Friday, May 25, 2012
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RG Steel will shut down its Warren plant early next month.
By Jordan Cohen
WARREN
RG Steel LLC will shut down its Warren plant, idling more than 1,000 employees during a two-week period beginning June 4, a condition a spokeswoman said is believed to be “long term, but not permanent.”
The company also is shutting down similar plants in Wheeling, W.Va., and Sparrows Point, Md.
According to a notice issued by the company to the United Steelworkers, RG is facing “an immediate, unexpected liquidity crisis” and is still trying to work out an agreement with creditors to secure funds to cover the costs of continuing operations. RG Steel’s notification was issued under the federal Worker Adjustment and Retraining Notification Act (WARN), which requires companies to give a minimum of 60 days’ notice prior to shutdown. The Warren workers are getting significantly less notice than that.
In the WARN letter, the company said that suspension of funding for operations was “unforeseen” and called its failure to obtain working capital to continue production unexpected. “As a result of these circumstances, notice with respect to affected employees is unavoidably being provided less than 60 days in advance,” the notice stated.
The WARN letter anticipates a timetable of 14 days from layoff initiation to completion, meaning that the Warren plant on Pine Street Southeast could be completely idled by June 18.
“This place used to be profitable,” said Wayne Patrick, 54, Youngstown, a plant electrician for 12 years, as he concluded his shift Thursday afternoon. “They’ve been using the profits here to keep the other plants running.” Patrick said he has no choice but to start looking for other work.
The Warren plant employs approximately 1,020, including more than 100 salaried and 900 hourly workers. One of them, Jeff Friend, Bristolville, said he wasn’t surprised by the announcement.
“I thought it was pretty much inevitable because we had problems getting materials, and I know vendors were having trouble getting paid,” said Friend, 51, a combustion technician at the plant for 11 years. “I had to ride this out with Copperweld when they shut it down 15 years ago, and I guess I’ll have to ride this out, too.”
“The company continues to look for buyers for one or all of the plants,” said Bette Kovach, a public-relations representative for RG Steel. However Kovach refused to comment whether any negotiations are taking place with potential buyers or creditors.
“All I can tell you is that the company is facing either long-term idling or a permanent closing, and we are viewing this as an idling,” Kovach said.
The shutdown, whether temporary or permanent, is bound to impact the finances of the city of Warren. Tom Gaffney, the city tax administrator, said RG Steel had approximately $275,000 in income-tax withholdings in 2011 and was on track to pay a similar amount to the city this year.
Meanwhile, Friend and the other soon-to-be laid-off workers ponder their future. “I don’t know if I want go back to the mill,” said Friend, the father of three who has a master’s degree. “It’s sad — we made money here for 18 years.”
The Warren plant has been producing steel at the site since 1912. It has undergone a series of different owners including Republic Steel, LTV and, in more recent years, WCI, Severstal and RG Steel, which purchased the Warren plant and the other facilities, when it was founded in March 2011.