October 13, 2012 Kasich Hopes Yorkville Deal Is Just The Beginning
October 13, 2012, By LINDA HARRIS – Staff writer, The Herald-Star
Post-Press Conference Special Edition
YORKVILLE – Ohio Gov. John Kasich hinted Friday that Esmark Steel’s plans to reopen an idled cold-rolling mill in Yorkville could be just the tip of the iceberg.
Esmark Chairman and CEO Jim Bouchard said the Kasich administration was instrumental in closing the $6.5 million deal for the Yorkville mill, working with his company and the US Environmental Protection Agency to develop a remediation plan that addresses unresolved chemical spills that former owner RG Steel neglected to correct two years ago.
In addition to the Yorkville mill, which will be known as Ohio Cold Rolling Co., Bouchard also acquired a 50 percent ownership stake in the nearby Ohio Coatings Co. tin plating facility, partnering with South Korea’s TCC Steel.
Both mills were acquired from bankrupt RG Steel, which also sold its property in Steubenville to River Rail Development LLC, a division of Wheeling-based Strauss Industries, and its Mingo Junction plant to New York-based salvage company, Frontier Industrial.
Asked if his staff had been involved in discussions about the future of either of those properties, Kasich said, “We know all about those properties.”
“The Steubenville property, to my understanding, is going to see good things happen there with the (new owner) being able to come in and perhaps lease some of the more valuable parts of that,” the governor said. “It’s another thing our Ohio EPA had to be involved with, to make sure we can clear the hurdles. It’s good news it’s not like we hit a grand slam; we’re getting singles, maybe a double here and there, but we’ve got to do a lot more.”
Kasich, meanwhile, credited Ohio EPA Director Scott Nally with “coming to the rescue” after legacy environmental issues threatened to derail Bouchard’s acquisition of the Yorkville plant.
“He’s not a pushover, if you do something bad to the environment he’s going to call you on it,” Kasich said. “But he also has common sense. He was able to take authority over this (Yorkville) operation out of the hands of the federal EPA into the hands of Ohio EPA. As a result, we can have more common sense, more active development here, and they’re still going to clean things up.”
The governor told workers and dignitaries gathered outside the plant Friday that “there’s no reason we can’t be optimistic about the future.” He said at a minimum, it means work for 165 idled steelworkers at Yorkville alone, “but I think the numbers will be bigger than that.”
“This is a good day,” he said. “People will be people coming back to work, more people, I think, then they’ve already announced…It’s a great start, and it’s good news for us. There’s no reason we can’t be optimistic about the future.”
He stressed that state and local leaders need to figure out how to maximize the Ohio River’s development potential.
“It’s going take folks with some really creative thinking, but it’s important with what we’re going to see from oil and gas and the companies that spin off from that,” he said. “It’s just going to take time.”
Now that the Yorkville plant is in the Esmark stable, Bouchard said he’s planning to invest another $15 million to $20 million to get it up-and-running.
“Everybody I talked to this morning basically said I was out of my mind,” he admitted. “The state of the steel business globally and here in the U.S. is bad, and here we are committing $20 million plus to start up the Yorkville cold mill. Do people think I’m nuts? Yes. But I think we’ve got a good plan, I think the workers are up to it. It’s going to be a challenge, but we’re up to the challenge.”
But Bouchard said it’s “a good opportunity, I wouldn’t do it if it wasn’t.”
“I think all the positives will outweigh (conditions) at this point in time in the steel market,” he added. “But it would be a heck of a lot easier if the steel market was humming along.”
He said the Yorkville plant is capable of processing 50,000 tons of steel a month, “but we’re going to start at about 25,000 tons and make sure we bring it up slowly. The plan is next year to get up to about 40,000 tons a month we’re going to start slow and be conservative. We’re not going to buy market share. We have a nice plan we’ve put together, a nice, conservative business plan.”
He said Esmark committed millions, along with the State of Ohio, “to help clean up the site so it will be cleaner than it’s ever been.”
“We will immediately clean up the pickle spill RG had a few years back, we have a nice plan to remediate the rest of the project over time so we can have a nice, clean plant that will be the foundation, hopefully, of some other things,” Bouchard said.
He also said the window of opportunity to make a go of the steel operations had narrowed considerably, particularly with Ohio Coating. “They had their annual contracts to nail down for next year, so we were really at the end of the window,” he said. “We lucked out because Mittal and U.S. Steel were late in concluding” contract talks, and buyers delayed placing orders because they weren’t sure if the United Steelworkers union would strike.
He said Esmark and the USW already have a tentative agreement for the Yorkville operation.
“To be honest, to see a mill of this size without a pound of steel in it, see it without any lubricant in it, without the electricity turned on scares you,” Bouchard added. “But we’re going to give it our best.”