• SDI to Acquire Roanoke Electric
• Alcoa Sees Third-Quarter Income Decline
• Atlas Tube Building Arkansas Mill
• Correnti, Russians Join Forces
  in New Southern Mill
• Nucor Adds Second Castrip Facility
• Kaiser Plans Expansion in Washington
• ADS Logistics Moves Hub
• Plymouth Tube Acquires CWA Facility
• Aerospace Boom Benefits Carpenter
  
• Briefs
• People

SDI to Acquire Roanoke Electric
Steel Dynamics Inc., Fort Wayne, Ind., in a move that would make the minimill one of the most diversified domestic steelmakers in the United States, has agreed to acquire Roanoke Electric Steel Corp. for about $240 million. The deal is expected to be completed by the end of the year or early in 2006.

Roanoke Electric, through its steel manufacturing facilities in Roanoke, Va., and Huntington, W.Va., produces angles, rounds, flats, channels, beams, special sections and billets, about 60 percent of which are sold to steel service centers, with the balance going to construction-related companies, the OEMs and fabricators. The company also has four subsidiaries that are involved in various steel-related activities, including scrap processing, bar joists and truck trailer beam fabrication.

Terms of the definitive agreement, which still must be approved by Roanoke shareholders and regulators, call for the exchange of 0.4 shares of Steel Dynamics common stock and $9.75 in cash for each outstanding share of Roanoke stock. Steel Dynamics will also assume Roanoke’s net debt, which as of July 31 totaled $41 million. Keith Busse, Steel Dynamics’ president and chief executive officer, says he doesn’t anticipate any antitrust or regulatory problems with the transaction.

In addition to providing Steel Dynamics with further product diversity, Busse says the acquisition will give his company access to new OEM markets, particularly through Roanoke’s Steel of West Virginia subsidiary.

Steel Dynamics also will benefit from synergies with Roanoke’s fabrication businesses, which include joist and girder fabricators Socar Inc. and John W. Hancock Jr. Inc. These relationships will further enhance the company’s ability to supply the needs of customers on a national basis because of their fit with Steel Dynamics’ New Millennium Building Systems, with facilities in Butler, Ind., and Lake City, Fla.

Overall, the acquisition should yield $5 million to $10 million in synergistic savings, with as much as $8 million of that being enjoyed “right out of the gate,” Busse says.
T. Joe Crawford, president and chief operating officer of Roanoke, says that he is very excited about this opportunity, which he sees as an excellent fit for his company. “We feel strongly that this combination is going to ensure the continued success (of Roanoke). It is going to ensure our survival 20 to 30 years from now.”

Once the acquisition is finalized, Busse intends to spend $50 million to $80 million to improve and upgrade Roanoke’s facilities. Much of that will be spent at Roanoke’s fabrication businesses, which are older facilities, to bring the technology more in line with that of New Millennium, he says. Over time, that will include upgrading lines at the Salem, Va., Hancock facility, building a roll-forming facility on that site, making some improvements to the Socar operations and putting in a new bag house at the Roanoke, Va., steel mill.

Busse says Steel Dynamics might eventually look to further grow its fabrication business with the construction of a facility that would serve the western marketplace, giving the company a truly national supply scope. “That won’t be a 2006 project,” he added, “although it could be a 2007 project, if approved.”

Alcoa Sees Third-Quarter Income Decline
Lower aluminum prices and higher input costs contributed to a drop in income from continuing operations for Alcoa during the third quarter.

Though the net income of $289 million was up from the $283 million in the third quarter of 2004, it was down 37 percent from the $466 million in the second quarter. Seasonal weakness in Europe and the automotive industry also contributed to the decrease, Alcoa officials say. Additionally, energy and other costs, including raw materials, have increased $486 million on a year-to-date basis.

“A reduced upstream pricing environment and higher energy costs affected our results this quarter,” says Alain Belda, chairman and CEO of Alcoa. “We have an aggressive productivity program, but it has not offset the impact of escalating costs in energy and raw materials, and the speed at which they are flowing through.”

The sale of railroads serving Alcoa locations in the quarter resulted in a gain for shareholders, though that was offset by losses stemming from a fire at the company’s Dover, N.J., aerospace castings facility, losses in Russia, the impact of unplanned temporary outages at the Wenatchee, Wash., Point Comfort, Texas, and Lake Charles, La., facilities, and an increase in the reserve for litigation expenses. Most of the impact from recent Gulf Coast hurricanes will be seen in the fourth quarter.

The company’s 2005 restructuring program, designed to reduce costs and streamline operations along global business lines, continued to make progress. In the second quarter, the company announced the second stage of its 2005 restructuring plan, which will result in the elimination of approximately 8,100 positions and $195 million from its cost base when fully implemented over the course of 12 months.

