Official seeks action on RG
WARREN – A Warren councilman on Friday called for action on the future of Warren’s RG Steel mill, fearing that a planned March auction to sell off non-steel-producing assets might be a prelude to future liquidation that would render the mill useless.
”I want to see a roundtable. (Elected officials) should all be here just like they were here when they saved the Lordstown (General Motors) plant. They were all here. The governor was here,” Councilman Al Novak said Friday. ”Steel made this Valley.”
Novak said such a meeting of top political leaders would be a good starting point in an effort to generate enthusiasm and brainstorm about ways to save the mill that had employed more than 1,000 workers when it shut down in May with RG Steel’s Chapter 11 bankruptcy. Now an auction has been scheduled for March 12 to 15 in which millions of dollars worth of assets will be auctioned.
An auction listing ”excludes any assets used in the steel production process for the hot strip mill.”
”RG made good steel, and they never had any problems with the mill because there was such demand for it. Production rates there were fantastic, and sales were really up there,” Novak said.
But the mill has fallen into disrepair with an investment of more than $50 million likely needed to repair the blast furnace and make other improvements.
Charles J. Betters, an Aliquippa, Pa., investor, and two commercial partners purchased the mill out of bankruptcy in August for about $17 million with the promise that they would try to save the mill and not scrap it for at least nine months. In November he and his partners invested nearly $1 million to winterize the mill, protecting it against freezing temperatures that would have damaged it beyond repair.
Betters has maintained, however, that his background is not in steel production and he would need a buyer or a partner to operate the mill.
”We have four months until that nine months is up,” Novak pointed out.
Novak said he would like to see the local and state enthusiasm that was generated when officials rallied around the possibility of V&M Star’s expansion in Youngstown, and around GM’s Lordstown plant when the chance of a shutdown loomed. Both of those efforts reaped high benefits.
”We have been the red-headed stepchild for a long time,” Novak said. ”I think we need some attention. I just can’t understand why it seems like they have turned their backs.”
But state Rep. Tom Letson, D-Warren, said officials have not turned their backs on the mill.
”I don’t think any of us have given up,” Letson said. ”I don’t think any of the avenues have gone unexplored so far.”
Letson noted that talks between JobsOhio, the governor’s economic development arm, and Betters have been ongoing, but that challenges involve dealing with Betters as a “middle man” rather than potential buyer or end user.
”There’s a lot more going into this than is going to appear in the newspaper and that JobsOhio is ever going to be able to talk about,” Letson said. ”This is a chicken or the egg kind of thing. An end user wants to know certain things before they make a commitment and the state of Ohio wants answers from an end user.”
Laura Jones, communications director for JobsOhio, echoed Letson’s comments.
”Our goal is to work with Mr. Betters’ team and any potential operator of the mill. JobsOhio has communicated to Mr. Betters that as he engages potential operators that we will offer assistance based on proposed project parameters and scope of restarting the facility,” Jones said Friday.
U.S. Rep. Timothy J. Ryan, D-Niles, also noted that he has been doing what he can to assist.
“I and my staff have stayed in close contact with the team at BDM Warren Steel Holdings about the status of the facility as they continue to seek a mill operator,” Ryan said Friday.
”I still believe the best outcome for the community is for steel operations to resume at the site, and I’ll continue to work with state and local elected officials on a financial package should BDM identify and bring forth a steel mill operator with an experienced management team,” he said.
For now, though, the steel market remains soft, and with the struggling economy, operators are not easy to come by, those involved in the process have said.
United Steelworkers Local 1375 president Darryl Parker last week said he remains hopeful that a buyer would be located now that the presidential election and the holidays are over, and the fiscal cliff issue has been settled.
Letson said he understands much of the equipment being auctioned in March would not affect steel production, if a buyer were to be located.
”There are certain things in that mill that he can sell and make some of his winterization money back. Some of those things would have absolutely no bearing on whether he would be able to bring the melt shop back up,” Letson said.
Specifics of the sale listed on the web sites of four auction houses working together on the project say the sale will include the ”complete large capacity machine shop,” ”complete fabrication shop,” ”complete carpentry shop,” ”complete tractor maintenance shop,” more than ”1,000 new and used electric motors,” three Cat backhoes, two Cat haul trucks, five Cat wheel loaders, forklifts cranes, grinders, hand tools and much more.
Betters this week noted that many of the assets being sold are redundant and unnecessary.
”These are components that a mill doesn’t need to operate,” Betters said.