CHICAGO HEIGHTS | About 30 workers will lose their jobs after a steel service center closes.
Esmark Inc. has announced plans to permanently close its steel service center at 300 Joe Orr Road in Chicago Heights. The company plans to lay off 31 employees, according to a Worker Adjustment and Retraining Notification Act, or WARN, notice filed with the state of of Illinois.
Layoffs begin at the end of December and will continue until the facility is shut down Jan. 14.
The diversified company, which focuses most heavily on steel services and oil and gas production, is consolidating service centers in Chicago Heights, spokesman Bill Keegan said. Esmark also owns and operates the old Sun Steel Co. service center at 2500 Euclid Ave.
Keegan declined to comment further, saving "several factors" prevented him from doing so.
In 2005, Esmark bought the 300,000-square-foot flat-rolled steel processing facility in Chicago Heights for $40 million from Century Steel LLC. At the time, the service center had about 150 employees and was one of the largest distributors of flat-rolled steel in the country.
Esmark CEO James Bouchard said at an industry conference in Las Vegas earlier this month that Esmark Steel Group was reducing capacity to improve its profitability at a time when orders were slow and the economy was sluggish, according to the trade publication American Metal Market. He said the company needed to get smaller and would save an estimated $400,000 a month by consolidating operations.
"The decision – from a macro viewpoint – basically comes down to my belief that the overall economy is not going to improve very quickly," he said, according to American Metal Magazine. "I just see this as a slow-growth scenario. So keeping that capacity around waiting for additional orders to come in is, I think, close to insanity."
Bouchard told attendees at the conference that Esmark Steel Group had to make painful moves with personnel as it went to running three facilities instead of four.
"It has taken some soul searching," he said. "But I think it is the right decision. I think it also is the right decision for the industry."
Steel service centers buy steel in bulk, warehouse it, process it if necessary and sell it to customers. They lately have suffered because of low prices for steel coils and other products, said Charles Bradford, a New York-based analyst of the steel industry.
But conditions have recently improved for service centers, largely because of improving demand and the recent increases in flat-rolled steel prices, Bradford said.
"Service centers tend to do well where there's stability in orders and a slight uptrend in prices," he said. "Right now, there's both. But of course prices weren't very good for the last few years."