Union: ‘Steel people’ coming back to WCI

Reps from prospective buyer visit Warren mill

By LARRY RINGLER Tribune Chronicle
WARREN — It didn’t matter to seasoned steelworker union leaders that the parent of WCI Steel Inc.’s presumptive new owner is based in Russia.

What’s important for United Steelworkers District 1 Director Dave McCall and Local 1375 President Ed Machingo is OAO Severstal has money to upgrade the Warren mill and has experience running a steel mill.

‘‘My concerns are about our members and our retirees,’’ McCall said Wednesday afternoon after meeting at the Local 1375 hall with officials of the company’s North America operations. ‘‘The fact is they do have money, and they have a commitment to revitalize this mill.’’

McCall said the company is looking to spend $100 million ‘‘minimum’’ over the next five years to modernize the mill.

Machingo said he greeted Friday’s announcement of the binding agreement with a ‘‘big sigh of relief.’’ He said Severstal will be the first ‘‘steel people’’ to run the mill since Republic Steel Corp. through its heyday in the mid-20th century until 1984.

Subsequent owners LTV Corp., Ira Rennert and Harbinger Capital Partners Master Fund I Ltd., basically were financial entities.

‘‘We have steel people back in the driver’s seat,’’ Machingo said.

Representing Dearborn, Mich.-based Severstal North America Inc. at the meeting were Ronald Nock, president and chief executive officer; Thomas Cera, chief operating officer; Mark Yost, chief financial officer; and Patrick Murley, vice president of strategy and business development.

The purchase is expected to be completed in the July-September third quarter.

Meanwhile, the good times kept rolling for Severstal in the first three months of the year, according to the company’s first quarter report issued Wednesday.

Russia’s second largest steelmaker said it posted a 16.7 percent increase in revenue to a record $4.31 billion and a 14.6 percent rise in an operating profit measure to $1.04 billion from the same quarter last year.

Profit dipped 4.1 percent to $439 million, mainly due to a larger share of taxable profit at its Italy-based Lucchini steel operation and in North America, the company said.

Sharply higher raw material costs pushed cost of sales up 25.1 percent to $3.17 billion for Severstal’s consolidated holdings. Rising energy and labor costs were partially offset by job cuts and energy savings, the company said.

The Moscow metals and mining company noted the raw material increase came before price increases on steel products late in the first quarter, which are continuing.

Severstal’s North America steel operations delivered a 29.9 percent revenue gain over last year’s first quarter, despite reduced production from a blast furnace accident in January at its Severstal North America home base mill, the former Rouge Steel in Dearborn, Mich.

OAO Severstal Chief Executive Officer Alexei Mordashov said the favorable outlook for pricing and anticipated growth in sales volumes across the company’s businesses means the company expects more progress in 2008.

lringler@tribune-chronicle.com