Metals Industry Responds
to Hurricanes’ Impact
The twin hurricanes—Katrina and Rita—that wreaked havoc on residents of the Gulf states in late August and mid-September also created a variety of problems for metals suppliers.

Metals producers and distributors warn that supply levels, deliveries and financial performance will be affected for some time. Most metals facilities shut down by the storms are back in operation, however, and many companies are providing relief for hurricane victims.

Alcoa Inc., Pittsburgh, reported Sept. 22 that “the impact of temporary closure of Alcoa’s Point Comfort, Texas, alumina refinery and the Lake Charles, La., anode plant as a result of Hurricane Rita is still unknown, but will be reflected in its third-quarter results.”

Northwest Pipe Co.’s third-quarter earnings will be lower than earlier estimates. “A combination of events headed by Hurricane Katrina, related transportation issues and delays at some of our key suppliers are delaying our receipt of critical raw materials,” said Brian W. Dunham, president and CEO. The company temporarily closed its Houston facility in anticipation of Hurricane Rita.

“We had expected to report record revenues in this quarter, but instead have had to cut back production temporarily at four facilities,” Dunham said.
NS Group Inc. reported Sept. 26 that its finishing facility in Baytown, Texas, was found to be relatively undamaged. Rene J. Robichaud, president and CEO, said the majority of employees had returned to work. The Koppel Steel-Baytown Works was shut down Sept. 21 in preparation for Hurricane Rita.
Service center chain O’Neal Steel shut down branches in Houston and Lafayette, La., on Sept. 21 to prepare for Rita and urged employees to evacuate.

“Because we have locations all around the Atlantic and Gulf coasts, we have a fairly extensive hurricane preparedness checklist. First we get all our people out of there. A lot of people learned a lesson with Katrina. We have known this stuff for years, and we don’t mess around,” O’Neal President Bill Jones said.
O’Neal transplants inventory to high ground in case of flooding; boards up windows; protects equipment with plastic wrapping and other material; moves out important documents; backs up all data at other sites; forwards phone calls to unaffected branches; and makes arrangements to protect its orders in process at galvanizers or elsewhere.

O’Neal lost a large piece of its roof in Mobile during Hurricane Katrina; it has since been repaired. “Even though we didn’t have power for a week or more, we moved in generators,” Jones said. The generators were later shipped to Houston in anticipation of Rita.

Beginning Sept. 2, Steel Dynamics Inc. suspended order entry for hydrogen gas-dependent products such as cold-rolled, galvanized and painted sheet until it could make alternative hydrogen gas supply arrangements.

Customers were notified of the decision after Air Products Corp., SDI’s hydrogen gas supplier, said it was unable to meet SDI’s immediate supply commitments due to the temporary outage of its New Orleans hydrogen gas production facility in the wake of Hurricane Katrina, and the planned two-month shutdown of its Sarnia, Ontario, plant as a result of feedstock curtailment. Keith Busse, SDI’s president and CEO, said that although the company hoped for a minimal impact, there could be some margin reduction.
AK Steel Corp. expects to report an operating loss of about $20 a ton for the third quarter. James L. Wainscott, president and CEO, attributed that to substantial cost increases for steelmaking inputs, especially natural gas and scrap, due to the effects of Hurricane Katrina.

Bayou Steel Corp., LaPlace, La., resumed steel production Sept. 4 following a shutdown in anticipation of Hurricane Katrina. Jerry M. Pitts, president and CEO, said the steel works, 35 miles north of New Orleans, experienced minor damage to the building exteriors and phone service.

“In the midst of destruction, our employees’ resiliency has been evident as the plant successfully resumed operations at normal capacity in just a few days following the hurricane,” Pitts said, expressing gratitude to employees and patient customers.

A small independent aluminum products distributor with three warehouses in New Orleans—Metal Sales CEM Supply LLC—reported damage to two warehouses and to some of its inventory as a result of Katrina.

“The damage is mostly to the back warehouse, which was holding full unopened skids of aluminum plate,” said President Robert L. Carey. “There is a gaping, 40-foot-long by 16-foot-high hole on the far right side of our front warehouse.”

Carey said the company’s locations in Norfolk, Va., and Harvey, La., are open and serving customers. Insurance should cover the damage, but he is concerned about a lengthy downturn in sales. “We will need to maintain a steady stream of sales in order to cover our monthly direct overhead expenses” and to “keep providing employment for our 23 working families” in New Orleans.

The Mobile, Ala., steelworks of IPSCO Inc., sustained minimal damage from Hurricane Katrina and returned to normal production levels within two days. However, damage to the gulf region’s distribution infrastructure, especially westbound, disrupted the normal flow of inbound and outbound freight.
Minor storm damage was isolated to the roof of a new heat-treat facility under construction at the site, but the damage won’t delay the plant’s completion.

“It is difficult at this time to estimate the precise financial impact that Hurricane Katrina will have on the company’s performance overall,” said John Tulloch, executive vice president-steel and chief commercial officer, but “we do expect to experience some cost increases at Mobile.”
Industry relief efforts

Several steel companies and the United Steelworkers of America have donated aid to agencies involved in relief efforts, directly to employees and to affected communities.

IPSCO Inc. donated $500,000 to the Alabama Gulf Coast Chapter of the American Red Cross to be used in Katrina relief work in hard-hit communities along Alabama’s coast, including Mobile and Baldwin counties where the steelworks is located and where most IPSCO employees live. This Red Cross chapter is also providing shelter assistance to evacuees from Mississippi and Louisiana.

IPSCO also established a matching grant program to support employee donations to Katrina relief. The company provided in-kind donations and support as well, such as trucks filled with gasoline and diesel fuel, cases of bottled water, high-protein foods, generators and ice. They were sent to the Alabama mill as bare essentials for employees and others in the community. Lastly, IPSCO employees have been volunteering in community clean-up work.

Employees of Gallatin Steel, Ghent, Ky., donated $77,800 to the American Red Cross. The money was a combination of proceeds from the sale of scrap metal collected at a company-sponsored community scrap metal collection day, along with cash contributions from Gallatin and its employees.

In early September, Gallatin also donated fuel to transport a tractor-trailer load of food, water and medical supplies to New Orleans. The food and supplies were collected by Wal-Mart employees in Carrollton.

Lastly, Gallatin employee volunteers loaded a truck with 70 collapsible cages, 130 large shade tarps and pallets of food bound for the Society for the Prevention of Cruelty to Animals in Mobile, Ala., to rescue pets. Animals were relocated to Mobile from flooded areas in Alabama, Mississippi and New Orleans.

The United Steelworkers of America in the United States and Canada have contributed $150,0000 toward relief to the victims of hurricanes Katrina and Rita. In addition, contributions from union members and their locals surpassed $300,000 as of Sept. 27, and continued to arrive.

An estimated 2,500 union members and 1,000 retirees have lost their homes as a result of the disasters.

The American Iron and Steel Institute and its members have begun networking behind the scenes to assist as experts examine the repair and rebuilding effort needed in the Gulf region. The Steel Framing Alliance, comprising steel framers and steel stud manufacturers, is working with the U.S. Department of Housing and Urban Development to assess damage in the Gulf region, the extent of the reconstruction effort and what role steel can play to help rebuild stronger infrastructure.

ESAB Welding & Cutting Products, an equipment supplier to the metals industry that has many customers in the storm-ravaged regions, donated $25,000 to the American Red Cross and sent 4,500 gallons of bottled water to Mississippi. Employees collected supplies and donated money as well, with the company providing matching funds.

After the initial needs assessment, ESAB senior managers are working with equipment dealers to develop a long-term plan to help the rebuilding effort.