Weirton Steel Hot Strip Mill Closing after Nearly a Century

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Researched by Industrial Info Resources (Sugar Land, Texas)-- ArcelorMittal (Luxembourg) is writing another chapter in the history of Weirton Steel mill in Weirton, West Virginia, as it ceases production at the hot mill in December. The tin mill will remain operational. Associated costs to close the mill are expected to reach $10 million.

Founded in 1909, Weirton was a fully integrated steel mill. A decade later, the mill was plagued with strikes, and production decreased 50% for a while. In 1929, Weirton Steel joined with Michigan Steel and M.A. Hanna to form the National Steel Corporation.

In 1982, when the industry fell into a slump, the plant laid off 2,300 employees, and production was reduced 40%. Earlier that year, the former owner announced that no more investments would go toward capital spending at the Weirton plant, with the hope that the plant would be purchased by the workforce through an Employee Stock Ownership Plan (ESOP). The community supported the initiative and in September 1983, union members approved the ESOP, forming the Weirton Steel Company in early 1984.

In 1998, the plant ranked 268 on the Fortune 500 list of U.S. industrial corporations. A far cry from the massive layoffs of 1982 - or is it? By early 1992, the ranking slipped and instead showed a loss rather than a profit for the year, yet the company was still ranked the eighth largest steel producer in the country.

Weirton filed for a voluntary petition under Chapter 11 bankruptcy to reorganize in early 2003 - the same year it was sold to the Ohio-based International Steel Group in 2003. Now, it is known as ISG Weirton Incorporated. Workers took pay cuts to sweeten the deal for the buyout. The pension plan was handed over to the federal Pension Benefit Guaranty Corporation, and payouts were reduced an average of 25%.

After shutting the blast furnace in July 2004, the International Steel Group announced that it would restart the No. 4 blast furnace at Weirton Steel in response to stronger customer demand. It was also stipulated that 50 employees would be called back. That same year, Weirton was, again, sold to Mittal Steel.

Mittal wanted to make the plant more competitive and did not hesitate to state that there were no guarantees that the mill would remain operational in the volatile marketplace. That statement still holds true today. December 2005 brought more sad tidings; Weirton Mittal Steel declared that it would not be restarting the blast furnaces. Instead it looked to reconfigure the plant around its successful tin-plating operations. About 700 workers were affected by the additional layoffs. Weirton would now have to compete with other companies but also with mills in the Mittal Steel Group. During that same period, there were talks of closing the hot mill.

Mittal's integrated mills have been compared and ranked by cost, profit margins and raw material inputs. The lowest-ranking plant, the "swing" plant, was given the dubious honor of the facility that during times of low demand, just does not produce enough money. It's not entirely unexpected that Weirton finds itself on the bottom of that list. Before selling the company, ISG had executed a contract with Cleveland-Cliffs, a shipping and mining company, to supply Weirton with iron-ore pellets through 2019. Early in April 2006, Cleveland-Cliffs agreed to cancel the Weirton invoice when Mittal agreed to purchase an unspecified amount of ore through 2010 for its Cleveland and Indiana Harbor mills.

As 2007 arrived, Mittal found itself in the precarious position in having to sell a plant to settle antitrust issues raised by its merger with Arcelor. Mittal offered to sell the Weirton Mill. Instead, it was ordered by the government to sell the Sparrows Point Plant near Baltimore. It operates as an integrated mill, meaning it produces the raw steel slabs used in tin mill products. And Weirton is no longer equipped for that. Had it been the one sold, a new source of raw materials would have been an issue.

Now in the offing, ArcelorMittal informed local government officials, as well as union leaders, that the Weirton hot strip mill will be closed in mid-December 2007. The hot strip mill converts steel slabs into coils for additional treatment in the tin mill. The closure will see a loss of about 250 hourly and 15 salaried positions, leaving the once mighty workforce with fewer than 1,000 people. In the 1960s the plant boasted 14,000 employees. This closure follows the footsteps of previous major closures. The company knew it had issues with the hot strip mill because it had undesirable narrow width capabilities. ArcelorMittal anticipates some cleanup at the plant. That cleanup might include selling portions of the mill and demolishing older abandoned sections.

Industrial Info has tracked major spending at this plant since 1998. The total expenditures have reached more than $200 million in that capital and maintenance arena. The closing of the hot mill with costs reaching roughly $10 million will start with production coming to a halt in December. The next step will be the dismantling of subcontractors and employees and preparations for disposing the walking beam furnaces, hydraulic roughing and finishing stands, rotary crop shear, and the like.

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