WARREN -- Bankrupt CSC Ltd. just might succeed in selling its massive steel bar production plant, but industry experts and local development specialists say a quick sale isn't likely.
CSC officials have asked Judge William T. Bodoh of federal bankruptcy court in Youngstown to approve a plan to mothball the plant over several weeks and to allow the company to sell the facility intact if possible.
On the line are 1,200 jobs.
CSC officials say they don't have enough cash to continue making steel, so the company's 1,200 hourly and salaried employees will be on the street unless it can find a buyer.
What's next: Judge Bodoh set a hearing for 9 a.m. Feb. 13 for CSC creditors to comment, but local development specialists at the Youngstown/Warren Regional Chamber of Commerce already were starting their search for a buyer Wednesday afternoon.
"Can they sell it? Absolutely. Is this the best time? No," said Reid Dulberger, senior vice president of community development for the chamber.
He said the U.S. steel industry is in a crisis caused in part by the flood of discount-price foreign steel and complicated by a recent decline in the economy.
Here's the situation: With CSC and 10 other major steel companies forced to file Chapter 11 bankruptcy claims in the past two years, Dulberger said, it's a tough time to try to sell a steel mill.
"The big question is: Will they be able to sell the plant intact? Can a buyer be found who will reopen the facility? That would give us the opportunity to retain at least some of the jobs at CSC," he said.
Dulberger said he hopes creditors will allow the company time to find a suitable buyer. He said the plant will likely be worth more if sold intact than it would be if liquidated and its equipment sold piecemeal.
The $100 million plant modernization project which CSC just completed could save the plant from being disassembled, said David MacGregor, a steel industry analyst from Midwest Research in Cleveland.
CSC spent two years installing a new, computer-controlled melt shop, a continuous caster and other improvements.
Possibilities: MacGregor said a sale could be a year or two away, however.
"These mills seldom go away, but it's likely to remain dormant until the industry recovers and steel prices recover," he said.
"When that happens, someone will come along and operate some portion of the plant, but it will have a marginal capacity, and it will probably never be very profitable."
MacGregor said it would probably be best for the steel industry in general if CSC were shuttered permanently.
"The problem is there are too many companies, too much supply," he said. "Imports have only tipped over what was already a very precarious situation. Some of the excess capacity needs to be removed."
Another view: Jim Cowan, general manager at the North Star Steel seamless steel pipe mill in Youngstown, said he's not optimistic that a buyer can be found for the foundering plant.
The steel bar market has been declining, he said. North Star's bar plant in Monroe, Mich., for example, which has always been the company's crown jewel, is now doing poorly in the specialized niche market.
"I'd love to give those 1,200 [CSC] employees some glimmer," Cowan said, "I hope they can sell it, but there's a very short list of companies that have the money to buy something like CSC. There's about 40 steel companies, and 11 of them are bankrupt."
North Star considered buying CSC several years ago but scrapped the plan.
Some optimism: John Russo, director of the labor studies program at Youngstown State University, said he thinks there's a good chance CSC will find a buyer, but it may not like the price.
Russo said a shutdown of the plant, Trumbull County's fourth-largest employer, will cause a damaging ripple effect to the Valley's economy.
"The rule of thumb is that for every manufacturing job lost, there are three more jobs lost that are directly or indirectly related. It will affect everything, from retail to trucking," he said.
Two area development specialists, Donald French of Mahoning Valley Economic Development Corp. and William DeCicco of CASTLO Community Improvement Corp., said they have reasons to be optimistic about a sale and continued operation of CSC.
Advantages: French said MVEDC worked to preserve the Warren-Trumbull Railroad, a shortline industrial track that provides transportation services for CSC, when the facility was threatened with closure in the mid-1990s.
MVEDC now owns the railroad through one of its affiliates, he said, and the transportation access it provides for CSC, in combination with capital improvements at the plant, should help to make the facility more salable.
DeCicco agreed that recent plant improvements should help the company to salvage at least some of its operations through a new buyer. He pointed to the former Sharon Steel Corp. as an example of how a bankrupt steel producer can be at least partially salvaged.
Sharon Steel filed for bankruptcy protection in the early 1990s, liquidating part of the operation but keeping its central steel producing plant in Farrell intact by selling it to Caparo Steel.
Duferco Farrell Corp. is now operating the plant to process steel, although no steel is produced there.
CSC officials have said the company had a strong order book for January and February, and the plant has been processing its finished steel inventory and shipping it to customers under a limited, four-week budget approved by the bankruptcy court.
The company shut down its melt shop because of cash shortages several weeks ago, and officials asked Judge Bodoh on Wednesday for permission to sell its unused scrap steel. Attorneys said CSC lost several of its key customers shortly after its bankruptcy filing.
What happened: Company officials have said that sales were down in 1999 and in the first three quarters of 2000, but steel imports began to decline at the end of last year and CSC sales were picking up.
The cash-strapped company was unable to rebound in time to avoid the bankruptcy filing, however, and took the action when it was unable to pay a $760,000 monthly health insurance premium for hourly employees.
CSC was unable to find new financing to stay afloat, despite a $60 million loan guarantee it received in October from the federal Emergency Steel Loan Guarantee Board.
The government loan guarantee program was designed to protect struggling steel companies, but private banks and other lenders didn't trust the program to provide enough protection, CSC officials have said.
Gov. Bob Taft said he would work with labor and management on state assistance and retraining programs.
"We are committed to doing what we can to help the workers and families affected by today's decision. The financial strain on Ohio and the nation's steel industry caused by the dumping of foreign steel is exactly why I believe strengthening the steel industry needs to be higher on our national agenda."

Don't Miss a Story

Sign up for our newsletter to receive daily news directly in your inbox.