Former Qualitech plant has expanded its product line
WEB EXCLUSIVE
Staff -- Purchasing, 9/1/2005
What used to be the Qualitech special bar quality (SBQ) mill in Pittsboro, Ind., appears to have reopened successfully under new ownership (Fort Wayne-based Steel Dynamics) as a merchant steel bar mini-mill churning out steel bars (mostly for automotive engine crankshafts) like never before.
After spending $45 million to buy the plant in 2002 and $85 million to renovate steelmaking equipment between then and 2004, Steel Dynamics also spent $8 million on a facility where bars can be straightened, machined to perfect roundness, inspected and cut to length. Now, the parent company is seeking permits to develop a neighboring industrial park that would attract fabricators and other businesses that use steel bars.Qualitech, which opened as a specialty mini-mill in 1997, had a checkered past. New technology that involved adding sulfur dioxide to the melted scrap metal failed. Then, earlier this decade, steel-bar prices collapsed under the weight of a weakened economy and low-priced foreign-made imports. When Qualitech went bankrupt, Indiana taxpayers lost more than $40 million in state incentives used to lure the plant. After outbidding rival steelmaker Nucor, Steel Dynamics now has spent $130 million on a facility that general manager Glenn Pushis estimates would cost $400 million to build new. The product mix was broadened beyond special bar products to merchant bars and concrete reinforcement bars that can keep the mill humming when orders slow for the expensive grades. Upshot: The mill generated $40 million in earnings on $218 million in sales for 2004. New York-based independent steel analyst Charles Bradford says that achievement is noteworthy considering Steel Dynamics has no contracts and relies totally on spot-market sales. With the mill now doing so well, others may follow its formula, suggests the president of Bradford Research. "Once people see them making that kind of money, other people will try to emulate what they do, and then you get a lot of competition," says the steel analyst.
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