Mi-Tech Well Positioned
to Serve New Honda Auto Plant in Indiana
Mi-Tech Steel hopes to be among the big beneficiaries of the June decision by Honda to build a $550 million automobile plant in Greensburg, Ind.

Mi-Tech Steel, a joint venture between Steel Technologies and Mitsui & Co. Ltd., already operates a 200,000-square-foot facility in Greensburg. The facility houses two slitting lines that handle coils from 0.015 to one-quarter inch with leveling up to 72 inches wide, and an automotive blanking line.

“Our forte is supporting the New Domestic, or more specifically, the Japanese transplant business. That’s our foundation, so this is just an ideal opportunity for us,” says Stuart Ray, president and chief operating officer of Mi-Tech Steel.

The Honda plant will begin mass production of fuel-efficient, four-cylinder vehicles in fall 2008, with an annual production capacity of 200,000 units. It will employ 2,000.

Mi-Tech Steel officials have already begun discussions with Honda about the transition. Steel Technologies has existing work with Honda at other locations.

“We’re talking to Honda about what they’re expectations or needs might be, but we’ll be prepared to expand if the need were to arise,” Ray says, noting that Mi-Tech has ample room to add on to its Greensburg facility.

The new Indiana plant, Honda’s sixth auto plant and 14th major plant overall in North America, will help boost Honda’s total North American auto production capacity from 1.4 million units to more than 1.6 million units in 2008.
O’Neal Steel also has a facility in close proximity to the new Honda site, though President and CEO Bill Jones does not anticipate his company will benefit greatly.

“There’s been quite a bit of automotive development here in Alabama and in the South, and it’s had very little impact on us because we do so little automotive work,” says Jones. “Most of the impact has been indirect, and it’s been very minimal.”

Mi-Tech, on the other hand, is eagerly awaiting Honda’s arrival. “This falls in the category of I’d rather be lucky than good,” Ray says. “We’ve been in Greensburg for 15 years, and now an outstanding company like Honda comes to our community.”

Esmark vs. Wheeling-Pitt:
Service Center Maneuvers to Take Over Mill
In an unusual role reversal, a smaller service center company is hoping to take over a larger mill and create a low-cost steel supplier hybrid. Esmark Inc., an aggressive industry consolidator, hopes to acquire Wheeling-Pittsburgh Steel Corp., one of the oldest mills in the country, and possibly through a rare reverse merger process become a publicly traded company.

After quietly approaching Wheeling-Pitt earlier in the year, Chicago-based Esmark and its chief executive Jim Bouchard have launched an open, hostile bid to take over the West Virginia steel producer, whose board has approved an alternate merger with Brazilian steelmaker Companhia Siderurgica Nacional.

The first step in Esmark’s takeover plan is to seek election of a new slate of directors at Wheeling-Pitt’s upcoming annual meeting. If a new board is elected, Esmark would present a proposal to merge Esmark with Wheeling-Pitt.

Under Esmark’s proposed merger, Wheeling-Pitt would issue 26.5 million common shares to Esmark shareholders for a value equal to $473 million, which reflects current Esmark valuation of $273 million and a $200 million cash infusion from Esmark’s largest shareholders, funds managed by Franklin Mutual. Following consummation of the merger, Wheeling-Pitt would offer to repurchase up to 50 percent of the shares from current shareholders of Wheeling-Pitt at $20 per share, a 12 percent premium from the closing share price on July 14.

Esmark claims Wheeling-Pitt’s current board has not fulfilled its responsibility to enhance shareholder value. In particular, Esmark believes that the current board has failed to adequately address persistent operational problems and strategic issues at the company.

In a conference with investors and analysts in New York late last month, after Wheeling-Pitt announced operating income of $19 million in the second quarter, Bouchard said, “that type of income is totally unacceptable to Esmark. We are in one of the greatest steel cycles of all time.

“We have a plan, we have a management team, and we have a strategic partnership through which we will get the costs down at Wheeling-Pitt,” he said. “We will combine our low-cost service center with a low-cost production company and become a low-cost provider of steel products.”

Bouchard said the steel company’s union, the United Steelworkers of America, supports his bid, but Wheeling-Pitt’s management team remains unconvinced.

“Our ongoing negotiations with Companhia Siderurgica Nacional regarding the proposed strategic alliance in North America remain positive, and we believe this combination will deliver significantly more value than the recent proposal by Esmark,” said James G. Bradley, chairman and CEO of Wheeling-Pitt. “Upon finalization of a definitive agreement, we intend to provide detailed information about the strategic, operational and financial aspects of the proposed transaction that will enable our shareholders to fully understand its many benefits. We fully expect that the alliance we are finalizing with CSN will be subject to a vote of our shareholders at the appropriate time.”

