New owner of WCI Steel promises exciting future

Under any other circumstances, the announcement of a $100 million investment in a steel mill in the Mahoning Valley would have been headline news for days, but with General Motors Corp. unveiling plans to build a new generation of compact car at its Lordstown plant, the WCI Steel story got second billing.

Nonetheless, we believe OAO Severstal of Russia has earned editorial recognition and support for pledging to spend millions of dollars to upgrade the Warren facility — over and above the $140 million it paid for the company. WCI was owned by bondholders who had taken control when it emerged from bankruptcy protection in May 2006.

There are several aspects to the story that make it more than just an interesting read.

First, Severstal North America, which was created in 2004 when the Russian company bought a mill in Dearborn, Mich., has become the fourth largest steelmaker in the U.S.

Second, the Warren mill, renamed Severstal Warren, will be undergoing major maintenance work, including a relining of its 96-year-old blast furnace.

Third, the owner is already looking down the road, expressing concern about the average age of 54 of the almost 1,100 employees. During a meeting between company officials and Ed Machingo, a steelworkers union president, and others at the union hall for Local 1375 of the United Steelworkers of America, it was noted that workers are getting close to retirement age and Severstal wants the skills and knowledge of the plant to be passed along. In that regard, the company will ensure that hiring and training programs are in place.

Job attrition

This is significant, given that in recent years the Mahoning Valley’s major employers have pursued a policy of job attrition. Positions that open up due to retirement are not generally filled.

However, it appears the Russians are committed to doing all they can to ensure that their North American operations do not suffer setbacks due to a lack of skilled workers or antiquated equipment.

In addition to relining the blast furnace, at an estimated cost of $40 million, Severstal also wants to upgrade the hot strip mill and install a new pickling facility.

Finally, there is the aspect of Severstal Warren’s needing a secure supply of coke for its steel-making operation. Local governments should work with company officials and the state of Ohio to explore an idea broached by Machingo: The construction of a coke plant on the Warren mill’s property.

Currently, the mill gets about half its coke from a plant located next to it, but that facility is owned by ArcelorMittal, which has indicated that it plans to use all the coke from the facility for its own steel mills. Mittal is the world’s largest steel making company.

The state has already invested in the former WCI Steel facility, having provided a $5 million low-interest, state-back loan in January 2007.

The loan was one piece in a financial package that assured the installation of a new $36 million reheating furnace at WCI.

The seven-year loan carries an interest rate of 1 percent for the first three years and 3 percent for the remainder.

The state of Ohio made a sound investment in the company and in the Mahoning Valley — and now it can ensure that the future of steelmaking in the Valley is put on a firm footing.

The investment being made by the Russians is worthy of Gov. Ted Strickland’s personal interest, just as the decision by GM to build the Cruze to replace the hot-selling Chevrolet Cobalt has become a priority for him.