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AK Steel

Coordinates: 39°19′38″N 84°26′18″W / 39.32722°N 84.43833°W / 39.32722; -84.43833
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AK Steel Holding Corporation
Company typePublic company
NYSE: AKS
S&P 600 component
IndustrySteel
Founded1899; 125 years ago (1899) (as The American Rolling Mill Company - Armco)
HeadquartersWest Chester Township, Butler County, Ohio, United States
Area served
Worldwide
Key people
Roger K. Newport, CEO
Kirk W. Reich, President & COO
James A. Thomson, Chairman[1]
ProductsCarbon steel
Stainless steel
Electrical steel
Tubular products
Production output
6,051,000 tons[1]
RevenueDecrease $5.882 billion (2016)[1]
Increase $0.230 billion (2016)[1]
Increase -$0.007 billion (2016)[1]
Total assetsDecrease $4.036 billion (2016)[1]
Total equityIncrease $0.090 billion (2016)[1]
Number of employees
8,500 (2016)[1]
SubsidiariesAK Tube
AK Coal
Websitewww.aksteel.com
AK Steel production facility in Mansfield, Ohio.
An Armco culvert in an irrigation canal.

AK Steel Holding Corporation is a steelmaking company headquartered in West Chester Township, Butler County, Ohio. The company's name is derived from the initials of Armco, its predecessor company, and Kawasaki Steel Corporation, which contributed several of its production facilities to the company in 1989 in exchange for a large stake in the company.

The company has been criticized for its record regarding pollution and worker safety.

Current operations

The company operates 8 steel plants and 2 tube manufacturing plants. The steel plants are in Ashland, Kentucky; Butler, Pennsylvania; Coshocton, Ohio; Dearborn, Michigan; Mansfield, Ohio; Middletown, Ohio; Rockport, Indiana; and Zanesville, Ohio.[1]

Of the company's 2016 sales, 66% was to the automotive industry, 16% was to infrastructure and manufacturing industry, and 18% was to distributors and converters.[1]

AK Steel is a producer of flat-rolled carbon, stainless and electrical steel products, and carbon and stainless tubular products, primarily for automotive, infrastructure and manufacturing, electrical power generation and distribution markets.

History

The company was founded in 1899 as The American Rolling Mill Company (Armco) in Middletown, Ohio, where it operated a production facility.

In 1922, it opened a second production facility, Ashland Works in Ashland, Kentucky.

During the late 1970s and 1980s, corporate finances and business declined, as with much of the US steel industry, and Armco faced several pollution and obsolescence/international competition issues, which resulted in a general decline of workforce size and profitability and closure of several older facilities.[2]

In 1971, Armco Steel purchased Kansas City-based engineering firm Burns & McDonnell; however, in 1985, employees of Burns & McDonnell secured a loan to buy the company from Armco.[3]

In 1978, Armco Steel was renamed Armco, Inc. It moved its headquarters to New Jersey in 1985.

In 1989, it entered into a limited partnership with Kawasaki Steel Corporation, which contributed several of its production facilities to the company.[4]

While the company achieved over $1 billion in annual sales in the early 1990s, it was not profitable. The company then hired the 65 year old Tom Graham and Richard M. Wardrop, Jr. to improve its finances. These executives divested unprofitable operations and replaced most of the company's executives and managers.[5]

In 1993, the company moved its headquarters to Pittsburgh, Pennsylvania and renamed itself AK Steel Holdings reflecting its Armco roots and sizable investment by Kawasaki.

In 1993, the company sold the Kansas City Bolt and Nut Company plant to Bain Capital to avoid its shutdown.[6]

In March 1994, the company became a public company via an initial public offering,[7] using the proceeds to pay down its unmanageable debt load.

In 1995, the company moved its headquarters back to Middletown.[8]

In 1996, Graham made the controversial decision to spend $1.1 billion to construct a new steel production facility in Rockport, Indiana.[9]

In 1996, rifts with its unions and its safety record, including 10 fatalities at its plants in 4 years, resulted in fines and scrutiny from the Occupational Safety and Health Administration (OSHA).[10]

In 1999, the company acquired Armco Inc., its former parent company, for $1.3 billion.[11]

In 2007, the company moved its headquarters to West Chester Township, Butler County, Ohio.[12]

In 2014, the company acquired steel-making assets, including a coke-making facility and interests in 3 joint ventures that process flat-rolled steel products in Dearborn, Michigan, from Severstal for $700 million.[13]

In August 2017, the company acquired Precision Partners Holding Company for $360 million.[14][15]

Inclusion in the S&P 500 Index (2008-2011)