Bouchard believes that the proposed merger with Esmark would transform Wheeling-Pitt from a high-cost steel producer to a company that combines the best of steel minimill production and distribution, and is similar to the model employed in Europe. He envisions a steel company that would be a niche, regional player producing 3.5 to 4 million tons annually, focusing on serving manufacturers in the Ohio Valley, Illinois and Indiana. He added that Esmark is discussing similar strategies with Steel Dynamics Inc., Fort Wayne, Ind.

If Esmark succeeds in winning control of the board at publicly traded Wheeling-Pitt, according to a recent Chicago Tribune report, it plans to employ a seldom used “alternative initial public offering” technique, through which the combined entity would become a public company, as if Wheeling-Pitt had acquired Esmark.

In other action, Esmark announced Aug. 3 that it has acquired Independent Steel Co., Cleveland, Ohio, for $21 million in cash. Independent Steel has annual revenues of $60 million and sells low-carbon cold-rolled and galvanized painted steel to the construction, tubing, transportation and consumer products markets. The Independent Steel acquisition brings total revenues for Esmark’s holdings to $625 million.

Kenwal to Build Facility Near New SeverCorr Mill
Kenwal Steel Corp., Dearborn, Mich., has announced plans to build a processing and distribution facility next to the SeverCorr mill under construction near Columbus, Miss.

“We are already serving customers in the South, and SeverCorr’s announcement made this an opportunity that was just too good to miss,” says Kenneth Eisenberg, chairman and CEO of Kenwal. “SeverCorr’s commitment to building a tightly integrated working relationship with their mill operations will provide a new level of service to our steel customers.”

Kenwal provides a range of flat-rolled steel products and services to various industries, including automotive, electronics, appliance, tubing, major equipment manufacturers and other steel-related businesses. The new facility in Columbus will feature surface-critical slitting and packaging systems with a range of coil-to-coil processing capabilities. The facility is scheduled to become operational in late spring 2007.

“When we decided to build a next-generation steel mill, we also decided to create next-generation relationships with the downstream channel,” says Michael Wagner, chief commercial officer of SeverCorr. “So we selected a site with room for partners to build processing and distribution facilities. We are pleased to welcome Kenwal as one of our first neighbors.”

Kenwal will build its first company facility in the southern tier of the U.S.—a 140,000-square-foot warehouse and processing center with rail and truck shipping/receiving docks, supported by 44-ton cranes that can accommodate SeverCorr’s large-coil production capabilities.

Kenwal’s capabilities will include:

• A light-gauge slitting system that will focus on cold-rolled and coated materials from 0.010 to 0.060 inches thick, as well as HRP&O from 0.055 to 0.100 inches thick in widths up to 72 inches.
  
• A heavy-gauge slitter that will run largely unexposed materials such as HRB and HRP&O from 0.070 to 0.375 inches thick in widths up to 72 inches.
  
• And an automated packaging line that will complement the slitters.
  

The new Kenwal facility will be located on a portion of the 1,400-acre site that SeverCorr has set aside for business partners.

Samuel, Son Completes
Purchase of Form-Tech
Samuel, Son & Co. Ltd. has finalized the purchase of the inventory, equipment and service center business of Form-Tech, Temperance, Mich., a division of Leggett and Platt.

Form-Tech’s sales of carbon flat-rolled steel exceed $20 million per year and will be combined with those of Samuel, Son Midwest, which operates from a 350,000-square-foot facility in Detroit.

The acquisition is a continuation of Samuel’s expansion program in both products sold and markets served in the Midwest. This acquisition will increase Samuel’s penetration in the Midwest furniture, automotive, shelving and heavy equipment markets, say company officials.

Form-Tech will report to Tom Sennett, vice-president and general manager of Samuel Midwest.

Reliance Expands Reach with Yarde Purchase
Reliance Steel & Aluminum Co. moved closer to becoming the nation’s largest service center operator with the acquisition of Yarde Metals, the 30th largest company in Metal Center News’ 2005 ranking of the Top 50 North American service centers. This follows the acquisition of Earle M. Jorgensen earlier in the year by Los Angeles-based Reliance.

Yarde, Southington, Conn., specializes in the processing and distribution of stainless steel and aluminum plate, rod and bar products, with metals service centers in Pelham, N.H.; East Hanover, N.J.; Hauppauge, N.Y.; High Point, N.C.; Streetsboro, Ohio; and Limerick, Pa. It also has a sales office in Ft. Lauderdale, Fla.

Yarde’s sales for the fiscal year ended June 30 were approximately $385 million.

“The Yarde acquisition adds significantly to our geographic network in the northeastern United States and also expands our customer base and product offerings,” says Reliance CEO David H. Hannah.

