UPDATE | Cleveland-Cliffs, AK Steel merger could mean new life for idle Ashland plant

By  | 

ASHLAND, Ky. (WSAZ/AP) -- UPDATE 12/3/19 @ 1 p.m.
A merger agreement between Cleveland-Cliffs Inc. and AK Steel means Cliffs has acquired all of the issued and outstanding shares of AK Steel common stock.

The company announced Tuesday that they bought out AK for a little more than $1 billion.

AK says the merger will combine with Cliffs to create a vertically integrated producer of value-added iron ore and steel products.

Cliffs is North America's largest producer of iron ore pellets, and AK says with the companies combined, they will be "ideally positioned to provide high-value iron ore and steel solutions to customers primarily across North America."

According to a release, one of the strategic and financial benefits of the merger could bring new life to AK's now idle Ashland location.

"The combined company will ensure pellet volume commitments to AK Steel's blast furnaces along with Cliffs' Toledo hot briquetted iron facility, to complement its existing long-term minimum volume pellet offtake agreements with other key integrated steel producers. Further, the potential startup of pig iron manufacturing at AK Steel's facility in Ashland, Kentucky would create future opportunities for pellet demand and more metallics products without significant additional capital expenditures," the release says.

The transaction is expected to close in the first half of 2020.

State and local leaders say they're overjoyed by the announcement.

"We look forward to receiving more details about today’s news. We will work to create and restore good-paying jobs in the Ashland area every day of my administration," Gov.-elect Andy Beshear said.

“Our goal was to ensure the AK Steel property didn’t sit idle rusting as a reminder of our past. While the loss of Armco/AK Steel will always be deeply felt and grieved in this community, we need to continue to move toward the future and this announcement provides hope and positive energy," said state Rep. Terri Branham Clark (D).

Ashland City Commissioner Matt Perkins said, “I’m thrilled with the proposed merger and excited that the Ashland furnace was highlighted for potentially reopening. We always knew the site was viable and our people are ready to work. We as a city will support them any way we can."

State Rep. Danny Bentley, R-Boyd/Greenup, said, "This is a major step forward for both Ashland and surrounding communities. I am optimistic that good things are on the horizon, but also think it is important to recognize that two factors play an important role in such an announcement - the strength of our workforce and retaining the positive economic policies that I've fought hard to pass in Frankfort. We know our workforce is solid, the people of this area will outwork anyone. I just hope that the commitment to growing jobs remains strong."



UPDATE 12/3/19 @ 7:50 a.m.
As headwinds mount for steelmakers, Cleveland-Cliffs buys AK Steel for $1 billion.

Tuesday's announcement comes a little less than a month since the facility made its final coil.

This is a developing story. Keep clicking the WSAZ APP for the latest information.



UPDATE 1/28/19 @ 6:20 p.m.
A facility that has been idled since 2015 will officially close by the end of 2019.

Ashland Mayor Steve Gilmore tells WSAZ that officials with AK Steel called to say they will be closing the plant.

Gilmore says this will directly impact about 200 people.

Gilmore tells WSAZ the company has been able to relocate around 170 people over the last few years since the plant idled. The hope is the remaining 200 employed will be relocated. They will also be offered severance packages.

“It’s not like anyone wasn’t expecting this to happen, we were,” Gilmore told WSAZ. “We were hoping against it, but the truth of it is, all of us need to pull together and do all we can and work with AK to maybe sell that plant, and get something else in there and get some sort of revitalization of new jobs in some form or fashion.”

Gilmore went on to say it is a very sad day for Ashland, but the city will stay positive as they work to regroup.

AK Steel released the following statement on its website:

"Given the company’s strategy of focusing on value-added, more innovative and differentiated products, AK Steel plans to close the largely-idled Ashland Works facility by the end of 2019. More than three years ago, AK Steel idled most of the Ashland Works operations, including the blast furnace, but continued to operate a single hot dip galvanizing coating line with 230 employees. The company plans to increase its operating efficiency and lower its costs by completing the shutdown of the blast furnace and steel-making operations within the next several months, and by working with its customers to transition products coated at Ashland Works to other AK Steel operations in the United States with available capacity before the end of this year. This will increase those operations’ utilization rates. Production volumes and customer shipments are not expected to be impacted by the closure. The company will offer employees at the Ashland Workssite open jobs at its other facilities.

"Once fully implemented, these actions are expected to result in annual savings of over $40 million. These savings, combined with the positive impact of the Administration’s policies to address unfair trade practices, will help facilitate the company’s longer term growth plans. It will also help maintain and enhance the company’s more cost effective steel-making facilities and further drive growth and innovation. The company expects to invest approximately $650 million in maintenance at its facilities in 2019 and make another $170 million to $190 million in capital investments. Over the last five years, the company has invested over $5 billion in its steel-making assets and downstream businesses, including over $4 billion in maintenance and capital investments and $1.1 billion in acquisitions.

