CHICAGO Republic Steel expects to start a new melt shop in Lorain, Ohio, during the third quarter, allowing the company to adequately supply its special bar quality (SBQ) mills and run them more efficiently.
Republic has faced an internal shortage of raw materials for its Lorain and Lackawanna, N.Y., bar mills since its blast furnace was idled in 2008 (amm.com, Dec. 3, 2008). That has led to staggered, temporary work force reductions in Lorain, particularly in recent months, when bar demand pulled back.
"We are in the process of installing a new electric furnace in Lorain," Republic executive vice president Ted Thielens told AMM April 1. "We completed the foundation and concrete work and equipment is starting to arrive for installation."
However, until the melt shop is running, Republic remains in a "steel-short situation, dependent on the melt shop in Canton," he said. "We are not able to operate all three bar mills on a continuous basis, so at Lorain we run the bar mills two to three weeks per month."
Lorain has one mill that produces coils of up to 1-inch diameter hot-rolled bar, and a second that makes 3- to 6.5-inch diameter hot-rolled bar. The Lackawanna mill produces up to 3-inch diameter bar, shipped primarily to automotive customers.
"That has been busier than the two mills in Lorain, and we run that mill heavier," Thielens said. "This year, were running each of the Lorain mills two weeks a month. ... We will be on that schedule until the melt shop starts up, and then well be able to increase production on the bar mills."
As the bar mills are typically on two weeks and off two weeks, this has meant temporary layoffs during the off weeks. Up to 200 production workers are affected each month, Thielens said, but noted that other departmentssuch as billet inspection and conditioningcontinue operating.
"We certainly look forward to the additional capacity coming online with the new melt shop," he said, acknowledging that the Canton, Ohio-based company has "missed some opportunities in the market" because of its insufficient steel production.
The Lorain melt shop will allow Republic to produce and sell bar, coil and semifinished billets, Thielens said.
"We had a very slow second half in 2012, but we have seen a steady improvement in incoming orders. That is encouraging; a positive indication for the future, when we will need added steel production," he said.
Dan Voorhees, president of United Steelworkers union Local 1104, couldnt be reached for comment on the pattern of temporary layoffs or the progress of the melt shop construction.