Jun 11 2009
Gerdau Ameristeel Corporation (NYSE: GNA; TSX: GNA) announced today that it is suspending production at its Sayreville, New Jersey steel mill and closing its rolling mill in neighboring Perth Amboy, New Jersey due to lower demand for its products resulting from the downturn in the economy. The company said these actions are expected to occur gradually over the next several months. The company indicated that it would restart operations at the Sayreville facility when business conditions warrant.
The company is also entering into discussions with the United Steel Workers regarding the potential closure of the Company's steel mill located in Sand Springs, Oklahoma.
The company will continue to offer its full range of products to its customers throughout North America. Service to customers will be uninterrupted and will be provided by production from Gerdau Ameristeel's extensive network of steel mills in the United States and Canada. The Sayreville facility will continue to carry a full range of products in inventory available for shipment or customer pickup until production resumes.
Mario Longhi, President and CEO of Gerdau Ameristeel commented: "This was a very difficult decision that came after careful analysis and review of the marketplace, our production capabilities, and the most cost effective alternatives to meet the current and future needs of our customers throughout North America during this unprecedented economic downturn. These actions follow a series of steps the company has taken over the last nine months to reduce its costs. We understand the impact that these decisions will have on the lives of our employees and our communities, but unfortunately market conditions mandated that these actions be taken at this time. The company will make every effort to help displaced employees through this time of transition."
In connection with these actions, depending on the outcome of the Sand Springs discussions, the Company expects to incur an after tax charge from approximately $80 million to $140 million related to these closures. Of these amounts, between approximately $15 million to $30 million are expected to be cash costs for severance and facility closure expenses. Depending on the outcome of the Sand Springs discussions, the company expects to realize annualized pre-tax cash savings of approximately $35 million to $70 million as a result of these actions. In accordance with US GAAP requirements, the company anticipates some of these charges to be included in the three month period ended June 30, 2009 and some to be included in the three month period ended September 30, 2009.