RG Steel has confirmed it will idle operations at its Sparrows Point, Maryland, Warren, Ohio and Wheeling, West Virginia steel mills. Many workers at the plants will be laid off as well, although the exact number of total layoffs has not been released. Hot steelmaking and finishing operations at Sparrows Point will be stopped; hot steelmaking in Warren and Wheeling's finishing operations will all be idled.
In a letter to USW's Leo Gerard and David McCall Wednesday, Thomas Cera V.P. & General Manager of RG Steel's steelmaking operations, said "As you are already aware, RG Steel, LLC and its wholly-owned subsidiaries have been confronted with an immediate, unexpected liquidity crisis. The Company has been engaged in discussions with its lenders and existing equity investors in an effort to ensure a stable source of working capital sufficient to sustain day-to-day operations at the Wheeling facility. Though those discussions have been difficult, the Company had every expectation that it would be able to maintain its existing level of operations."
He added that in an "unforeseeable turn of events," RG's lenders and equity investors have suspended funding, and as a result, RG is now actively pursuing a buyer of some or all of the company's assets. "Though we are hopeful that a buyer will be identified, a sale process under these circumstances is fraught with uncertainty. While that process is underway, we will be compelled to idle the Wheeling facility and to lay off all or virtually all Wheeling employees. Given the exigency and uncertainty of the situation, we do not know at this time whether the idling will be temporary or permanent." RG issued a layoff notice for the Wheeling facility under the Worker Adjustment and Retraining Notification Act (WARN Act), indicating that layoffs will be implemented within the 14-day period beginning on June 4.
Cera said: "The Company could not give notice earlier because the suspension of funding for operations was not foreseen, it was unforeseeable to the Company that its efforts to raise capital from its current equity investors and third-party investors or lenders would all prove unsuccessful, and in any event, issuance of this notice earlier would have precluded any chance of retaining customers and procuring the necessary capital."