YOUNGSTOWN Cold Metal backs efforts to find new owner

By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Cold Metal Products has no plans to reopen its Campbell plant but is supporting efforts to find another owner.
Ray Torok, company president, said Monday that a business associate in the metal processing business is interested in buying the plant and is considering making a bid through bankruptcy court.
Mike Makagon, whose Canadian company bought two steel service centers from Cold Metal in 1999, is looking for an investment after closing those plants, Torok said.
He also hopes former workers at the plant are successful in efforts for an employee buyout, though he thinks finding customers for the plant will be difficult no matter who operates the plant.
Loss of customers
It was the loss of two major customers two years ago that led to the closing of the plant in August, he said.
These customers bought steel that had been processed by Cold Metal and used it to make magnetic shields for televisions. The tons of steel that the plant processed went from about 2,100 to 1,500 when the orders were lost.
The customers were demanding steel that was wider and made to more exact specifications than Campbell could produce, Torok said.
He said executives tried to save the plant because it was the company's original plant, had a quality work force and had long had been considered the core of the company.
It also was losing money, an average of more than $3 million a year over the past four years, he said.
He said the company brought in two executives from a competitor to increase sales for Youngstown, but they were unable to secure much new business because of the poor economy.
Next attempt
The company's next plan was to modernize the Campbell plant by closing a plant in New Britain, Conn., and moving equipment from that plant to Campbell.
A slow economy meant, however, that the volume of orders that came over from Connecticut was smaller than expected.
The third attempt to save the Campbell plant was a proposal to borrow between $3 million and $6 million, most of which would have been spent to upgrade the plant's annealing operations and rolling mills.
A key part of the plan was new furnaces, which are needed to lower operating costs, he said. Because of high rates and inefficient equipment, the plant produced 12 percent of the company's steel but used 38 percent of its electricity, he said.
Talks with the lenders continued from April until July, when the lenders decided they would provide money only for operations and not capital improvements, he said. They insisted that the company become profitable as quickly as possible, which meant the Campbell and Indianapolis plants had to be closed, he said.
Indianapolis plant
Cold Metal and union officials in Indianapolis recently agreed to reopen that plant temporarily while they work on a long-term labor agreement. Torok said that the Indianapolis plant was close to breaking even, so it may have a future with wage and benefit concessions from the workers.
Cold Metal has no plans to reopen the Campbell plant, because its losses were too high, Torok said.
Cold Metal continues to operate a processing plant in Ottawa, Ohio, a steel service center in Michigan and processing plants in Canada. It also has an office with about 20 workers in Boardman.
The company is working toward emerging from bankruptcy court in March and remaining a publicly traded company, but a sale of the company also is possible.
shilling@vindy.com