Troubled Steelmaker Proceeds With Japanese Joint Venture
PITTSBURGH (AP) _ Wheeling-Pittsburgh Steel Corp. said it signed agreements Wednesday with Nisshin Steel Co. Ltd. of Japan to build a $65 million sheet steel coating plant, a joint venture delayed since October 1983 by the U.S. company’s financial trouble.
″We believe Wheeling-Pittsburgh will recover from the current difficult situation. We feel the coating line will reinforce the great probability of the recovery,″ said Kiichi Mochizuki, president of Nisshin Inc., the American arm of Japan’s sixth-largest steel producer.
Wheeling-Pittsburgh’s chief executive, George A. Ferris, said his company is operating with a nearly full order book and would report an operating profit in the first quarter.
″We had a great month of November. We had a great month of December. We had some record tonnages in December, and we’re off and flying in January,″ he said after a news conference.
Wheeling-Pittsburgh, one of the 10 largest U.S. steel producers, has been in Chapter 11 since April 16, trying to reorganize $530 million in bad loans. It will need the approval of U.S. Bankruptcy Judge Warren Bentz in order to proceed with the Nisshin venture, company officials said. A hearing is set late next month on the issue.
A plan to build a plant at Follansbee, W.Va., had been tabled since the project was announced here more than two years ago.
The plant should be operating within two years, employing about 100 people at the new facility and increasing employment at Wheeling-Pittsburgh’ s plants in Steubenville, Ohio, and Allenport, Pa., by 250 to 300 employees, said John E. Wright III, president and chief operating office of the newly created Wheeling-Nisshin Inc.
The partners also created Wheeling-Nisshin Coaters Inc.
Steubenville will pour steel and Allenport will roll it into sheets for the new plant.
The Follansbee operation will use a vacuum, hot-dip coating process that avoids high electricity costs associated with electrogalvanizing, a leading method of coating steel against rust, Mochizuki said.
Nisshin, which recorded $1 billion of its $1.7 billion sales last year from coated steel, developed the new process and is just now starting to operate its first vacuum deposition line outside Osaka, he said.
The Follansbee plant will produce three types of coated steel for the construction, appliance and auto industries. Coated flat-rolled steel is considered one of the most sought, most profitable products in the highly competitive steel industry.
Wheeling-Pittsburgh will be a one-third partner in the venture through contributions of land, buildings and services, Ferris said.
Nisshin will guarantee loans of about $55 million, most of that to be borrowed from Japanese banks, Mochizuki said.
A federal Urban Development Action Grant will provide $9 million.
Wheeling-Pittsburgh, a producer of sheet, strip, tin mill products and rail, could assume a larger role in the project if it recovers, Ferris said.
″We’ll be happy to have a 50-50 relationship as soon as Wheeling-Pitt is capable of sharing in the loan guarantees,″ Mochizuki said.