business of the Silgan Corporation certified the Division as a supplier for the second consecutive year.

Our employees can be proud of their progress in 1995. They made gains with safety, revenue, production, shipments, the "Partnership," TBM and, last, but not certainly not least, our customers. In all of our product lines, some of the world's largest manufacturers and fabricators in their field think that Sparrows Point is the best in the business.

Other metal suppliers "haven't even come close" to Sparrows Point, said the top purchasing agent for the nation's largest container company. The best-known and biggest steel fabricator on the east coast uses Bethlehem plate exclusively. Our employees and products are gaining a reputation for reliability and for the ability to provide customers with the total solution. Sparrows Point is changing for the better. That's progress!