In 2008, the company was added to the S&P 500 Index.[16] In 2011, it was removed from the S&P 500 index and added to the S&P 600 Index.[17]

The 2016 bestselling book, Hillbilly Elegy, focuses on life in Middletown, Ohio and makes many references to the town's dependence on AK Steel's Middletown Works facility.[18]

Environmental record

AK Steel was listed #1 on the Mother Jones Top 20 polluters of 2010; dumping over 12,000 tons of toxic chemicals into Ohio waterways.[19]

The Political Economy Research Institute ranks AK Steel 53rd among corporations emitting airborne pollutants in the United States. The ranking is based on the quantity (343,000 pounds) and toxicity of the emissions. At the same time, it scored well in terms of environmental justice, affecting smaller percentages of the poor and minorities than their respective percentages of the total population.[20]

On June 27, 2000, the United States Environmental Protection Agency (EPA) issued an Emergency Order pursuant to the Safe Drinking Water Act, Clean Air Act and the Clean Water Act to AK Steel's Butler Works in Butler, Pennsylvania concerning the nitrate/nitrite compounds being released into the Connoquenessing Creek, an occasional water source for the Borough of Zelienople, alleging that AK Steel had failed to properly dispose of hexavalent chromium.[21] The issue was settled in 2004, with AK Steel agreeing to pay a total of $1.2 million.[22]

In 2006, AK Steel reached a settlement to compensate for polychlorinated biphenyl (PCB) contamination in Middletown, Ohio. The settlement included cleanup work estimated to cost $12–13 million.[23]

In early 2015, the EPA listed the Ohio River as the most contaminated body of water in the U.S. According to the EPA's Annual Toxics Release Inventory, of the 23 million pounds of chemicals discharged into the river in 2013, more than 70 percent came from AK Steel.[24]

Middletown Works lockout

Armco and the Armco Employees Independent Federation (AEIF; a labor union) had a collective bargaining agreement in place in 2004 that required AK Steel to employ 3,114 workers, a "minimum base force guarantee". The agreement also authorized AK Steel to suspend the minimum number. On January 13, 2004, AK Steel informed the AEIF that it was suspending the minimum. The union then filed a grievance contesting the suspension. An arbitrator upheld the decision by AK Steel on July 1, 2004, subject to certain limitations, through at least May 10, 2005. The union sought and was granted a new hearing, and on July 1, 2005 the arbitrator issued a comprise total workforce. As part of the agreement the arbitrator allowed AK Steel to set aside financial payments to a fund, in lieu of hiring to the minimum, the amount of which was set by the arbitrator on October 7, 2005. On September 29, 2005, the AEIF filed a lawsuit against AK Steel in the United States District Court for the Southern District of Ohio (AEIF v. AK Steel Corp.; Case No. 1:05-CV-639), in which the AEIF sought to vacate that portion of the July 1, 2005 Award. AK Steel answered the complaint and filed counterclaims (AK Steel Corp. v. AEIF, Case No. 1:05-CV-531) on November 2, 2005.[25][26]

On March 1, 2006, AK Steel began a lockout of about 2,700 workers at the Middletown Works plant in Middletown, Ohio.[27] By the next day, the mill was operated by 1,800 salaried and temporary replacement workers.

In late October, AK offered a so-called final contract, which was rejected by the union by a vote of 2 to 1.[28]

One year after the lockout started, on February 28, 2007, AK Steel reached an agreement with the labor union.[29]

The union members ratified the proposed contract on March 14, 2007.[30]

As part of the agreement, the AEIF and AK Steel reached a joint settlement of their 5 counter lawsuits, with AK Steel paying $7,702,301. A third of the amount was for profit sharing, a third for an assistance fund for employee benefits of employees not recalled to work, and a third an escrow account to settle employee disputes and claims as a result of the lockout. The Employment Security Plan and the Trade and Craft Quota and Service/Support Group Quota (the "minimum base force guarantees") were completely terminated.[26]

This lockout was the longest labor stalemate in the 105-year history of the Middletown Works. The previous longest stalemate had been a six-day company lockout in 1986. Prior to that lockout, Armco's Middletown works never lost one minute of production due to a labor issue.

