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Charter May Add Melting Facility

May 1, 2003

By David Prizinsky, Crain's Cleveland Business

Charter Steel, the successor to the former American Steel & Wire Corp. in Cuyahoga Heights, has begun an engineering study that might lead to the construction of an electric furnace scrap metal melting complex that would round out the operations of the local rolling mill.

Company officials last week emphasized that no final decision has been made, but indicated the engineering feasibility study will be completed this fall. Industry experts estimate the cost of a new steelmaking shop ranges from $60 million to $100 million, depending on its capacity and technical sophistication.

A steelmaking complex would give Charter Steel’s plant at 4300 E. 49th St. its own supply of steel and would eliminate the need for the company to buy semi-finished steel on the open market. The 75-employee Cuyahoga Heights plant produces steel bars that are rolled from re-heated, semi-finished billets that arrive cold at the mill. The plant has a capacity to produce 650,000 tons of bars annually, primarily for makers of fasteners and other components for the automotive industry.

"We are happy with our investment in Cleveland," said John Couper, chief financial officer of Charter Manufacturing Co., the parent company of Charter Steel. "We are looking at a range of options, and no final decisions have been made. But engineering studies are expensive, and we wouldn't be doing one if we weren't serious about a melt shop."

Charter Manufacturing is based in Mequon, Wis. It bought the Cuyahoga Heights plant a year ago from embattled Birmingham Steel Corp. of Alabama, which filed for Chapter 11 bankruptcy protection in June 2002 and was acquired this year by steelmaker Nucor Corp. When Charter Manufacturing acquired the mill, company president Tom Glaister told Crain's Cleveland Business that his long-term plans for the local mill included the possibility of building a steelmaking shop.

Mr. Couper said a number of issues must be addressed before a final decision is made to go ahead with the project. Those issues include the outlook for the manufacturing economy.

Mr. Couper said the steel market is soft and wouldn't be conducive in its present state to making such a large investment. He said the engineering study would be completed by the end of September.

One local steel consumer, who asked not to be identified, said Charter Steel officials have indicated informally that the Cuyahoga Heights plant could be pouring its own steel within two years.

Cuyahoga Heights Mayor Louis Bacci said Charter Steel has submitted some engineering drawings to the village. He said the company could start the project in the "near future," though he could not offer a more specific timetable.

The mayor said the mill site consists of 80 acres and would accommodate an electric furnace shop that melts scrap and other forms of iron to produce steel. Mayor Bacci said he admired Charter Steel's management and looked forward to helping them move the project forward.

The Charter Steel plant has had a well-documented history since it was revived in 1986 by Steel industry veteran Thomas N. Tyrrell, who formed American Steel & Wire to buy the plant from U.S. Steel Corp. U.S. Steel had closed the plant in 1984. Investors sold American Steel & Wire in 1993 to Birmingham Steel. Birmingham built a $110 million bar rolling mill at the plant in 1996, but its plans to build a melt shop in the area to feed the mill were scrapped and a melt shop was constructed instead in Memphis, Tenn.

American Steel & Wire began its operations by reviving a mothballed rod mill at the plant. Charter Steel never used that rod mill, and Mr. Couper said it is in the process of being sold. He said the rod mill likely will be shipped to a foreign steel company.