WARREN WCI wants to restructure expenses to reverse losses

The Valley steelmaker reported losses of $17.5 million in the past six months.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- WCI Steel announced a restructuring plan today aimed at reversing the company's continuing financial losses and preserving the jobs of its 1,800 employees.
The steelmaker said its three-pronged plan would require new commitments from New York-based Renco Group Inc., its parent company, as well as from its lending banks and its employees.
Officials said the company has begun meetings with the United Steelworkers of America to discuss revising its labor agreement, which expires Oct. 31, 2004. USW Local 1375 represents hourly workers at the Warren mill.
WCI executives have also met with lenders to discuss reductions in payments the company must make on its $300 million in secured notes.
The steelmaker said its parent company has "indicated it is receptive to making the substantial cash infusion that would be an integral part of any successful financial restructuring."
Second-quarter loss
Announcement of the restructuring proposal came as part of WCI's report of a second-quarter loss of $13.4 million, compared to an $11.8 million loss in the same period of 2002. The company reported a loss of $17.5 million for the first half of fiscal 2003, compared with a first half 2002 loss of $37.4 million.
Edward Caine, WCI president, said the company will continue to make customer needs a primary focus of its strategic planning process, during and after the restructuring.
"We will maintain our strong commitment to customer satisfaction, providing our customers with value-added services, including high quality products delivered on time," Caine said. "We appreciate their support as we work to make WCI a viable and financially sound steel supplier."
The plan was the result of a comprehensive assessment of WCI's operations which the company began in March after announcing its second consecutive year of losing money.
The Warren mill reported a net loss of $37.5 million on sales of $502 million in fiscal 2002, and it lost $100.8 million in fiscal 2001.
Metal Strategies, a Pennsylvania company specializing in strategic planning and business plan development for metals businesses, was hired to work with WCI officials on the analysis.
Avoiding bankruptcy
WCI, the third largest industrial employer in the Mahoning Valley, has managed to avoid filing for bankruptcy court protection despite more than two years of losses.
Renco bailed the steelmaker out earlier this year by depositing an additional $15 million into its coffers. Officials said the cash infusion gave the company time to reassess its operations and to look for ways to make the mill profitable again.
Thirty-seven other American steel producers, including CSC Ltd. in Warren, filed for bankruptcy protection between 1997 and 2002. A sluggish economy, resulting decreases in industrial production and competition from cheap foreign imports that drove prices down forced many to shut down.
The resulting drop in the number of steel suppliers and increased federal tariffs on steel imports benefited WCI at first, and the company reported a $7.9 million profit in the last quarter of fiscal 2002.
Prices again fall
However, consolidation in the industry is changing the picture again.
Large producers have bought and restarted some of the bankrupt facilities, and the increased supply is increasing supply and pushing prices lower again.
Explaining the most recent quarterly loss, the company cited higher energy and raw material costs, the continuing slowdown in the manufacturing segment and increased competition due to reopening of formerly idled mills as factors.
The company said it will likely lose money again in the third quarter.
vinarsky@vindy.com