CMC, a Hope business, calls it quits

The chairman, chief executive officer and president of Commercial Metals Company announced Friday that the company is “exiting” the joist and deck business, which will mean the closure of the CMC Joist and Deck Co. fabricating facility here.

The remaining 50-60 employees not affected by a Jan. 22 layoff of about that many personnel were told Friday that April 29 will be the last working day for the facility. The closure comes as the result of a corporate decision to get out of the joist and deck fabrication business altogether.

“We continue to review our product lines, geographic dispersion, and vertical integration consistent with our strategic plan to determine the best allocation of resources for the company,” Murray R. McClean, chairman, president and CEO of CMC corporate parent Commercial Metals said in announcing the decision Friday. “The outlook for joist consumption in the North American markets is weak. This product line has suffered low demand, depressed prices, and shrinking margins, all leading to unacceptable losses. By exiting this business, we believe the capital invested in these operations will be better deployed in our other downstream fabricating operations.”

CMC Vice President Marcus Redburn said in an interview this morning with the Hope Star that there is little likelihood the facility will reopen.

“As the announcement said, basically we are going to wind down all the operations and try to sell them,” Redburn said.

He said the company will close its 6 joist and three deck plants in the United States and Mexico and seek to sell them. But, Redburn said other uses for them might be possible.

“That may be a possibility if we aren't able to sell it,” he said. “We have in the past used idle facilities for other business opportunities, but there is nothing planned for that.”

Redburn said all employees have been notified, and that a severance package has been arranged for the affected employees.

He said he did not know whether the CMC Steel Products facility here might hire some of the affected employees.

“That's a different division,” Redburn said. “If they need people, it's possible.”

Hope Mayor Dennis Ramsey said Saturday the announcement is a blow to the local economy. But, Ramsey said he is hopeful a buyer can be found for the facility.

“It seems like every time there has been somebody to take it over; that's speculative on my part,” Ramsey said. “Obviously, CMC was extremely successful out there for a number of years. The hope is that somebody is waiting in the wings.”

Ramsey would not say whom he thought that might be.

Hempstead County Judge Wallace Martin sounded the same theme Saturday.

“I've heard the rumors, but there is nothing to put your teeth in,” Martin said. “It has been spread out enough that it hasn't been as noticeable; but, I'm sure that it will be after this. They've been laying off for a long time. Hopefully, they can come up with somebody to buy it, reorganize it, and get it back up and going.”

But, Martin also would not say whom he thought might do so.

In conjunction with its announcement concerning the joist and deck business on Friday, the company said it had yet to put a value on the loss of the business, but it could range between $35 – 50 million in after-tax impact on the second quarter of the year.

“Estimates of cots and losses, the majority of which will be impairments on fixed assets and intangibles, are being developed and depend on a range of factors including, but not limited to, valuations upon sale of the business as a going concern or by individual property, plant, and equipment,” the announcement states. “The company's management expects to complete its evaluation within the next two weeks.”

The company is also amending certain of its credit agreements in connection with the exit from business and sale of assets, it said; and, will issue a pre-release on its earnings for the quarter on March 12, but without detail or comment until March 24. Those changes, according to the announcement, involve a $400 million revolver and a $100 million accounts receivable securitization agreement. The changes will affect the way pre-tax earnings are considered.