Union Leader Says RG Sale Offers 'Glimmer' of Hope
WARREN, Ohio – The president of United Steelworkers of America Local 1375 says the sale of RG Steel's Warren plant to Hilco Trading LLC (READ STORY) offers a "glimmer of hope" that a buyer could be found to operate the idled hot mill.
"It gives the plant a little more time to find a potential operator," said Darryl Parker. "And, it would give a reprieve to some of the unskilled workers."
Hilco, an international firm based near Chicago that has a division devoted to marketing older industrial properties, announced May 31 that it has acquired the assets of RG Steel Warren, which closed its doors last year after parent RG Steel filed Chapter 11 bankruptcy.
Terms of the acquisition were not disclosed.
An investment group headed by C.J. Betters formed BDM Warren Holdings LLC and purchased the mill out of bankruptcy last year. The group then pledged to find a buyer for the mill and winterized its equipment.
"It gives us a glimmer of hope," Parker said. "Albeit it's not bright, but hopefully they'll find someone who will run this facility, or a part of it."
The plant once employed 1,100 people; today about 15 maintenance and clerical workers operate in the plant.
One of the obstacles in restarting the plant is the up-front costs required to upgrade the blast furnace, which could cost as much as $200 million, Parker said. "That could be holding some potential investors back."
Another stumbling block is many of the skilled tradesmen have either moved on to other jobs, retired, or are in the midst of training for other positions. "They've lost an entire skill set. They would have to put a package together to get some of these individuals back."
Hilco's chief marketing officer, Gary Epstein, said in a statement that the company's objective is to find a buyer that's able to operate the hot mill. "Our goal is to do everything possible to find a purchaser for the facility that can operate the hot mill as a going concern," he said.
Parker said union officials have been in contact with at least one group that's expressed interest in operating the plant.
"They laid out a possible business plan with their possible investors.We gave them a lot of suggestions as to how they could generate capital without running the whole facility," Parker said.
The last time the parties spoke was Jan. 31, he reported. "We gave them all the information they need, but they haven't contacted us," Parker said.
Since that time, BDM Warren auctioned thousands of pieces of equipment from the sprawling mill.
Some of those assets, Parker said, are important to the steelmaking process. "Technically, they weren't part of steelmaking but important to it, such as hot metal cars, those were all auctioned," he said.
And, should a buyer be found, it would take months to prepare the plant for operations again, Parker added.
Despite the weak steel market, Parker holds out hope that an operator for the mill will emerge.
"There's always been a demand for the product that we produce, because we were in a specialty market," Parker said. "We had a very, very loyal customer base that loved our steel and the quality that came along with it."
MORE:
Hilco Buys RG Steel Mill, Says Will Seek Operator
Copyright 2013 The Business Journal, Youngstown, Ohio.
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