AK Steel’s redevelopment could take awhile

February 3, 2019
Armco Steel, seen in this aerial view from 1972, built its Ashland Works in the 1920s. In 1989, Armco's Ashland Works joined with Kawasaki Steel to form AK Steel. Last week, AK Steel announced the Ashland plant would close this year, laying off the 230 employees who still work there.

For nearly a century, the steel works along the Ohio River at Ashland comprised one of the dominant industrial operations in the Tri-State.

Armco Steel built its Ashland Works in the 1920s. It grew through expansions and acquisitions, and by the 1950s more than 7,000 people worked there. Employment numbered in the thousands until automation and competition whittled that number down to the hundreds by the 1990s.

In 1989, Armco placed the Ashland Works in a joint venture with Kawasaki Steel to form AK Steel. A few years later, AK Steel was spun off as a freestanding company, and in 1999 it acquired Armco.

The Ashland Works has had its ups and downs over the years, just as the steel industry in general has. In recent years, they just couldn’t compete either in the national or international steel markets or even within AK Steel itself.

“This administration’s strong actions in addressing unfair global trade issues including the Section 232 tariffs has strengthened our industry. However, global overcapacity particularly from China remains a systemic problem,” Roger Newport, CEO of AK Steel, said in a conference call last week. “This along with recent U.S. announcements of new steelmaking capacity and the restart of existing mills will create more competition in the commodity steel market in the United States.

“Our strategic actions continue to focus on enhancing our competitive cost position and selling in the products that generate an adequate return. Thus in this environment we ultimately concluded that a restart of the Ashland hot-end operations would not enhance our earnings profile or provide an adequate return to our investors over the long term.”

So while the steel industry in the United States as a whole may be doing better, in some places it is not. Ashland is one of those places.

AK Steel officials didn’t offer many hints of what the future of the Ashland Works property will be after all operations there cease later this year.

“The plan or the intent is to permanently close the facility. What we do with it after its closure will depend on offers or anything else we choose to do with it at that point,” Karl Reich, AK Steel president and chief operating officer, said during the call.

“We’ve looked at all the different alternatives, as you can imagine, as a company looking at what’s the best way, can we generate returns out of that,” he continued, adding later, “The facilities are being permanently shut down, but the assets will still be sitting there for a while.”

The property has excellent rail access, sits along the Ohio River with barge docks and is along U.S. 23.

Other than the usual brownfield concerns, it could be considered prime property for redevelopment.

The problem is that prime property for redevelopment does not always translate into redevelopment, at least in the Tri-State. The old Ironton Iron foundry closed a couple of decades ago. The plant was razed and for years has been a level lot awaiting redevelopment.

ACF Industries once employed hundreds in Huntington. That plant has sat idle since it closed.

The former Owens-Illinois glass bottle factory in Huntington’s West End and neighboring factories were redeveloped into an industrial park, but that took years of work and significant investments of public money.

So which path will the Ashland Works take? Will it be quick or slow? That could depend in large part on the efforts of officials in Washington, Frankfort and Ashland.

There likely will be promises, false starts and disappointments along the way. Patience is a must. Success may take a generation. That kind of slow progress has happened in this area before, but it will be necessary to find a replacement for one of the Tri-State’s signature employers.

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