By the end of the third quarter, the company had eliminated more than 1,400 positions as part of that program.

Alcoa faces power struggle
In other action, Alcoa gave notice to 600 employees at its Eastalco aluminum smelter in Frederick, Md., that the plant will be curtailed if a new competitive power supply contract cannot be secured. The company continues to work with government officials and others seeking ways to secure power for the 195,000 metric ton per year smelter.

Eastalco has been operating under a power arrangement with Allegheny Power, but that contract is scheduled to expire on Dec. 31. The current rates paid by Eastalco are approximately 40 percent higher than the global smelting average paid for electricity. Discussions with power providers in the Pennsylvania, New Jersey and Maryland market area that services Eastalco are suggesting retail market rates that would increase Eastalco’s cost to more than three times the global average, according to company officials.

Alcoa is now working with government officials on other options, including possible legislative actions that could provide a short-term solution until a longer-term arrangement can be finalized.

Alcoa also announced a new joint venture with China International Trust & Investment, its equity partner in Alcoa Bohai Aluminum Industries Co. Ltd., to produce aluminum rolled products at the Bohai plant in Qinghuangdao, China.

Alcoa is the managing partner in the new venture, holding a 73 percent stake. This investment lays the foundation for Alcoa’s global flat-rolled products growth strategy in China, with a focus on high-value-added products.

Alcoa plans to invest more than $200 million in a major expansion of the facility, which includes a technologically advanced hot-rolling mill and related equipment. Alcoa anticipates having the mill commissioned by 2008 with output growing to more than 220,000 metric tons per year.

Atlas Tube Building Arkansas Mill
Atlas Tube Inc., the largest maker of hollow structural tubes, says construction on a new 450,000-square-foot plant in Blytheville, Ark., will begin immediately. More than 100 workers will be hired at the plant, which should be fully operational by the end of 2006.
The Canadian tubing giant, whose U.S. headquarters are located in Plymouth, Mich., says its structural tubing products have been used in construction of the Rock and Roll Hall of Fame in Cleveland, the Kennedy Space Center’s Apollo Center and Las Vegas’ Light Screen over Fremont Street.

In July, Atlas purchased the structural tubing products line of St. Louis-based Maverick Tube Corp. for $37.8 million. That deal included an agreement that allows Maverick to continue producing products for up to 18 months for Atlas Tube at its mill in Hickman, just outside Blytheville.

A month later, Atlas agreed to buy all of the shares of Copperweld Holding Co. of Pittsburgh for $350 million. As part of that deal, Atlas then sold Copperweld’s mechanical tube and auto parts plants in Shelby, Ohio, Elizabethtown, Ky., and at three sites in Canada to Ontario-based Dofasco Inc. for $177.8 million.

The Atlas facility will be located near two large flat-rolled steel mills owned by Nucor Corp.

Correnti, Russians Join Forces in New Southern Mill
SeverCorr LLC, a newly formed partnership between SteelCorr and Severstal Group, has begun construction of a new steel mill in Mississippi. The mill is designed to produce 1.5 million tons of flat-rolled steel products for the southern U.S. steel market.
SeverCorr, directed by former Nucor CEO John Correnti, expects the new facility to begin producing hot-rolled, cold-rolled and coated steel products by the third quarter of 2007.

The newly formed company opted to locate its steel mill in Lowndes County, Miss., because of the site’s proximity to the growing number of automotive producers located in the southern United States. In addition, the site gives the mill access to low-cost and reliable electric power from the Tennessee Valley Authority and the business-friendly environment in Mississippi.

“This is the next generation of steel production,” says Correnti, president and CEO of SeverCorr. “We are very excited to have a partner with a complementary business philosophy that includes aggressive growth, customer-focus and a return on investment for stakeholders.”

Approximately 2,000 construction-related jobs will be created during the next 24 months, and nearly 450 people will be employed when the production facilities are fully operational.

GE Commercial Finance has structured and arranged $440 million in senior financing to support construction and ongoing operation of the mill.

Severstal Group is a major Russian steel company founded in 2002 as part of the restructuring of the biggest Russian metallurgical plant, JSC Severstal.

“We are pleased to partner with such an experienced group of industry leaders and look forward to launching the most efficient steelmaking operations in the United States, meeting the highest quality standards for commercial and automotive applications,” says Severstal Group Executive Gregory Mason.

Nucor Adds Second Castrip Facility
Nucor Corp. announced plans to build a second Castrip production facility during a conference call last month on its third-quarter performance.

