NORTH STAR STEEL Pipe mill is put up for sale
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
YOUNGSTOWN -- North Star Steel's seamless pipe mill in Youngstown, lately the only bright spot in the Mahoning Valley's steel industry, is up for sale.
General manager James Cowan confirmed Friday that Cargill Inc., North Star's parent company, has been looking for a buyer for the pipe mill on Martin Luther King Boulevard and a pipe processing mill in Houston.
"We're very healthy, we're at the top of our game," Cowan said of the two plants, explaining that the pipe division has been doing well because it produces seamless pipe used mainly for drilling deep underwater oil and natural gas wells.
"We're healthy because we're not really in the steel business, we're in the oil service industry," he explained.
Cargill negotiation: Greg Lauser, a Cargill spokesman at its headquarters in Minneapolis, would not comment on published reports that Cargill has been negotiating with Maverick Tube Corp. of St. Louis, Mo., for sale of the pipe division. "I can only say that there is no agreement with Maverick or any other company," he said.
A Maverick Tube spokesman could not be reached to comment.
Cowan said North Star's other six mills, which produce flat-rolled steel, steel rods and bars and other products, are not being sold. Most of them are struggling, he said, like the rest of the domestic steel industry.
Competition from foreign steel and a sluggish economy have created a steel crisis that has caused many producers to file for bankruptcy protection, including CSC Ltd. in Warren, Cleveland-based LTV Steel and Wheeling-Pittsburgh Steel in Wheeling, W.Va.
Another area steelmaker, WCI Steel of Warren, has also been losing money, although it's still strong thanks to a healthy cash reserve.
Employees: Cowan said that he and North Star's 425 other employees will almost certainly be asked to stay if the Youngstown plant is sold. The mill also provides employment for about 140 contract workers, and about 150 work at the Houston mill.
"I'm part of the sale. I go with the mill too," Cowan said. "They know we're a successful operation, so they're not going to come in here and make a lot of changes."
North Star's Youngstown mill has been reporting brisk business in recent months because of increased gas and oil well drilling worldwide.
He said a sale to Maverick Tube would be "a good marriage" because the company is in a similar business. "They make welded tube for shallow, on-land drilling, we make seamless tube for deep underwater drilling. We complement each other."
A 22-year veteran of North Star, Cowan said Cargill has been talking about selling the division for about 20 of those years, so he's not sure it will happen.
Lauser would not comment on why the company wants to sell.
Focus: The Wall Street Journal, which reported the talks Thursday between Maverick and Cargill, quoted unidentified sources who said the parent company wants to get rid of its steel business so that it can focus on agriculture and food. The company's primary businesses are agriculture feed and food processing.
The newspaper said Cargill was negotiating to sell the two plants for about $400 million.
Cargill, with 85,000 employees in 60 countries, is the country's largest privately held company and acquired North Star Steel in 1974. With a net worth of $7.5 billion, it reported 2000 profits of $480 million on sales of $47.6 billion.
Maverick Tube is publicly traded on the Nasdaq under the symbol MVK and closed Saturday at $12.30.
North Star's Youngstown pipe mill completed a $30 million expansion and improvement in 2000, increasing its annual production capacity to 650,000 tons. The mill recycles scrap steel into new steel using electricity, which is more environmentally friendly than superheating coal, iron ore and alloys in a blast furnace to produce steel.