NEW YORK OmniSource
Southeast, a division of scrap major OmniSource Corp., is in
the midst of an organizational restructuring that will result
in between 40 and 50 layoffs, sources familiar with the
situation told AMM.
A weak business environment and
related margin compression is the primary driver behind this
"right-sizing," according to sources familiar with the
Sources estimated the layoffs
will represent about 10 percent of the divisions work
force and will occur across all areas of the business. The
layoffs started last week, one source said.
"The organizational changes are
just an outcome of business conditions. Omni is trying to get
its business right-sized to meet the current market environment
and demand," a second well-placed source said.
Fort Wayne, Ind.-based
OmniSource, which is a wholly owned subsidiary of Steel
Dynamics Inc., declined to comment.
In the most recent quarter,
OmniSource generated operating earnings of nearly $16.57
million, up 44.8 percent from $11.44 million in the same period
last year, but sales fell 23.9 percent to $766.1 million from
just over $1 billion in the year-ago quarter (
amm.com, Oct. 18).
Talk of restructuring comes at a
time of increased margin compression for many domestic scrap
companies. Executives across the industry have pointed to
supply drawbacks from unpredictable weather conditions, a
laboring economy and volatile pricing as chief reasons for
As a result, other companies
have executed similar staffing moves.
Earlier this month, employees of
Mayfield, Ohio-based PSC Metals Inc. said the company had laid
off more than 100 workers, although the company has not
officially confirmed the talk (
amm.com, Nov. 9). PSC Metals, division of Icahn
Enterprises LP, announced an operating loss of $5 million for
the third quarter ended Sept. 30 on revenue of $236
In late August, Schnitzer Steel
Industries Inc. announced plans to cut 300 jobs, or nearly 7
percent of its total work force, "as part of a major
restructuring and cost-cutting exercise" (
amm.com, Aug. 28). Two months later, the company
reported a net loss in its fiscal fourth quarter ended. Aug. 31
of $485,000 on sales that fell 29.5 percent year on year to
$762.2 million (
amm.com, Oct. 25).
"There is no question that scrap
companies are struggling to stay profitable and need to make
hard decisions," a third market source said.