Gerdau Ameristeel to Idle Sayreville Plant, Close Perth Amboy Rolling Mill
06/09/2009 - Gerdau Ameristeel is suspending production at its Sayreville, N.J., steel mill and closing its rolling mill in neighboring Perth Amboy, N.J., and has also entered discussions with the USW regarding the potential closure of its Sand Springs, Okla., steel mill.
Gerdau Ameristeel Corp. is suspending production at its Sayreville, N.J., steel mill and closing its rolling mill in neighboring Perth Amboy, N.J., citing lower demand for its products.
"This was a very difficult decision that came after careful analysis and review of the marketplace, our production capabilities, and the most cost effective alternatives to meet the current and future needs of our customers throughout North America during this unprecedented economic downturn,” commented Gerdau Ameristeel President and CEO Mario Longhi. “These actions follow a series of steps the company has taken over the last nine months to reduce its costs.”
The company expects the idling and closure to occur gradually over the next several months, and indicated that Sayreville operations would restart when business conditions warrant. In the meantime, the company said the Sayreville facility would continue to carry a full range of products in inventory available for shipment or customer pickup.
The company said it is also entering into discussions with the United Steel Workers regarding the potential closure of the company's steel mill located in Sand Springs, Okla.
“We understand the impact that these decisions will have on the lives of our employees and our communities, but unfortunately market conditions mandated that these actions be taken at this time,” noted Longhi. “The company will make every effort to help displaced employees through this time of transition.”
The company expects to incur a charge of approximately $80 to $140 million related to the closures, including approximately $15 to $30 million in cash costs for severance and facility closure expenses. Charges will likely be included in the three-month period ended June 30, 2009 as well as the three-month period ended September 30, 2009.
Depending on the outcome of the Sand Springs discussions, the company expects to realize annualized pre-tax cash savings of approximately $35 million to $70 million as a result of these actions.
Gerdau Ameristeel,the second-largest mini-mill steel producer in North America, has an annual manufacturing capacity of approximately 12 million tons of mill finished steel products. Through its vertically integrated network of 19 minimills (including one 50% owned joint venture minimill), 23 scrap recycling facilities and 60 downstream operations, Gerdau Ameristeel serves customers throughout the United States and Canada. The company's products are generally sold to steel service centers, steel fabricators, or directly to OEMs for use in a variety of industries. Gerdau Ameristeel's majority shareholder is the Gerdau Group, a 100+ year old steel company, the leading company in the production of long steel in the Americas, and one of the major specialty long steel suppliers in the world.