McNichols Relocates
Service Center in Chicago
McNichols Co., Tampa, Fla., has relocated its Chicago-area service center to Des Plaines, Ill., near O’Hare International Airport. The company moved from its Elk Grove Village, Ill., location to a newly constructed 80,000-square-foot space, which allows McNichols to increase its fabrication services, offer an expanded inventory and accommodate future growth. The new facility is double the size of its Elk Grove Village plant.

This is the second major expansion in 2006 for the $145 million family-owned company. McNichols’ Chicago-area metals service center had been in its previous building since 1976.

“We are very pleased to have completed this relocation and third major expansion in the Chicago area,” says McNichols President Herb Goetschius. “We designed this facility not only to meet the growing needs of our customers but to serve a greater role as a supply chain logistics center.”

Approximately 20,000 square feet have been dedicated to fabrication services, nearly double the previous location. The area includes two crane bays with 5-ton and 10-ton cranes. A new wire cloth processing area has been added with additional slitting and cutting equipment. Welding capabilities have also been increased to now include MIG, TIG, and stick welding, as well as plasma and torch cutting. Additional fabrication equipment is planned.

Monarch Buys Feralloy’s
Operations in Cleveland
Monarch Steel Co. will purchase Feralloy Corp.’s operations at Johnston Parkway in Cleveland near the intersection of Interstates 77 and 480.

“This purchase provides us the added capacity necessary to continue expanding our production capability and product offerings,” says Robert L. Meyer, Monarch’s CEO. “It conforms to our strategic plan to achieve greater economies of scale and scope and reinforces our continued commitment to the Cleveland area.”

This transaction will be another step toward consolidating the flat-roll processing capacity in the Cleveland area market and will strengthen Feralloy’s overall performance within the industry, according to Frank M. Walker, Feralloy president and CEO.

Acero Prime Expanding
in Northern Mexico
Acero Prime has launched a $2 million, 55,000-square-foot expansion at its steel service center in Ramos Arizpe in northern Mexico. The expansion will support Acero Prime’s entire customer base, but in particular, the steel supply chain of Toyota Tsusho for its major customer in San Antonio, Texas.

The expansion will increase Acero Prime’s total capacity in Mexico to 70,000 tons per month for steel processing and logistics management.

Acero Prime is a joint venture of Feralloy México, U.S. Steel Export Company de México and Mitsui Steel Holdings, Inc. It operates from three locations: San Luis Potosí in the center of México, Ramos Arizpe in the north and Toluca in the southern center of the country.

Briefs
Olympic Steel Inc., Cleveland, has announced plans to implement a new information system that consolidates its three legacy systems into an integrated one. Company officials say the objective is to standardize and streamline business processes and improve support for its growing service center and fabrication businesses. Olympic selected Steelman Software Solutions Inc., Toronto, for its service center software. Hudson Global Resources will be employed for consulting, training, and project management during the implementation of the system. The project plan anticipates a 30-month phased implementation, which began last month, with estimated external implementation costs of around $14 million.

Heidtman Steel Products has installed a new cut-to-length line from Red Bud Industries, Red Bud, Ill., at its Butler, Ind., facility. The new 3/8th-inch line features a heavy gauge straightener, stretcher leveler and grip feed system.

Marmon/Keystone Corp., Butler, Pa., opened its Rochester, N.Y., service center in early July. The 30,000-square-foot facility maintains an inventory of carbon, stainless and aluminum pipe, plus stainless and chrome-plated bar products. Lou Grenci, district manager of the company’s Butler service center, oversees operations at the Rochester facility, which services customers in central and western New York. In other action, Marmon/Keystone honored more than 70 multinational suppliers at its annual Supplier Recognition Day. Rath Gibson, North Branch, N.J., was honored for perfect performance in on-time delivery, zero defects and outstanding service. Kaiser Chandler, Kaiser, Ariz., and Sharon Tube Co., Sharon, Pa., were recognized as most improved companies.

Phoenix Metals Co. Inc., Atlanta, is constructing a $4.2 million, 101,700-square-foot steel service center in Charlotte, N.C. The facility will serve customers in the Carolinas, Virginia and West Virginia. Completion of the project is scheduled for March 2007. Phoenix Metals is a subsidiary of Reliance Steel and Aluminum Co., Los Angeles.

TMX Aerospace, a division of ThyssenKrupp Materials NA, has entered into a six-year contract with Bombardier Aerospace to become its service provider for cut-to-size aluminum and related supply chain services. TMX Aerospace will service Bombardier’s primary manufacturing facility in Montreal, including daily just-in-time deliveries supported by an electronic order release system. TMX Aerospace, Kent, Wash., will operate from a new local facility in the Montreal area.

Friedman Industries, Houston, has ordered a hot-band skin pass mill from Butech Bliss, Salem, Ohio, for installation at its new Decatur, Ala., facility. The 84-inch mill will provide Friedman with the ability to skin pass a wide range of products at higher speed and precision. The new flat-roll facility should be on-line by mid-2007.