Future of the Yorkville Cold-Rolling Mill Remains Unclear
Nearly a year after buying the Yorkville cold-rolling mill, Esmark Chairman and CEO Jim Bouchard said he’s not sure what the future holds for the plant.
Bouchard, who announced a series of management changes Tuesday involving the steel group, said he’s fielded “inquiries and offers” from concerns interested in buying the property.
While he balked at identifying the potential buyers, he did say the plant’s location on the Ohio River – and in the heart of the Utica Shale play – is attracting attention from the oil and gas sector. The land is “very valuable, the mineral rights,” he said.
He also said the plant’s suitors are domestic interests.
“We’ve assessed some offers, but we’re still going through the process,” Bouchard said. “People are getting concerned. We’re getting close to the time we have to make a decision for the 2013 tin (ordering) season. We may start up ourselves, we may look at a partnership, we may sell, we may not run it for now and just wait for the tin market to improve. We’re not leaning any specific way right now, we’re just reviewing options.”
Bouchard, who is reassuming his role as CEO of the steel group, said he’d like to make that decision by late-September or mid-October at the latest.
He said the management restructuring was undertaken in response to the changing needs of the customer base and the market dynamics. As the steel industry continues to adapt to the current economic environment, he said Esmark’s steel group “must respond in kind if we’re going to remain competitive.”
“From the steel service center side, margins have been half what they used to be,” he said. “It’s just a real competitive business: Consumption hasn’t rebounded, the economy hasn’t rebounded on the steel sector side. Prices have been very competitive, margins have been thin. We just took an aggressive cost-cutting program for the steel group, starting in the third quarter and into next year.”
Among the other changes on tap:
- Thomas Modrowski, formerly chief executive officer of Esmark Steel Group, is now chief operating officer of its Ohio mill operations, which includes Ohio Cold Rolling Co. in Yorkville.
- John Krupinski, currently chief financial official of Esmark Steel Group, assumes the same title for Ohio mill operations.
- Thomas Mihelcic, vice president of purchasing for Esmark’s recently divested CSI Bars Division, will be general manager of commercial sales for Ohio Mill operations.
Bouchard, meanwhile, said he has no regrets about the roughly $6 million acquisition of the Yorkville plant and a 50 percent ownership stake in its sister company, Ohio Coatings Co., from the now-defunct RG Steel in a bankruptcy court-supervised auction in August 2012.
The land and mineral rights alone, plus all the oil and gas activity in the Yorkville area, make it a valuable property, he said.
“It’s a good investment, I’m very happy with what we have,” he said. “When we purchased the company, we didn’t get a labor contract done in time so we couldn’t start up until the 2013 tin season anyway. There was really nothing we could do until now, basically. In the meantime, we’ve had people express interest, and that’s positive, and I’m very happy with our Ohio Coatings investment. We’ve just got to figure out what to do with Yorkville.”
And he said the company “spent a bunch of money in the last 60 days on a new IT system, so we are prepping, we (could) proceed with startup.”
“If we do decide to start up, we’ll be ready to go,” he said.