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New owner stresses commitment to WCI
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[7.10.2008] Thomas J. Cera, Chief Operating Officer SeverStal N. America Inc., @ Warren USW 1375
By Don Shilling
Executives taking over the steel mill are concerned about the age of the workers.
WARREN — The new owner of WCI Steel is in it for the long term, its executives say.
“We’re not here to flip this place. We’re not here to sell it in three years,” said Thomas Cera, chief operating officer for Severstal North America.
“That’s what I like to hear,” said Ed Machingo, a union president who joined Severstal officials Thursday in a meeting with reporters at the union hall for Local 1375 of the United Steelworkers of America.
Severstal, a Russian steelmaker that is expanding in the U.S., closed its purchase of the steel mill Monday. It bought the mill for $140 million from a group of bondholders that brought WCI out of bankruptcy court in 2006. It has renamed the mill Severstal Warren.
Machingo said he hasn’t seen so much commitment to the Warren steel mill since the days when it was owned by Republic Steel, which operated the mill from 1928 to 1984. That commitment comes in the form of investment dollars and a concern for the mill’s aging work force, Machingo said.
Cera said his biggest concern is that the average age of the mill workers is 54. Executives plan to meet with union officials to make sure that hiring and training programs are in place, he said.
Workers are getting close to retirement age, and Severstal wants the skills and knowledge of the mill to be passed along, he said.
Cera said, however, that he couldn’t commit to a level of hourly workers until executives have had the time to review operations. The mill has about 1,050 hourly workers, of which about 45 percent are skilled trades workers.
Cera said he didn’t expect any changes in middle management. Back office staff, such as accounting and billing, will be reviewed, although he said he didn’t expect any dramatic changes.
Senior management of the mill also is being reviewed, he added. The only change so far is the resignation of Leonard Anthony, who was hired as president and chief executive in December.
As for investments, executives will put together a five-year plan to upgrade the mill and complete necessary maintenance work, Cera said.
When the sale was completed, Severstal committed to spending $100 million in the mill. That amount could go up once the mill is reviewed, said Ronald Nock, president and chief executive of Severstal North America.
Severstal has committed to relining the blast furnace in 2011, which officials said could cost more than $40 million. Cera said officials also want to upgrade the hot strip mill and install a new pickling facility.
Machingo said he is so excited by what he’s heard so far that he plans to push Severstal to expand the Warren operation. He said he would like to see Severstal build a coke plant on the property.
Cera said ArcelorMittal, which owns the coke plant next to the steel mill, has indicated that it plans to begin using all the coke for its steel mills. Securing a supply of coke for the Warren mill is one of the top priorities of the new owner, he said. The mill receives about half of its coke from that coke plant.
Mike Adams, vice president and general manager of the mill, said he hopes that the new ownership can increase production from about 1.2 million tons a year to between 1.4 million and 1.5 million tons. Adams had been with WCI for the past two years.
Cera said Severstal intends to turn a profit at the mill, which lost $5.4 million in the last quarter of 2007 and first quarter of this year. The mill can make money because Severstal will bring world-class operating procedures and will focus the mill on the products that it makes the best, he said.
shilling@vindy.com