“As evidence of our strong and growing confidence in Castrip’s future, we are very pleased to announce the selection of Nucor-Yamato Steel in Blytheville, Ark., as the location where we intend to build our second Castrip production facility,” said Daniel DiMicco, Nucor vice chairman, president and CEO.

Blytheville was chosen over several other Nucor plants that made bids to house the Castrip thin-slab-casting production facility, which will cost $110 million to $120 million to build.

“Though several divisions made strong business cases for locating Castrip at their divisions, markets, logistics and excess melting capacity gave NYS the edge,” said Executive Vice President John Ferriola.

According to Nucor, the Castrip process significantly reduces energy use and associated carbon emissions compared to conventional sheet production processes. From liquid steel to cold-rolled product, the Castrip process consumes just 0.17 decaderms of energy compared to 2 decaderms at conventional mills, a savings of $25 to $30 a ton at current energy costs.

Castrip was introduced at the company’s Crawfordsville, Ind., plant in 2004. Nucor has steadily expanded the technology’s capabilities.

“We’ve had trials where we’ve taken our Castrip product directly to the galvanizing line. It depends upon what the final application of the steel is, but we’ve had quite a bit of success taking our Castrip product directly to the galvanizing line without pickling or doing any additional rolling,” Ferriola said.

The expansion of the Castrip process affirms remarks DiMicco delivered to the International Iron and Steel Institute and repeated at the third-quarter meeting. “What steel producers should be doing is investing capital in new technologies and making existing plants more efficient, not just building new capacity at a rate greater than the increase in demand requires.”

Kaiser Plans Expansion in Washington
Kaiser Aluminum is expanding its Trentwood, Wash., rolling mill to address the significant growth in demand for fabricated aluminum products. The $75 million expansion is slated to proceed over the next three years with full capacity available in 2008.

“This is an important expansion to meet a growing worldwide demand in our major markets for high-quality fabricated aluminum products,” says Jack A. Hockema, president and CEO. “The investment demonstrates our commitment to serving our customers’ changing needs while equipping the company to benefit from the continuing growth and currently strong demand cycle of the global aerospace industry and other manufacturing sectors.”

The expansion includes the addition of a new thick-plate stretcher, horizontal heat-treat furnaces, an ultrasonic inspection system and other ancillary equipment to complement existing capabilities for light-gauge plate and sheet at the facility. The new equipment will enable Kaiser to supply heavy-gauge heat-treated stretched plate in thicknesses up to 10 inches to the aerospace and general engineering markets worldwide.

Capital spending for this project is expected to span the period of 2005 through 2007, with the most significant expenditures occurring in 2006.

ADS Logistics Moves Hub
ADS Logistics, LLC, the national provider of integrated logistics services to the metals industry, moved its Los Angeles-area hub to a larger, rail-served facility in Commerce, Calif. The facility provides ADS the necessary square footage to meet the growing demands and volumes for metals shippers in the Southern California region.

The facility, located on 2701 S. Carrier Ave., has excellent freeway access to the I-5 and 710 Freeways. All loading is under cover with 13 dock-high doors and a ground level ramp that will accommodate four flatbeds inside the building. The facility also has three rail spots for boxcar unloading/loading. A high-tech ventilation system provides an ideal environment for Class-1 metals storage.

“The move to this facility provides numerous advantages for ADS to better serve its customers,” says Tom Eatinger, vice president and general manager of the company’s multi-modal division, Western Intermodal. “The increased square footage and rail capacity will allow us to better facilitate the high volumes of domestic and international metals traffic moving to and through the Southern California region.”

Plymouth Tube Acquires CWA Facility
Plymouth Tube Co., Warrenville, Ill., has purchased Trent Tube’s Cold Work Anneal facility in East Troy, Wis.

Acquisition of the CWA plant will involve Plymouth Tube in the manufacture of high alloys and ferritic stainless steels such as AL-6XN, SEA-CURE, 29-4C, E-BRITE 430 and 439.

“We are very excited by the addition of the CWA capabilities to our overall offering to the energy and heat-transfer markets, and look forward to providing our combined customers with a broader array of products and services to meet their needs,” says Don Van Pelt Jr., Plymouth Tube president.

Additionally, Plymouth Tube has named Phillip Kretekos general manager of its Streator, Ill. facility. The company added Bill Kubik as technical sales manager at the East Troy facility. It recently named Reggie Stewart as southeast regional sales manager for the hydraulic fluid line and mechanical tubing products at the Eupora, Miss., facility. In another addition to the sales team, Steve McKenzie was named market manager for seamless OEM products at the hot-mill facility in Winamac, Ind.

