CAMPBELL Cold Metal consultant says ESOP would work
Workers hope they can restart the closed plant by March.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
CAMPBELL -- A newly formed company with part employee ownership could reopen the closed Cold Metal Products plant here and make money the first year, a consultant says.
If production targets are hit, the steel processing company could hire more than 50 of the 116 workers who lost their jobs in August, said Harry Kokkinis of New York.
The first step in making that happen, however, is finding investors.
Kokkinis, who was hired with state funds to do a feasibility study of reopening the plant, said he hopes to have investors and an operating plan in place before Cold Metal officials appear in bankruptcy court Jan. 21 to sell the machinery in the plant.
He was explaining his feasibility study this morning to hourly and salaried workers who lost their jobs.
Bob Boak, president of United Steelworkers of America Local 3047 at the plant, said a buyout committee is recommending workers approve the plan, which he expects them to do.
Ownership structure
Kokkinis said he hopes the plant can be restarted in the first three months of next year but added that it's too early to determine the ownership structure of a company if investors are found.
He said he would prefer that an employee ownership stock plan be created, which would receive a minority ownership interest through the sweat equity of the workers. They would not have to invest money.
Under this proposal, the ESOP would over time use company funds to buy a majority interest in the company. An ESOP is set up under state law to be a type of pension plan, which uses company stock to provide for retirement benefits for workers.
The hiring of workers would be handled by management of the newly created company, he said.
Workers, who made an average of $19 an hour under Cold Metal, would receive less pay, and work rules would be changed, he said.
Restarting plant
If investors are located, the company would then need to borrow money to restart the plant.
Between $8 million and $10 million would be needed to get the plant running, Kokkinis said.
Of this amount, about $2.5 million is needed to upgrade equipment in the plant, including installing new furnaces to reduce utility costs and renovating the rolling mill to improve its ability to roll steel to more exact specifications.
Another hurdle is solving environmental liabilities, including the cleanup of hazardous materials, he said. Kokkinis is proposing the new company share some of this responsibility with Cold Metal. Otherwise, Cold Metal could leave the plant without a cleanup because there may not be enough money for that when bankruptcy court proceedings are complete, he said.
Nearly all of the available funds would go to its creditors, he said.
Acquiring the land
Campbell Mayor Jack Dill said he and other government officials are looking at the possibility of a government entity, perhaps the city or Western Reserve Port Authority, acquiring the real estate and leasing it back to the new company. The government entity would be eligible for state cleanup funds, he said.
Kokkinis said Cold Metal was shipping 1,500 tons of steel a month, and he thinks the new company could reach 800 tons to 900 tons a month in the first year, which would allow it to be profitable.
He said he has spoken with the plant's top 25 customers and all but one said they would like to do business with the plant, which processes steel for cutting tools, automotive bearings and other uses.
shilling@vindy.com