WEST CHESTER TWP. — AK Steel Corp. officials are evaluating how a recent arbitration ruling on its Ashland Works facility in Kentucky will affect its operations and costs in 2009.

During a Tuesday, July 21, conference call discussing its second quarter earnings, president, chairman and CEO Jim Wainscott said the company “strongly disagrees” with an arbitrator’s interpretation of language in its workers contract with United Steelworkers at the Ashland plant that the company must keep that plant running so long as there is a demand for the product it makes.

An independent arbitrator ordered AK to abandon plans to shut down its Ashland plant, saying it would violate a contract provision with the USW. The company announced in May it likely would idle Ashland Works beginning late in July or early August and continue that shutdown possibly through the remainder of 2009. The decision to idle was attributed to announcements by General Motors and Chrysler that they would idle several plants this summer.

Wainscott said the company has some of the “best labor agreements in the steel business,” which include flexibility to run those plants when it is economical to do so. Ramping up production at Middletown Works instead of Ashland was “purely economics” since the local plant has a more efficient furnace and has the capability to roll the full range of slabs AK produces without shipping them to another facility, as is required at the Kentucky plant.

“We’d love to run everything at full capacity both at Middletown, Ashland and Mansfield, but obviously in this environment it can’t be done,” Wainscott said. “We didn’t create the economic situation that we are in but we have to react to it.”

The company intended to run Ashland throughout most of August due to a higher order intake as well as its Middletown plant, which Wainscott said has been running at top level since it was restarted in early July.

“Hopefully, the market will solve this for us. If not, we will evaluate our other options,” Wainscott said.

For the third quarter, AK officials said they expect a break-even in operating profit, which would represent an improvement of about $70 million over second-quarter results. Shipments also are expected to increase 27 percent to about 940,000 tons.

Contact this reporter at (513) 705-2843 or jheffner@coxohio.com.