Service Steel Inc. to shut down its operations in Swan Island factory ,Victoria

3 February 2015

Service Steel Inc. will shut down at the end of February after more than three decades. The company is liquidating its Swan Island factory, along with the Washington plant where it had hoped to expand.

A company representative confirmed the out-of-court liquidation as Service Steel's legal and financial troubles became more visibile.

An auction bill listing the company's remaining equipment and inventory began circulating among potential industry buyers. And a staffing firm sued Service Steel Jan. 12, saying the company is past due on debts incurred as far back as June.

"There will be no more Service Steel," said Edward Hostmann, the Lake Oswego adviser Service Steel hired to manage its liquidation.

The company cut and assembled steel parts to order, with a sizable business making armored plates for military vehicles. That work helped fuel its growth in Portland from several dozen employees to as many as 250 in recent years, although state records show that number was closer to 190 last April.

Executives were confident enough in the company's future that they bought industrial space at the Port of Ephrata in eastern Washington to expand.

As the business was mulling a move there in 2013, President Edward Westerdahl told port commissioners that Service Steel did more than $50 million in business every year, turning $1 million in profits, and was growing. The business planned to employ 50 people when Ephrata operations got underway.

"They started getting things ready for production, and then they're not," Port Manager Mike Wren. "They never really got going."

Westerdahl referred calls to comment about the shutdown to Hostmann.

Wren said Westerdahl informed him of the plans to stop operating at both locations.

Learning Service Steel wasn't going to come to after all "was definitely a disappointment," Wren said.

Auctioneer James G. Murphy Co., based in Kenmore, Washington, will sell many of Service Steel's remaining possessions March 17 and 18. The online sale bill lists more than 125 machines, trucks and pieces of equipment, as well as 5 million pounds of steel. Some of the machines are located in Ephrata.

At the same time, Service Steel is facing a lawsuit filed by staffing agency Aerotek in U.S. District Court in Portland. The Maryland temp firm contends Service Steel owes $652,000 in unpaid bills stemming as far back as June 20.

Court records show Service Steel has not yet responded to those allegations.

Its shutdown will also be a blow to Portland's Enterprise Zone portfolio. Under the program, companies do not pay property taxes on capital investment for a set number of years, as long as they meet job and pay benchmarks.

Service Steel has signed two of the agreements, one in 2007 and another in 2011, according to Oregon Department of Revenue records. The company saved $49,700 on its 2013-2014 tax bill through the deals.