An arbitrator has ruled that AK Steel Corp. may continue to suspend a provision in a labor contract with its largest hourly union that calls for a minimum base workforce. The company said the ruling will allow the company to further reduce the hourly workforce at its Middletown plant through attrition and layoffs.

AK Steel had already reduced the hourly workforce at its Middletown plant by 125, or 4%, since January when it suspended the base workforce guarantee. The independent AEIF union filed a grievance against the company in the matter, which eventually resulted in the binding arbitration decision just issued.

"While we regret reducing our workforce, it is an absolute necessity if we are to achieve competitive labor costs, maintain our retiree pension and healthcare promises and, importantly, reach a sustainable level of profitability," said James L. Wainscott, president and CEO. "In the last six months we have reached progressive new labor accords for three of our facilities, and we are hopeful of having meaningful discussions with the AEIF and other unions to achieve competitive employment costs at the balance of our facilities."

AK Steel said new labor agreements with unions representing its Mansfield and Coshocton plants in Ohio, and its Rockport plant in Indiana, have given the company the ability to establish smaller and more flexible workforces, among other cost-saving provisions. None of the new agreements contain provisions for a minimum base workforce.

In its quest to return to profitability, AK Steel has reduced its salaried workforce by more than 20% since October of 2003 (through an involuntary force reduction), reduced the number of executives at the company, reduced salaried employee health benefits, sold non-core assets and reduced operating, maintenance and administrative costs.

Headquartered in Middletown, AK Steel produces flat-rolled carbon, stainless and electrical steel products, as well as tubular steel products, for automotive, appliance, construction and manufacturing markets.