New Firm to Focus on Items for Auto, Welding Markets : Steel Executive Sees a Profitable Niche
The widespread woes of the U.S. steel industry have not dampened Tom N. Tyrrell’s enthusiasm for his newly founded American Steel & Wire Corp.
Tyrrell said there is a profit to be had making steel in the backyard of LTV Steel Co., the nation’s second-largest, but struggling, steelmaker.
Formed by a merger in 1984, LTV Steel found itself carried into bankruptcy court proceedings when its parent, Dallas-based LTV Corp., filed a Chapter 11 reorganization petition last July.
“While the steel industry is depressed, as in any depressed industry there are always going to be certain niches that are advantageous to get into,” Tyrrell said.
He said a strong market exists for high-quality steel rod and wire used in the automotive and welding industries. And if all goes well, Tyrrell said, the mill that began operations the day after Labor Day with about 100 people on the payroll could employ 300 steelworkers in its third year and 450 in four years.
American Steel & Wire is on 260 acres adjacent to the Cuyahoga River in this industrial suburb. That includes 40 acres of factory or office space.
The site is the former Cuyahoga Works of U.S. Steel, the nation’s biggest steel company, which changed its name to USX Corp. earlier this year.
Closed After 74 Years
U.S. Steel closed its Cuyahoga Works in 1984 after 74 years of operations. It had been refurbished in 1976 for $35 million and apparently was still profitable when it shut down.
The closing culminated tense labor-management discord. In December, 1983, a year the Cuyahoga Works produced 270,000 tons of rod, wire and steel strip, United Steelworkers of America Local 1298 rejected a second round of wage concessions demanded by the company.
“They kind of put the union in a corner,” said Tyrrell, who has made his career in steel sales and management with Bethlehem Steel and Raritan River Steel before taking charge at American Steel & Wire.
“When you get involved in a situation like that, it’s generally a no-win situation, and U.S. Steel had no choice but to shut the plant, because if they kept it open, every bargaining situation they ever got into would have this as a precedent. They probably did something they really didn’t want to do,” Tyrrell said.
Frank Valenta, USW union District 28 director, agrees.
“It was a good operating plant with good equipment and made quality products,” Valenta said. “It was a shame it ever shut down, but it became part of U.S. Steel’s rationalization program, when all of a sudden U.S. Steel said 20 plants are going down.”
About 700 workers lost their jobs when the Cuyahoga Works closed. It lay dormant amid speculation that U.S. Steel would demolish the plant and sell the land, taking a tax writeoff.
Sold With Other Mills
Instead, the plant was sold with some other mills in a $40-million deal to Chicago West Pullman Corp., a Cincinnati-based short-line railroad holding company. The deal included assurances that U.S. Steel’s Lorain Works would supply steel raw material to American Steel & Wire.
Top executives of Chicago West Pullman, businessman Roger Ach and lawyer John Peck, were seeking to acquire the Newburgh South Shore Railroad near Cleveland when they learned of the moth-balled steel mill near the rail line.
With a $1.5-million state grant, a $4-million state loan and other financing from Westinghouse Credit Corp. and Central Trust Co. in Cincinnati, along with a minority interest taken by Cleveland’s Primus Capital Fund, Ach and Peck acquired Cuyahoga Works and brought in Tyrrell to bring it back to life.
Keeping Industry Alive
“I see it as some investors trying to keep the steel industry alive,” Valenta said. “I don’t think in any way they fall into the category of being plant liquidators. They have real sincerity and honesty and want the plant in business.”
Tyrrell says his workers will receive wages averaging about 25% less than the pay for workers in a traditional unionized mill, although he declined to give a specific pay rate. Steelworkers at USX were making $12.24 an hour before they went on strike last month.