Aerospace Boom Benefits Carpenter
Carpenter Technology Corp., Wyomissing, Pa., reported record income in the recently completed quarter, with net income at $40.1 million compared to $19.8 million in the same quarter a year earlier.

Company officials say the gains reflected the robust conditions in the aerospace market, increased sales of higher-value materials and benefits from the company’s focus on lean manufacturing. Carpenter’s sales increased 16 percent in the quarter vs. a year ago, which reflected higher base selling prices and surcharges.

Corrections
Some information in last month's article on temper mills was attributed to the wrong company. In the sidebar on page 34, under the headline "Temper Rolling vs. Leveling," a comment from Roger Sippey of Feralloy Corp. was inadvertently attributed to Mike Lerman of Steel Warehouse. The paragraph should have read as follows: “At the same time, he adds, Feralloy has invested in some proprietary design of leveling technology to address the springback and memory issues associated with coiled steel.” In the next paragraph, in which Sippey describes the productivity of temper mills vs. levelers, the quote should have read: “In the normal range we ship every day from our lines in Decatur and Charleston to plasma-cutting operations, we have zero rejections,” Sippey says. Also, in the chart on page 33, the capacity of the temper mill at Central Coil Processing's Portage, Ind., facility should have read 0.750 inch by 96 inches wide.

In the article, “Tool Steel Stays Strong,” on page 40 of the October issue, Timken Corp.'s raw material surcharges for tool steel were reported down $10 to $15 per pound. They were actually down 10 to 15 cents per pound.

On page 14 of the September issue, MCN incorrectly reported that ThyssenKrupp’s Copper and Brass sales arm purchased Schupan Aluminum Sales. Copper and Brass purchased Schupan Aluminum Sales-Texas, LLC. Schupan Aluminum Sales of Kalamazoo, Mich., is still owned by Schupan and Sons Inc.

Briefs
Brush Wellman Inc.’s Alloy Products group will increase prices worldwide 8 to 10 percent on premium performance alloy products, effective with orders placed Nov. 1. These price increases are necessary to offset increased costs for energy, raw material and other manufacturing supplies. Brush Wellman Inc. is a wholly owned subsidiary of Brush Engineered Materials Inc.

Expanded Solutions L.L.C. set a company record with a 32 percent increase in production tonnage during a two-week period in August. President Rick Bahner attributed the increase to improved operational efficiency achieved by new scheduling protocols. Expanded Solutions, Oklahoma City, Okla., provides expanded metals, security mesh, mini-mesh and expanded grating.

Luxembourg-based Arcelor will become the controlling shareholder of Brazilian stainless steel producer Acesita after acquiring 12 percent of the voting capital from a Brazilian pension fund. Arcelor now holds 76 percent of the common shares and 40 percent of the total capital. The move follows an Oct. 6 agreement with two other Brazilian pension funds to acquire common shares representing 25 percent of the Brazilian stainless steel producer’s voting capital and 8 percent of its total capital.

Iowa Precision Industries, a Formtek company, was recently awarded a contract to design and manufacture a Multi-Pro IV Up-Cut Shear Multi-Blanking Line for IMSA of Monterrey, Mexico. The line is designed for processing exposed application, pre-painted material for the white goods industry, at speeds of up to 500 feet per minute.

As part of a multimillion dollar expansion, Trumpf Inc. will build a laser research, development, manufacturing and demonstration facility in Farmington, Conn. Planning for the new 30,000 to 40,000 sq. ft. building has already begun. This stage is expected to be finished within the next year. In other news, Berthold Leibinger has resigned as president of the Trumpf Group, German parent of the machine tool manufacturer and laser specialist. Nicola Leibinger-Kammüller will become new group president.

Century Aluminum Co. reported a net loss of $20.1 million for third-quarter 2005. Sales in the quarter were $270.8 million, compared with $274.3 million in third-quarter 2004. Shipments of primary aluminum for the quarter totaled 337.3 million pounds compared with 344.2 million pounds in the year-ago quarter. Century’s net income for the first nine months of 2005 was $32.4 million. This compares with net income of $8.8 million in the year-ago period.

Universal Stainless & Alloy Products Inc. has reached a new five-year collective bargaining agreement with the employees at its Titusville, Pa., facility represented by Local 7312-03 of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union. The employees had commenced a work stoppage upon the expiration of the prior agreement on Sept. 30.

People
Terry Taft has been named president of Metalwest, Brighton, Colo., a subsidiary of O’Neal Steel. Long-time Metalwest President Brad Begin resigned to form a venture capital firm in Colorado, focusing on investments outside of the service center industry. Taft, O’Neal Steel’s current chief operating officer, will be replaced as COO by Holman Head, promoted from senior vice president of O’Neal’s southern region.