By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
NILES -- How can a middle-sized steel processing mill expect to survive when steel giants like LTV and CSC are struggling?
Officials at HM Steel in Niles say their answer is "down and dirty" steelmaking that fits a niche larger manufacturers can't fill.
"We're not competing with other companies. We have our own niche," said Kelly Jordan, operations manager for the 5-month-old Niles business. Because of its size, he explained, HM can produce small special orders and can do it fast.
"We're inexpensive to our customers. With the softening of the market, we can service them for less and do it more quickly than a larger plant."
HM Steel bought the former Hunter Steel Co. on Hunter Avenue in February, continuing production there while beginning a $1.75 million renovation of the building and equipment. The purchase price was not disclosed.
Government support: The new company's business expansion efforts, and its plan to create 59 more jobs there in three years, have attracted support from government officials on the municipal, county and state levels.
Trumbull County and the city of Niles and gave HM a 10-year, 75 percent property tax abatement, and the Ohio Tax Credit Authority approved a 55 percent, 10-year tax credit for the company.
Supplier: Jordan said HM is a second-tier and third-tier supplier, meaning its customers are plants and warehouses that buy its products and, in turn, sell them to other manufacturers. The company plans to add a quality control division after the plant renovation is complete, Jordan said, to market its work to a wider customer range.
The plant's edging, decoiling and slitter equipment can produce steel to customer specifications. One of its specialties is steel highway fencing, and Jordan said it works through a distributor to supply the fencing in small orders to five state transportation departments.
An industry trend toward just-in-time production that keeps raw materials and product inventory at a minimum makes HM an ideal supplier for some customers. While a company like CSC might produce an order of 10,000, 20,000 or 50,000 pieces, he explained, HM can produce one or two or two hundred pieces.
Many manufacturers prefer to place several small orders from a smaller manufacturer when needed to keep their costs down, he said, rather than placing one large order from a large manufacturer and storing the unused materials as inventory.
Employees: Company owners invited all 14 Hunter employees to stay when they bought the plant, and only two workers chose to go elsewhere, Jordan said. Those two have been replaced, so employment still stands at 14, but officials expect the number to total 73 by 2004.
Jordan said HM is combining the best of its predecessor, a longtime Niles steel processor, with improvements and changes that will expand the business.
For example, the management team includes Barb Frye, a former Hunter customer sales and service coordinator who kept the job under the new ownership; and Jim Mazzoni, a former CSC Ltd. employee who joined HM as plant manager.
Both have a strong background in the steel industry, Jordan said. Frye has a excellent rapport with customers and with the HM workforce, while Mazzoni brings an expertise he gained from years of working at CSC.
"And we have a phenomenal staff," he said. "If we get an order late Friday and the customer needs it on a Monday, they'll come in Saturday and Sunday to get it done. They'd just do it, no complaints. That's the kind of people we have."
Payroll: He said HM employees are not unionized, but the company pays the prevailing wage. Pay ranges from $7.50 to $13 per hour, plus benefits.
Company officials reported an average payroll of $326,000 to the city of Niles when they were seeking the tax abatement in June, and Jordan said then that it expects to triple that, bringing the annual high as $960,000 within three years. HM has offices in Cleveland, but the Niles facility is its only plant.