"Associated with the closure of Ashland Works, the company expects to record a charge of approximately $80 million during the first quarter of 2019. The charge includes approximately $20 million for termination of certain take-or-pay supply agreements, approximately $30 million for supplemental unemployment and other employee benefit costs, an estimated multi-employer plan withdrawal liability of $25 million and approximately $5 million for other costs. With respect to the approximately $80 million charge, the company expects to make cash payments of approximately $15 million in 2019, $30 million in 2020 and the remaining amount over several years thereafter. The actual multi-employer plan withdrawal liability will not be known until 2020 and is expected to be paid over a number of years. In addition to the approximately $80 million charge recorded in the first quarter of 2019, the company expects to record expenses of approximately $14 million over full-year 2019, consisting of cash costs of approximately $10 million related to closing the facility, and $4 million of accelerated depreciation related to the coating line fixed assets. These cash costs related to closing the facility will decline in future years and the accelerated depreciation expense will not be incurred beyond 2019."



UPDATE 12/17/15 @ 7:15 p.m.
Nearly 600 people are being laid off at AK Steel, starting this weekend, according to the United Steel Workers Local 1865.

The layoffs were announced in October. At the time they issued the WARN notices, the company said it was a result of challenging domestic market conditions. 733 were expected to be impacted.

“We are taking this necessary step due to the onslaught of what we believe are unfairly traded imports of carbon steel that have been flooding our shores. These imports have substantially reduced order intake rates, production rates, shipment volumes and selling prices,” said James L. Wainscott, Chairman, President and CEO of AK Steel. “We will continue to closely monitor market conditions and run our overall operations as efficiently as possible to continue to meet our customers’ needs.”

Union President Scott Conley tells WSAZ 599 workers will be laid off.

Starting Thursday, workers are being notified of the layoffs.

The first round of layoffs will impact 250-280 people.

Conley tells WSAZ the layoffs impact several departments.

No word at this time of the layoffs are temporary or permanent. Conley says they are being called temporary, but a call back date has not been issued.

At the time the WARN notices were issued, the company said the layoffs could last six months.

Ashland Mayor Chuck Charles tells WSAZ the city plans to help the laid-off workers in any way it can.

"It's really hard I think when you start thinking about all of these families and how they're affected," said Charles. "How they're going to make their mortgage payments, how they're going to make their car payments, you know? So there will be a huge scramble."

The layoffs are happening because the steel industry is struggling to compete with foreign manufacturers, like companies in China.

Charles said he and other local officials took their concerns to Washington earlier this year. They want to see the federal government raise tariffs to level the playing field.

"We took that message to our congressmen, our senators, we even took it to the Department of Commerce, the International Trade Administration," said Charles. "Spoke to those individuals there about the problem, specifically in Ashland, and tried to talk about how it was affecting our local communities. They were very appreciative that we came there to do that because it gave them a hometown feel of actually what was truly happening with our community."

Charles said Kentucky's governor also plans to meet with the CEO of AK Steel.

In addition to the steel workers, Charles said there will be a ripple effect, impacting other industries including the rail industry, truck drivers and contractors.

"The banks and the credit unions and mortgage companies, you'll see a lot begin to affect so many different organizations, not just AK Steel," said Charles.

As for assisting workers who are laid off, Charles said many of them will have unemployment benefits. After that, he said the city will try to help them get training for new jobs.

ORIGINAL STORY 12/17/15 @ 1 p.m.
ASHLAND, Ky. (WSAZ) -- Nearly 600 people are being laid off at AK Steel, starting this weekend, according to the United Steel Workers Local 1865.

The layoffs were announced in October. At the time they issued the WARN notices, the company said it was a result of challenging domestic market conditions. 733 were expected to be impacted.

“We are taking this necessary step due to the onslaught of what we believe are unfairly traded imports of carbon steel that have been flooding our shores. These imports have substantially reduced order intake rates, production rates, shipment volumes and selling prices,” said James L. Wainscott, Chairman, President and CEO of AK Steel. “We will continue to closely monitor market conditions and run our overall operations as efficiently as possible to continue to meet our customers’ needs.”

Union President Scott Conley tells WSAZ 599 workers will be laid off.

Starting Thursday, workers are being notified of the layoffs.

The first round of layoffs will impact 250-280 people.

Conley tells WSAZ the layoffs impact several departments.

No word at this time of the layoffs are temporary or permanent. Conley says they are being called temporary, but a call back date has not been issued.

At the time the WARN notices were issued, the company said the layoffs could last six months.



 
Comments are posted from viewers like you and do not always reflect the views of this station. powered by Disqus