STEUBENVILLE - The formation of a new company announced Monday by Craig Bouchard does not signal any intent to bid to buy the former Wheeling-Pittsburgh Steel Corp. for a second time.
Bouchard, with his brother, Jim, formed Esmark, which operated and then owned Wheeling-Pitt for about two years. Their ownership ended with the sale of the mills and Esmark's steel service centers to Russia's Severstal in August 2008, weeks before the collapse of the American economy, for more than $1 billion. Esmark, led by Jim Bouchard, has bought back several of its former steel service center properties from Severstal.
Severstal shuttered its Wheeling-Pitt properties, known as Severstal Wheeling, in the months that followed, and while some downstream units are operating, the steelmaking and ironmaking furnaces at Mingo Junction remain closed.
Severstal reportedly is reviewing a series of bids for its Wheeling, Warren and Sparrows Point, Md., facilities.
Bouchard said the formation of the new Shale-Inland firm, with York Capital Management, is independent of Esmark and won't be an attempt to re-create the integration of service centers and production that was Jim Bouchard's vision for Esmark when it bought Wheeling-Pitt.
"I'm not set on the production/service center model per se, though it can work if the managers of the service center can vertically integrate to the mill (not the other way around)," Bouchard said in a response to e-mailed questions about Shale-Inland. "In our industry, the only magic is the customer. And I want to be closer to the customer."
Bouchard said it is unlikely he will play a role in a transaction with Severstal "at this late date."
"I respect the management of Severstal very much," he said. "They have tried harder than most would in a recession bordering on depression. And, I also feel for the communities. They deserve help. But, the economics of any potential sale at this tough moment must be complicated."
A variety of companies have surfaced in steel industry publications as making bids to Severstal. Analysts and union sources say some bidders want to piece off the company, bidding on one of the three divisions but not Wheeling, Warren and Sparrows as a whole. Union officials have said they want to see jobs preserved at all three divisions.
Bouchard said he would get involved, if asked.
"Someone needs to find a solution that betters all parties involved. I hope it's a challenge that someone grasps hold of. I can say that if I was invited in any way to speed the steel working families in the Ohio Valley back to work, I would give it my best," he said. "So, let's see what the future brings."
Craig Bouchard had moved to handle Esmark's purchase of Sparrows Point to combine it with Wheeling-Pitt, but the deal fell through in 2007-2008. ArcelorMittal had owned Sparrows and was ordered to sell it because of antitrust concerns. Sparrows was sold to Severstal after the Esmark deal collapsed.
Despite comments at this week's World Steel conference in Tokyo that the American market may remain depressed in steel demand for as long as two more years, Bouchard said it's a good time to get back into the business. He cited the following:
Interest rates are very low. "It will never be this good again," he said.
A talented labor force is "hungry for work," he said.
Natural gas prices. "The U.S. enjoys an incredible advantage in supply and price of natural gas," he said.
Labor unions are being very supportive of entrepreneurs and job creation. "The USW leads the way and has tried its best to make things better out there," Bouchard said.
The credit crunch has debilitated the manufacturing sector. "Capital to grow is non-existent to many historically fine companies. This has depressed valuations to a ridiculous level," he said.
There is a move toward "Made in America" products. "It's about time," he said.
Bouchard said it all adds up to a nation ready for a renaissance in value-added manufacturing, which is where steel service centers work in the economy. Bouchard said he thinks 2011 will bring that recovery and he wants to time his move into the market to reflect that.
"If I'm off a year, so what," he said.
Bouchard reiterated his philosophy that in metals, companies have to operate at full capacity in good times and nearly so in bad times, which is not easy to do.
"Optimizing assets is a skill I take pride in," he said.
Bouchard said his partners, Raj Maheshwari and Phil Gaucher, have an ability to analyze markets and determine how companies fit into the future competitive structure in the markets.
(Giannamore can be contacted at firstname.lastname@example.org.)