Steelmaker Severstal Denies Write-Off Rumor

Aug. 7, 2009
Denies report that its Russian parent plans to exit the U.S. market

The fourth-largest domestic steelmaker is denying a report that its Russian parent plans to exit the U.S. market, just five years after it began investing billions to gain a regional presence. The report contends that Moscow-based OAO Severstal officials, as well as new Severstal North America executives named after a recent shakeup, notified United Steel Workers International officers of their plans. The union officials then notified local union presidents of the impending exit.

The report does not indicate how the steelmaker would pull itself from the domestic market. Within the past month OAO Severstal replaced two of the leaders heading its overseas organization. Severstal International CEO Gregory Mason left the company, as did Severstal North America chief operating officer Thomas Cera.

Severstal North America spokeswoman Bette Kovach issued a careful denial to the published report: "While our new leadership team in North America is reviewing a variety of operating strategies for our facilities, we expect our three facilities currently in operation to continue to run with a focus on greater efficiency and internal cost reduction," she stated.

OAO Severstal is among the worlds largest steelmakers by volume, and its domestic capacity is estimated at about 17.5 million tons/year. It began investing in domestic capacity with its 2004 of the former Rouge Steel, in Dearborn, Mich. That was followed by a joint-development of the Severstal Columbus mini-mill in Mississippi, which started up in 2007.

Those two operations remain the core of the organization. "Ongoing production at these facilities will allow us to meet the obligations of our order book while we also work to further enhance our ability to respond to customer needs," according to Ms. Kovach.

As steel prices spiked in the past four years, Severstal aggressively fought competitors to buy more domestic capacity. It acquired integrated plants once operated by Bethlehem Steel (Sparrows Point, Md.), WCI Steel (Warren, Ohio), and Wheeling-Pittsburgh Steel (Wheeling, W Va.)

Once industrial demand collapsed in 2008, Severstal followed the market pattern of idling operations. The latter three acquisitions have been shut down since late last year, and Severstal has no plans to restart. "As previously stated when issuing the WARN notifications in May 2009, the Warren and Wheeling operations will remain idle until the market returns for their products," Ms. Kovach concluded.

Popular Sponsored Recommendations

How to Build a Predictive Maintenance Program: Lessons Learned from LSB Industries’ Success

Dec. 21, 2023
Register today and join this webinar to gain insight on best practices for setting up a predictive maintenance program from industry experts.

Future-Proofing Your Business with Smart Manufacturing

Jan. 2, 2024
An IndustryWeek-Plant Services-Smart Industry-Automation World-hosted webinar sponsored by Amazon Web Services

Why DataOps may be the key to unlocking the full potential of digital transformation

Nov. 3, 2023
Read the 2023 market survey conducted by IndustryWeek

Executive Summary: Enterprise Resource Planning Manages Manufacturing Risk and Uncertainty in 2024

Jan. 4, 2024
Explore the future of manufacturing in 2024 by discovering how cloud-based ERP systems can help manufacturers thrive amidst supply chain disruptions and economic uncertainty.

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!