‘Unforeseen Conditions’ Closes Warren Steel Holdings
WARREN, Ohio – Warren Steel Holdings LLC, the company that partially resurrected the former CSC Ltd./Copperweld Steel plant on Mahoning Avenue in Champion Township, is effectively shut down for good, the company and a union representative confirmed Monday.
The company cited weak demand in the steel industry, but also acknowledged a lack of financing to continue operating the plant.
“The decision to permanently shut down Warren Steel Holdings LLC resulted from unforeseen business conditions,” the company said in a statement. “The rapid deterioration of business conditions as we entered the first quarter, coupled with the loss of significant customer demand and the lack of financing, are among the unforeseen business circumstances that led to the decision to close the plant.”
Last November, Warren Steel announced it would temporarily shut down operations beginning Nov. 30, affecting about 150 employees, and had initially planned to reopen early this year.
“Given the current challenging market conditions, we have made the difficult decision to temporarily shut down steelmaking operations at Warren Steel Holdings,” the company said in November. “Our current expectation is to restart production sometime in the first quarter of 2016, contingent on market and business conditions at that time.”
“We were informed late Friday that the company would go from temporary idle to permanent idle,” Pat Gallagher, sub-district director, District 1, of the United Steel Workers, said Monday.
On Saturday, all utilities to the building were cut off and the employees maintaining the equipment were placed on layoff, Gallagher said.
The United Steel Workers official says the company decided to permanently shutter the plant because conditions in the steel industry have not improved. “There’s a flood of imports on the market,” he said. “We were disappointed with the decision and it came as a surprise.”
The union was notified of the permanent closing late Friday, Gallagher said.
“The entire industry is under assault,” he continued, pointing to the high levels of imports and a strong dollar. The strong dollar inhibits domestic producers from shipping steel abroad and lowers the cost for foreign competitors to ship to the United States.
Workers at the plant voted to join the USW in April, Gallagher said.
Steel prices have not rebounded and demand still remains very weak, leading Gallagher to say, “U.S. producers just can’t compete.”
At this juncture, Gallagher said his union has requested additional information on whether the company intends to file for bankruptcy protection or sell its assets.
Warren Steel temporarily shut down its operations in March 2014, noting that it was paying higher energy prices than comparable manufacturers in Ohio. The company successfully petitioned the Public Utilities Commission of Ohio for reduced rates, reopening the mill in August of 2014.
In return for reduced energy rates, Warren Steel pledged to spend $10 million on capital improvements within the first 12 months after the plant restarted and $33 million over a five-year term of the reduced rate agreement.
In April 2015, Warren Steel announced that it had installed new electromagnetic stirrings, or EMS, capabilities on its caster.
“We will continue to look for these types of infrastructure enhancement opportunities in the future and invest in assets that will provide value to current and future customers,” John Scheel, vice president at Warren Steel, said at the time.
The company also promised to employ as many as 200 full-time workers and 25 contract workers within the first 12 months and eventually increase its workforce to 374 people.
Last summer, the company was sued in Trumbull County Common Pleas Court by a large investor – Bracha Foundation and its founder, Vadim Shulman – who alleged that Warren Steel Holdings and its other partners swindled him of the nearly $30 million he put up as seed money for the venture.
Magistrate Jami Bishop dismissed the case, ruling that the plaintiffs were unable to demonstrate they were shareholders in Warren Steel and therefore lacked standing. The court also removed a temporary restraining order that prevented the company from being sold.
The case has since been moved to the Ohio 11th District Court of Appeals.
Warren Steel Holdings was formed in the wake of CSC Ltd.’s bankruptcy in 2001. Just three years earlier, the mill had installed a new melt shop and continuous caster.
In 2007, Warren Steel began to hire workers at the plant.
“We were hoping to maintain it as long as we could,” Gallagher said. “We believed it was a valuable asset.”
Copyright 2021 The Business Journal, Youngstown, Ohio.