Republic Steel idles mill in Ohio

Guadalajara, Mexico-based Grupo Simec will indefinitely idle steelmaking operations at its Republic Steel electric arc furnace (EAF) mill in Canton, Ohio, as well as at a downstream rolling mill in Lackawanna, New York.

The steelmaker, which melts scrap at the Canton facility, says consolidation of production at its mill in Tlaxcala, Mexico, will enable it to have more competitive pricing, increased environmental responsibility and enhanced product quality.

Grupo Simec, a producer of special bar quality (SBQ) steel, steel wire, rebar and commercial and structural steel long products, says about 500 Republic Steel employees will be furloughed indefinitely.

“We’re facing an extremely challenging SBQ market in the United States, with competitive market pricing and decreased demand,” says Jaime Vigil, a Republic Steel board member and Grupo Simec executive advisor.

“At the same time, we’ve had to deal with increasing input costs on all raw materials, consumables and labor, all as a result of the inflationary environment in the U.S. over the past year.”

In terms of ferrous scrap pricing, transaction data from the Raw Material Data Aggregation Service (RMDAS) of Pittsburgh-based Management Science Associates shows those input prices declining since this March. Shredded scrap that cost an average of $507 per ton this March fell by 21.3 percent to $399 per ton on average this July.

Vigil says Grupo Simec had hoped inflationary pressures would ease and that Republic Steel would experience a bump in business following the passages of the infrastructure bill in 2021 and the Inflation Reduction Act in 2022. “Unfortunately, neither came to fruition in a timely manner,” Vigil says.

Two United Steelworkers (USW) Local 1200 officers contacted by a Cleveland television station were not as charitable toward Grupo Simec’s decision.

“They want to run to Mexico now because they can make the same thing that we’re making and they don’t have to pay the wage, and they don’t have the insurance and [do have] cheap labor, and they can hire [and] fire them because they don’t have a union over there,” USW Local 1200 president Todd Fitzgibbon tells WKYC-TV.

In the news report, Fitzgibbon also is critical of how Group Simec shut down the mill’s equipment. Adds Bryan Rice, vice president of the Canton-based union local, “They’ve run the place into the ground, and they bled every drop of blood out of it and I guess it’s just time to walk away.”

Grupo Simec management also points to a compliance issue, calling Grupo Simec and Republic Steel “the only producers of leaded steel in North America.”

Republic, which was acquired by Grupo Simec in 2005, says in the U.S. it took many steps over the past several years to remain compliant with all environmental regulations, particularly the National Ambient Air Quality Standard for leaded steel production. During that time, the company invested approximately $10 million in its Canton facility to maintain compliance.

“Although Republic Steel has, for the past two years, remained in strict compliance with the National Ambient Air Quality Standards for the production of leaded steel, ensuring future environmental compliance while producing steel in facilities that are up to 125 years old proved to be too challenging," Republic says. "As a result, Grupo Simec felt it would be most environmentally responsible to do so at its new, state-of-the-art mill in Tlaxcala.”

“This isn't an easy decision, but we feel it’s the only way for us to continue to serve our U.S. customer base with an ongoing and reliable supply of product, including leaded steel, and to do so at a competitive price point. Ultimately, we’re responsible to our shareholders and our customers," Vigil adds.