Roanoke Deal Helped in ’06, Steel Company Says: Employment at the Former Roanoke Electric Steel Plant Has Dropped Since the Deal in April With Steel Dynamics Inc.
By Duncan Adams, The Roanoke Times, Va.
Jan. 25–Indiana-based Steel Dynamics Inc. cited its acquisition last year of Roanoke Electric Steel as one contributor to SDI’s record year in 2006 — when SDI’s profits increased 79 percent from 2005 and sales jumped 48 percent to $3.2 billion.
And Keith Busse, president and chief executive officer for SDI, said the company’s capital investment this year in the former Roanoke Electric Steel plant could reach $40 million to $50 million.
But employment at the Roanoke plant has dropped since SDI and Roanoke Electric Steel closed their $281 million deal in April. Then, about 536 people worked for the Roanoke operation, where employment now totals about 495, the company reported.
Joe Crawford, vice president and general manager of Steel Dynamics Roanoke Bar Division, said several factors have decreased employment at his division. They include, he said, an early exit program offered to some employees, attrition and job cuts.
In April, during the final shareholders meeting for Roanoke Electric Steel, Busse said as new steelmaking technologies come on line in Roanoke, fewer employees might be required.
The former John W. Hancock Jr. steel plant in Salem employs about 215, according to SDI. Now known as New Millennium Building Systems, Roanoke division, the plant manufactures steel joists and is undergoing a major revamp as an SDI subsidiary.
The Roanoke steel plant is a mini-mill that relies on electric arc furnaces to melt scrap metal for the plant’s raw material. The molten steel is cast and then rolled into a variety of products. Crawford said the plant also plans to shut down a small melt furnace but anticipates affected workers will move into jobs vacated by those who have agreed to an early exit package or have otherwise left employment.
As for capital investments, Crawford said about $18 million could be spent on a new dust control system for a large melting furnace. Additional funds will be used to improve steel-melting operations and modernize other departments at the mill, he said.
Busse said Tuesday that the integration of Roanoke Electric Steel and its former subsidiaries is going well. He said steel bar products manufactured by Roanoke Electric Steel and Steel of West Virginia have helped SDI, whose previous offerings were dominated by flat-rolled steel, become a more diversified steelmaker.
Beginning in SDI’s third quarter, the companies “made a strong contribution to SDI’s earnings,” Busse said.
And 2006 was “a fantastic year,” Busse told industry analysts and stockholders during a Wednesday morning conference call.
Founded in 1955 by the late John W. “Jack” Hancock, a legendary Roanoke businessman and community leader, Roanoke Electric Steel is now a wholly owned subsidiary of SDI. Steel of West Virginia, formerly a Roanoke Electric Steel subsidiary, also is an SDI subsidiary.
On Wednesday, Busse said Steel Dynamics’ first-quarter results could be affected by weak prices for flat-rolled steel.
SDI’s stock price closed at $35.76, up 85 cents in Nasdaq trading.
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Copyright (c) 2007, The Roanoke Times, Va.
Distributed by McClatchy-Tribune Business News.
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