Pittsburgh Logistics Systems Lawsuit

In late 2016, AK Steel notified Pittsburgh Logistics Systems, Inc. (D/b/a PLS Logistics), a company which had been managing all of AK's truck dispatch and rail operations since 1995, that it was being replaced by Ryder as of January 18, 2017.[31] At the time, AK Steel constituted 32% of the PLS' revenue base, according to court filings. PLS battled both Ryder and AK Steel in the United States District Court for the Southern District of Ohio, arguing that Ryder should not be able to use the list of trucking companies that PLS had used while servicing AK. However, U.S. District Court Judge Michael R. Barrett rejected PLS's contention and cleared Ryder and AK to proceed with the use of these carriers.[31]

See also

References

  1. ^ a b c d e f g h i j AK Steel Holding Corporation 2016 Form 10-K Annual Report
  2. ^ CHAVEZ, LYDIA (June 20, 1982). "THE YEAR THE BOTTOM FELL OUT FOR STEEL". The New York Times.
  3. ^ Eaton, Collin (November 3, 2016). "At Burns & McDonnell, employees feel like owners -- because they are". Times Union.
  4. ^ Hicks, Jonathan P. (April 6, 1989). "Talking Deals; Armco's Accord With Kawasaki". The New York Times.
  5. ^ HOLUSHA, JOHN (February 12, 1995). "Profile; Having Done It All in Steel, He's on Top at Last". The New York Times.
  6. ^ BARCLAY JR., JOHN P. (September 22, 2012). "Trade policies destroyed steel industry". News-Press NOW.
  7. ^ "Equity Issues This Week". The New York Times. March 14, 1994.
  8. ^ "AK Steel Holding Corporation History". FundingUniverse.com.
  9. ^ "COMPANY BRIEFS". The New York Times. November 22, 1996.
  10. ^ "AK Steel Holding to Pay Fines Tied to Mill Mishaps". The Wall Street Journal. May 6, 1996.(subscription required)
  11. ^ "AK Steel buys former parent". CNNMoney. May 21, 1999.
  12. ^ "AK Steel Completes Corporate Headquarters Move" (Press release). PRNewswire. August 29, 2007.
  13. ^ "AK Steel Completes Acquisition of Severstal Dearborn" (Press release). PRNewswire. September 16, 2014.
  14. ^ "AK Steel Completes Acquisition of Precision Partners Holding Company" (Press release). Marketwired. August 7, 2017.
  15. ^ "AK Steel to make $360M acquisition". American City Business Journals. July 3, 2017.
  16. ^ "AK Steel Named To S&P 500" (Press release). PRNewswire. June 30, 2008.
  17. ^ "S&P Indices Announces Changes to U.S. Indices" (Press release). PRNewswire. December 8, 2011.
  18. ^ Ferguson, Mark Lynn (September 12, 2016). "Commentary: For Appalachia's hillbillies, more than an elegy". Chicago Tribune.
  19. ^ "America's Top 10 Most-Polluted Waterways". Mother Jones. April 2, 2012.
  20. ^ Political Economy Research Institute - Toxic 100
  21. ^ "EPA Orders AK Steel to Reduce Nitrate Discharges, Provide Safe Drinking Water for Zelienople" (Press release). United States Environmental Protection Agency. June 7, 2000.
  22. ^ "AK Steel Settles Lawsuit Over Environmental Violations at Butler Mill - Steelmaker to Pay $300,000 Penalty and $900,000 in Pollution Reduction Projects to Settle Hazardous Waste, Air and Water Pollution Violations" (Press release). United States Environmental Protection Agency. December 2, 2004.
  23. ^ "Settlement with AK Steel Will Require Cleanup and Investigation of Contamination of Middletown Plant" (Press release). United States Department of Justice. December 2, 2004.
  24. ^ "EPA Reports Ohio River Most Contaminated Body Of Water In The Country". TristateHomePage.com. Nexstar Publishing Group. February 28, 2015.
  25. ^ 1Q 2007 | Environmental and Legal Contingencies p.13
  26. ^ a b "Settlement Agreement" Archived 2008-11-01 at the Library of Congress Web Archives. - International Association of Machinists and Aerospace Workers
  27. ^ VRIES, LLOYD (March 1, 2006). "Workers Locked Out By AK Steel". Associated Press. CBS News.
  28. ^ "AK Steel Union Workers Reject Contract". Associated Press. The Oklahoman. September 26, 2006.
  29. ^ "AK Steel, union reach tentative pact to end lockout". Reuters. March 1, 2007.
  30. ^ "IAM Members Overwhelmingly Ratify New-Era Labor Accord For AK Steel's Middletown Works" (Press release). PRNewswire. March 14, 2007.
  31. ^ a b Boselovic, Len (January 20, 2017). "Pennsylvania Logistics Company Battles Ryder in Court Over Trade Secrets". American Trucking Associations.
  • Business data for AK Steel Holding Corporation:

39°19′38″N 84°26′18″W / 39.32722°N 84.43833°W / 39.32722; -84.43833

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