This is not first setback for Delaware steel plant

Delaware’s troubled manufacturing sector got more more bad news Monday when Evraz North America announced the suspension of production at its Claymont mini mill.

 

The shutdown, blamed on competition from China, will result in 375 layoffs. The site has employed as many as 500.  During the next two months, about 375 employees will complete processing and shipping of existing products and prepare the mill for idling. Evraz will consider restarting the operations as soon as market conditions improve, the company stated.

A statement from the governor’s office cited competition from China as a major reason for the shutdown. One American steelmaker AK, formerly Armco, this month, asked federal regulators to investigate whether China and other nations were “dumping” a type of steel used in electrical equipment on the American market. AK claimed many foreign steelmakers are heavily subsidized by their governments and have the ability to sell below cost.

In August, the U.S. International Trade Commission ruled Friday that eight countries, including China and South Korea were harming domestic steelmakers by flooding the U.S. with steel imports. The ruling covered steel used for piping in the oil and gas industry.  Evraz uses recycled steel from automobiles and other sources to feed the mill, which produces heavy plate used in construction and other areas. 

The mill has an up and down history. Known as Phoenix Steel for many years, the parent company later went into bankruptcy proceedings.  Former Delaware Lt. Gov. S.B. Woo, helped engineer the sale of the struggling mill to a unit of China’s government owned steel company in 1989. The government entity operated the mill under the name Citisteel and sold the operation in 2005 to H.I.G. Capital, which renamed it Claymont Steel. Company stock was publicly traded for a time.

Evraz, a steel company that is partly owned by Russian billionaire and soccer team owner Roman Abramovich, expanded in North America with a series of acquisitions, paying $564 million for outstanding stock in Claymont Steel in 2007.

North American operations of Evraz are based in Chicago. Evraz, which is based on London, reported a loss of $122 million in the first half of this year from its worldwide operations that extend from the Russian Republic to South Africa.

“We appreciate our employees’ efforts to operate Evraz Claymont as efficiently as possible,” said John Zanieski, executive vice president – flat products and recycling. “Unfortunately, market conditions continue to be challenging and low market visibility makes it difficult to foresee when positive changes will occur.”

All of the mill’s employees, with the exception of a small crew who will remain to maintain the site, have been issued Worker Adjustment and Retraining Notification (WARN) materials.

The company will work with Governor Markell’s office to evaluate options for resuming operations at the Claymont mill. “We value the support we have received from the governor, the state of Delaware and the community of Claymont over the years and appreciate their continued support during this challenging time,” stated Zanieski.

Total production volumes to date in 2013 and for 2012 were 189,025 tons and 383,590 tons, respectively.

Of the 375 employees at the plant, approximately 200 are Delawareans. Another 60 employees had been laid off in April. At one point, the mill was the largest business customer of Delmarva Power, according to an economic impact report.

Delaware’s manufacturing sector has seen a small loss in employment this year, according to a recent report from Manufacturer’s Guide.

This came as other states have seen gains, largely due to the comeback of the auto industry. The state’s two auto plants closed in 2008 and 2009 and efforts to reopen the GM plant near Newport by Fisker Automotive were thwarted by financial problems at the hybrid automaker.

Evraz has continued to invest in the plant with a $16 million system aimed at curbing pollution from the mill in the northeast corner of the state.

Doug Rainey is the editor of the Delaware Business Daily.  Email Doug at drainey@delawarebusinessdaily.com.  Follow Doug on twitter: https://twitter.com/DougRaineyDE.