WCI interim CEO vows to make ‘fixes’

WCI must focus on cutting costs and improving
efficiency, its new leader said.

By DON SHILLING

VINDICATOR BUSINESS EDITOR

WARREN — The executive brought in to make WCI Steel profitable said a second-quarter loss of $12.5 million was unacceptable.

“There are no easy fixes, but there will be fixes to the problems that WCI Steel confronts,” Michael Buenzow, interim president and chief executive, said Thursday in a conference call with analysts.

The search is on for more ways to cut costs and increase efficiency, said Buenzow, who was hired last month to replace Patrick Tatom.

“We need to increase our level of intensity and focus throughout the business,” Buenzow said.

Finances also will be helped by the installation of a new furnace and eliminating mill outages, he said.

A new furnace is scheduled to be operating in January, which will improve earnings before interest, taxes and depreciation by between $10 million and $14 million a year, he said.

The new $37 million furnace, which reheats steel slabs for processing, will be more efficient and will allow the mill to make larger steel coils and more value-added products.

Shutdowns in production were mostly behind the second-quarter loss, Buenzow said.

Product sales for the second quarter were $191 million, compared with $219.3 million in the same period last year.

The mill had a one-week outage scheduled in April for the installation of a new $29 million baghouse, which filters dust particles. Problems developed, however, and the outage was extended two additional weeks.

Also, second-quarter shipments were hurt because of an accident in the first quarter. A vessel that carries molten iron was damaged, which cut production and hindered efforts to build inventory.

Seeking permanent CEO

Buenzow said the board of directors is looking for a permanent CEO to replace Tatom, who retired without comment. No timetable has been set, said Buenzow, a Chicago executive who has been hired by several companies in recent years to turn around unprofitable operations.

In his first conference call with analysts, Buenzow didn’t offer specific operational strategies. He said WCI will not change its main objectives of differentiating itself in the market, strengthening core operations and pursuing growth opportunities.

Buenzow said managers and board members at WCI are not satisfied with the company’s financial results and added that “dramatic action must be taken.”

WCI, which has 1,300 employees, emerged from bankruptcy court in May 2006 under the ownership of its former lenders.

WCI stock isn’t listed on an exchange, but holders have been trading it through brokers. Pinksheets.com said the stock was last traded Tuesday at a price of $34 a share. The 52-week trading range is $25.50 to $36 a share.

shilling@vindy.com