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The saga of local steel

December 10, 2012
Morning Journal News

WHEELING - The liquidation of RG Steel leaves many questions for Ohio Valley residents. What will happen to the firm's plants? Will the federal government be forced to take over the pension funds? What's the future of the downtown Wheeling headquarters?

Here are some answers:

- As with many of the bankrupt steelmaker's former assets, the future of the RG Steel building, a downtown Wheeling landmark since 1905, remains unclear. Currently, less than a dozen people work in the 12-story structure.

- For about an additional $80 million, officials with Frontier Industrial Corp. - which purchased the Mingo Junction steel facility out of bankruptcy for $20 million - believe they can restart the plant to get hundreds of people back to work.

- Esmark Inc. - a former owner of the entire Wheeling-Pitt empire before selling it to OAO Severstal in 2008 - also has a new contract with the United Steelworkers to operate the Yorkville mill, and Wheeling businessman Quay Mull has purchased the Martins Ferry facility.

- Thousands of retirees and displaced employees throughout the Ohio Valley are waiting to learn how RG's bankruptcy will further impact them. Some have the hope of returning to work, while those collecting pensions wait to learn if the federal Pension Benefit Guaranty Corp. will have to step in to ensure retirees continue receiving payments.

"The whole thing is really sad - and it is really a shame," an RG retiree said last week while he waited for someone to let him in at the downtown Wheeling structure.

Asking not to be identified, the man added, "There are just a few people inside finishing up here. This place will be completely empty by the end of the year."

Downtown Wheeling Headquarters

Walking into the building last week, one could barely find evidence of anyone working there. Esmark this summer had considered purchasing the downtown headquarters along with Wheeling Corrugating, a division of RG. Esmark Chairman and Chief Executive Officer James Bouchard said he wanted to buy the building to keep Wheeling Corrugating in business on four of the floors, while renting office space on the remaining eight floors.

However, Bouchard ultimately decided against making a bid for the downtown structure and the Wheeling Corrugating brand. He instead entered a venture to purchase RG's Yorkville plant, as well as a 50 percent stake in the nearby Ohio Coatings Co. tin plate production facility. Recently, the Business Development Corp. of the Northern Panhandle purchased the 600-acre Wheeling Corrugating property in Beech Bottom.

Esmark spokesman Bill Keegan said, "As for the RG headquarters building, I don't have any idea what will become of it." At the current time, nine people are working in the building, an RG employee said.

Just across Market Street, Wheeling officials have leveled several buildings in the 1100 block, including the former G.C. Murphy and Rite Aid structures.

Mayor Andy McKenzie said city leaders are very aware of the situation involving the RG Steel building.

"They are attempting to sell it - I am sure they would love to sell it," McKenzie said.

Noting the facility is part of the bankruptcy filing, McKenzie said the city cannot do much until this is resolved.

Mingo Junction mill

Though the facility has been shuttered since 2009, the largest and most modern of the local RG plants traces its roots back to the steel company owned by Andrew Carnegie in the late 1800s. A decade ago, company officials and local steelworkers said Wheeling-Pitt's new $115 million electric arc furnace at the Mingo plant would provide the company a new future.

That new future did not last long as Frontier Industrial - a company whose website states that is specializes in demolition and "industrial gutting" - was able to buy the entire plant, "state-of-the-art" furnace included, for $20 million.

Craig Slater, general counsel and vice president for Frontier, said the company is not just a "rip and run" organization.

He said estimates are that for about $80 million, the plant could start producing steel again.

"We have been talking to a lot of people. We believe these are great assets," Slater said, noting he believes it would take roughly six to seven months from the time someone would decide to restart the plant until sales could begin.

Slater said his company has spoken with local, state and federal officials about getting some sort of assistance to restart the plant, while Frontier also is working with multiple potential investors to make the project a reality.

He also said discussions with the United Steelworkers have been "positive."

"We have not set a deadline," he said, adding it is possible that Frontier may decide to demolish some of the plant, but reuse other portions.


Since Esmark took over the RG Yorkville, which is now known as the Ohio Cold Rolling Co., and nearby Ohio Coatings Co. plants, company leaders have been negotiating with USW Local 1223 officials to reach a working agreement to get the facilities going.

Union President Jerry Conners said Thursday members voted 194 to 24 in favor of accepting the Esmark contract, with hopes of getting back to work early next year.

"This is the only one of the RG plants that was sold to an operator. In that, we feel fortunate to have a chance to make this work," Conners said.

Noting he hoped to be able to restart operations "early next year," Bouchard said of the agreement, "This is an important milestone in our ongoing efforts to restart operations at Ohio Cold Rolling Co."

"This agreement is the culmination of months of hard work and signals a brighter future for our members, the steel industry and the Ohio Valley's economic engine," said Dave McCall, USW District 1 director.


Pension payments for the thousands of local Wheeling-Pitt, Esmark, Severstal or RG Steel retirees and beneficiaries should be ensured by the federal Pension Benefit Guaranty Corp. Last week, the federal agency acknowledged it would take over at least some of RG's local pension obligations.

The Pension Benefit Guaranty Corp. is "not funded by general tax revenues. PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives funds from pension plans it takes over."

The maximum benefit guaranteed by PBGC is adjusted annually.

For plans ended in 2010 and 2011, those who retire at age 65 can receive up to $4,500 a month.

Other RG operations

Wheeling businessman Quay Mull purchased the Martins Ferry RG mill. Numerous efforts to reach Mull to discuss his plans for the facility have been unsuccessful.

RG also has sold the idled Steubenville plant to a subsidiary of Herman Strauss Inc., a Wheeling-based recycling business. Strauss paid $4.3 million for about 103 acres, plus another $10.7 million for the scrap and machinery.

Another RG plant, Sparrows Point in Maryland, also has not been sold. Steel analyst Michael Locker of New York City-based Locker Associates Inc. said he is surprised that Sparrows Point remains up for grabs. He also said he is surprised Wheeling Corrugating, which has been a major player over the years in the construction industry, doesn't have a viable future at the present time.

As for 2013, Locker sees the potential for some improvement in the domestic market.

"It's going to be better than 2013, but probably not by much," he said.



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