Potential buyer wants to keep Georgetown steel mill open
27 May 2015
A prospective buyer has emerged who wants to save the Georgetown steel mill from its impending doom.
A Florida entrepreneur who tried twice before to buy the plant thinks now is his chance to acquire it and keep it running.
Joseph G. Wortley of Boca Raton is to meet with plant officials and tour the property on Thursday, he said in a telephone interview.
ArcelorMittal, parent company of what used to be known as Georgetown Steel, announced May 14 that it intends to shut down the 46-year-old plant permanently in August because of a flood of imported product that prevents making a profit.
ArcelorMittal spokespersons did not respond to requests for comment.
Wortley said he believes he can make the facility profitable because of its unique ability to make a high quality of wire rod. Wire rod is shipped to producers who make it into other items such as wire, nails, and the steel used in tires.
Wortley, who owns or is a partner in a wide variety of businesses, bid unsuccessfully for the plant in its bankruptcies under former owners in 2001 and
2003. He wanted the property badly enough to sue in an attempt to overturn the winning bid, which was lower than his, but later withdrew the challenge.
James Sanderson, president of United Steelworkers Local 7898, contacted Wortley after ArcelorMittal's announcement to see if he was still interested.
“I am very interested in it,” Wortley said.
He thinks he can make the mill profitable because it makes a product that is specialized and he does not think ArcelorMittal has used that to its advantage.
“Willy Korf was a smart guy and he located something there that is not duplicated anywhere else,” Wortley said.
Korf was a German industrialist who started the mill in 1968 to get a foothold in American markets. It opened in 1969.
“That plant deserves to live and be producing steel,” Wortley said.
He has not been in the steel business directly but knows something about it, he said.
“This is not just a whim. My family was in the steel business for 80 years. I grew up in the steel business.”
In the 2001 bankruptcy of GS Industries, the mill's former owner, Wortley bid $45 million. Bidders had to first prove to the bankruptcy court that they had the money for their purchase.
He was beaten by Midcoast Industries' bid of $53 million at the 2002 sale of the property, then raised his bid to $72.8 million.
Midcoast was awarded the mill anyway, and Wortley sued. As the lawsuit stalled, Midcoast floundered and also filed for bankruptcy in 2003. Wortley tried to buy Midcoast's interests before the bankruptcy went to a sale, but was unsuccessful. It then sold for $18 million to International Steel Group, which was bought out a few years later by Mittal Steel, which then merged with Arcelor.
But even if Wortley can't make a deal, it's too early to count the mill out, said Sanderson, who has been the local union president since 1988 and worked there since 1974.
Federal law and the union's contract require a number of steps to be taken before the plant can be closed, Sanderson said. The union could offer a contract that costs the company less, or the workers themselves could buy the plant and run it, he suggested.
The union contract says that after an announcement of a proposed permanent closing, “the company will meet with appropriate union representatives in order to provide them with an opportunity to discuss the company's proposed course of action, provide the union with any additional requested information and bargain in good faith over any suggested alternatives.”
“We have the right to bid on it ourselves,” Sanderson said.
At least one struggling steel mill took that option. In 1983, in another time of steel industry upheaval, the workers of Weirton Steel in Weirton, W.Va., bought their mill after the owners announced they would close it.
Over the years, the workers sold off a majority share of the plant but they kept it alive, and it is currently an ArcelorMittal property.
“We are very much adamant that we are going to do everything we can to keep our plant working,” Sanderson said.
The mill's union contract expires Sept. 1 so it has to be renegotiated anyway, and those talks were about to begin when the closing announcement came,
It is a regional contract, but can have provisions specific to Georgetown, and workers gave up $3.50 an hour after a shutdown in 2011. The workers will not work for pennies, but are willing to look at pay “if it rationally makes sense, in order to keep our jobs,” he said.
They make about $20 an hour now.
“It's not so much doom and gloom,” Sanderson said.
New jobs opening
If all that fails, it's not hopeless for the workers at the plant. The union has 172 members who work in the mill, with the rest of the 206 employees being
management. In addition, a mill service company that has 27 workers would likely go out of business too.
Georgetown County Economic Development manager Brian Tucker said there are opportunities here now and likely coming soon for workers who have the skills of those at the steel mill.
He said five or six existing companies who need workers with those skills have contacted him, and in addition “we are close to making an announcement for a project” and for expansions of existing facilities that could use steel mill workers.
“Those folks currently at the steel mill will have opportunities,” Tucker said.
They are also eligible for expanded unemployment benefits and job training if their jobs were obliterated because of underpriced imports, Sanderson said. He said he has already filed for those benefits.
Tucker said the county is also poised to help in any other way it can, and has informed the state Commerce Department that the steel mill may be available
and in need of new occupants who can offer jobs.
But so far ArcelorMittal has not said exactly what it plans to do, and has not communicated with the county since making the closure announcement, Tucker said.
The city is also waiting to see what happens with the possibility of losing a major employer and taxpayer, or of opening up the city's waterfront for new
The steel mill sprawls along a curve in the Sampit River just a few blocks from the city's Harborwalk. The back of the plant stands squarely in view from the walkway, while its front faces five blocks of South Fraser Street, which is also U.S. 17.
Mayor Jack Scoville said the city is evenly divided over whether residents would like to see the mill continue as it is, or close and open the way for more tourism-friendly development.
The city's existing development plan, updated in 2011, says a committee should be formed to examine what to do in case the mill closes.
Scoville said no formal committee was ever named, “but this has been something we have often talked about.”
The mill is private property and there is little the city can do to impose its will, he said. If a new owner takes over and keeps the mill running, things will continue as they are, Scoville said. But if that does not happen, the city has a role in encouraging the type of development or building use that would take place there.
Steel still needed
As he has said many times over the years when some residents said they would like for the steel mill to go away, tourism jobs don't pay what manufacturing jobs do, Sanderson said.
“That place right there has raised a lot of families,” he said, pointing toward the plant from the union hall window a block away.
Although he believes the mill can continue to produce a good quality of steel and make a profit, he fears that will be a close call if the federal government
does not clamp down further on underpriced imports.
In its closure announcement, ArcelorMittal said Chinese imports of wire rod were undercutting the company's prices so much that it is impossible to
ArcelorMittal and four other steel producers filed a complaint with the government last year under a program meant to punish what is called product dumping. The government ruled in favor of the companies and imposed new tariffs on the steel imports but it didn't help, Sanderson said.
Chinese firms still undercut American prices by routing their product through other countries, and they can still sell it for less than American companies, he said.
But Sanderson thinks the right kind of marketing and management will make the mill profitable again.
“We have a good potential here, a great opportunity,” he said.
Wortley says he thinks so too. He would take advantage of the special quality of the steel, and the plant's ability to produce it, he said.
Wortley knows there are many residents of the area who would just as soon see the plant shut down, but he said that would be a waste of a good facility and would contribute to the slide of American manufacturing.
“We still have to produce something in this country to have a higher standard of living,” he said.