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Over 600 workers laid off at EVRAZ Pueblo Steel Mill following contract fallout

Posted at 1:43 PM, Jan 04, 2023
and last updated 2023-01-05 11:25:25-05

PUEBLO — Pueblo contractor Wanzek terminated 666 contract employees working on the new EVRAZ solar-powered rail mill on January 3, 2023.

A letter from the Colorado Department of Labor and Employment to Pueblo Mayor Nick Gradisar and the Board of County Commissioners details the termination of the contract between Waznek and Palmer NA, LLC in Pueblo.

Mayor Gradisar said he has been in discussion with EVRAZ and around 150 of the 666 contract workers laid off are based in Pueblo. While the employees were not unionized, they were informed they would be terminated once the contract was complete.

However, that promise came quicker than expected, as the termination has come immediately.

The termination comes amid a lawsuit brought against the contractor Waznek by Palmer NA, LLC, allegedly citing multiple instances of negligence and breaches of contract by Wanzek.

The lawsuit details the alleged lack of oversight and commitment to contract promises by Wanzek. The first is the lack of hiring of "competent personnel and workers," which has been the direct cause of unnecessary delays and substantial extra costs to the project.

The lawsuit also details incidents of workplace accidents that, while not fatal, could have led to extremely dangerous situations, including death.

The lawsuit states, "Wanzek further failed to comply with safety programs and protocols in accordance with the contract, causing multiple serious on-site incidents that required additional costs and substantially delayed the Project. As just one example of many instances, in October 2021, Wanzek’s crews uncovered an active waterline, forcing the Project to be shut down for a week."

As a result of that incident in October 2021, Waznek was supposed to establish excavation directives to avoid a similar incident. According to the plaintiff, this was not followed, as an alleged incident two months later resulted in Wanzek's subcontractor striking a 24-inch mill cooling waterline.

The strike of that water cooling line resulted in an immediate shutdown of both the coil and steel mills, leading to a 24-hour loss of production for both mills. Palmer NA, LLC argues that this negligence led to an unacceptable risk for furnace operators at the mill endangering workers' lives.

While the extent of damages will be decided later in court, Palmer NA, LLC estimates damages exceed $130 million.

Wanzek has alsofiled a counter-lawsuit. In the suit, they deny many of the allegations of negligence and endangerment of employees surrounding accidents stated in the original suit. The lawsuit does accept partial blame for instances of staffing issues with key project managers.

“Although it is unfortunate Evraz needed to make a change in general contractors on their construction project, I have full confidence this will be a short-term disruption to the future of the rail mill. Based on conversations over the holiday with Evraz officers, I believe Evraz is committed to supporting the local economy and jobs of those who are able to contribute to the completion of the construction project," says Pueblo Mayor Nick Gradisar. "It is not uncommon for a project of this magnitude to see disruptions, but I know Evraz is committed to completing this project in a timely manner as close to the original schedule as possible."

A statement was later released from EVRAZ. That can be read below:

EVRAZ North America is in the process of transitioning to a new General Contractor to complete construction on the new rail mill. Construction will continue with a new General Contractor in place to ensure the overall safety, quality, and timeliness of the project. The work is not going away, and no EVRAZ NA employees are being let go as a result of this change. We look forward to retaining many of the project’s current subcontractors as we work to complete the project.

We’re confident that these changes will help us to successfully complete the rail mill project, allowing us to best serve our workforce, our customers, and the Pueblo, CO community for many years to come. EVRAZ North America is committed to the growth, longevity, and ongoing success of our operations in Pueblo.
Senior Vice President of EVRAZ North America, Pueblo, David Ferryman

The new additions, when complete, will make the EVRAZ steel mill compete with major competitors in Asia. The new mill, when completed, would allow for the manufacturing of railroad segments in lengths only offered in Asian markets. The new rail mill would also be the first of its kind to be completely run on renewable energy.

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