Salaried employees and replacement workers ran AK Steel's (AKS) Middletown Works plant on Wednesday, hours after the steelmaker locked out 2,700 union workers when their contract expired.

"We are operating in a manner that we unfortunately must do, under the circumstances," AK Steel spokesman Alan McCoy said.

At the plant's gates, locked-out employees chanted "United we stand!" and held signs. Police reported no problems after the lockout was announced.

Union members recently voted overwhelmingly to authorize leadership to call a strike if negotiations on a new contract failed. The lockout began shortly after the contract expired at midnight Tuesday. Many of those gathered said they weren't surprised by the lockout because the company had been making preparations, such as training replacement workers.

"We kind of expected it," said Scott Prater, a six-year employee. "We've had a long time to prepare for it too."

The two sides began negotiating Nov. 30, and tensions rose as the deadline approached at this southwest Ohio city's largest employer.

The company has said reducing the work force is among things AK Steel must do to remain competitive in the increasingly global steelmaking industry.

The union said some 400 hourly jobs already have been cut at the plant in the past two years.

The company said its last offer would give raises to most workers, freeze the existing pension plan, force workers to pick up a greater share of health-care costs and streamline job classifications so that workers can handle more duties.

Brian Daley, president of the Armco Employees Independent Federation, said the union had offered to continue working under the terms of the existing contract, but the company refused. He said both sides agreed to continue negotiating, but no talks had been scheduled.

"We have been trying to do everything we can to get a contract," Daley said.

The company went through a heated 39-month standoff with workers at its Mansfield, Ohio, plant. AK Steel's predecessor, Armco Inc., locked out some 620 hourly workers belonging to the United Steelworkers of America on Sept. 1, 1999.

AK Steel acquired Armco and continued to operate the plant with replacement workers. There were numerous clashes and arrests before the lockout ended.

AK Steel produces steel products for customers in the automotive, appliance, construction and manufacturing markets, with sales totaling $5.65 billion in 2005.

Besides its hub in Middletown and the Mansfield and Ashland plants, AK Steel has operations in Zanesville and Coshocton in Ohio and at Rockport, Ind., and Butler, Pa. The company also faces contract negotiations this year with workers in Zanesville and Butler.

For 2005, AK Steel Holding Corp. posted a loss of $2.3 million, or 2 cents per share, compared with net income of $238.4 million, or $2.18 per share, the previous year.