The pending closure of the Super Steel Schenectady plant in April will represent the largest loss of jobs in Schenectady County in five years and will be felt through the Capital Region, local officials said.
The parent company, Super Steel Products Corp. of Milwaukee, Wis., intends to lay off the entire work force of 175 employees in stages, beginning Jan. 31. It cited a steep decline in orders for the Glenville railroad car plant for the closure.
Super Steel had to give the state Department of Labor 90 days’ notice by Monday of the pending layoffs. County Legislator Robert Farley, R-Glenville, said the company had to make the closure decision based on a worst-case scenario to avoid violating state law.
Also, the company was bound by conditions of a state grant to keep a certain level of staff working at the plant until Jan. 1. Super Steel officials did not return phone calls for comment.
The Glenville plant closure will hurt Albany Steel Inc., said company President Peter Hess. He said Super Steel was one of his best customers, accounting for more than $200,000 in annual sales. “They are a responsible and respectable customer and we hate to lose them,” Hess said.
Albany Steel brings in steel and sells it like a lumber yard. It also cuts, bends and shapes steel pieces.
Hess called the loss of Super Steel part of a continuing erosion of manufacturing in upstate New York. He does not plan on scaling back his operations or reducing his work force of 80 employees for now. “It is just another one of our good customers we’re losing in upstate New York,” he said.
STS Steel in Schenectady built the Super Steel building in 1995 and has had little contact with the company since, said company President Jim Stori. His company constructs buildings and bridges.
“Some of our guys have gone there and we have picked up a couple of their guys over the years,” Stori said, referring to welders and fabricators.
The job outlook for Super Steel workers is not good, Stori said. “I wouldn’t be surprised to see some of their guys apply here, but it is a tough time. We are fairly busy right now, but the economy is not great.”
Marie Guzzo, of American Metal Market, a daily newspaper tracking the metal industry, said the steel industry is in a severe downturn. It is laying off workers and reducing capacity in response to the financial problems of national automakers.
Toby Kolstad, a railroad analyst, said he expects to see a cutback in refurbishing and rebuilding of rail cars, which Super Steel does, and in program maintenance. He added railroads are not in a freefall but they have seen decreases in volume and will likely suffer economically in coming years.
On the positive side, Glenville Administrator Tony Germano said the town is confident Super Steel will continue to pay property taxes on the 175,000-square-foot plant in the Scotia-Glenville Industrial Park. Super Steel owns the building, which sits on 32 acres. The industrial park is owned by The Galesi Group.
Company officials said they are evaluating options for the building and will try to sell or lease the building to another business.
The company retains a payment in lieu of taxes agreement with local municipalities. The PILOT agreement started in 1996 at 20 percent of the building’s assessed value of $3.7 million. It was locked in for five years at 20 percent, then increased to 25 percent for two years, then to 35 percent for two years, then to 40 percent for two years, then to 45 percent for two years, where it is currently. It then increases to 50 percent for two years and 60 percent for two years before hitting 100 percent.
The building’s assessment increased to $5 million in 2007 when Glenville underwent a re-evaluation and it is assessed at $6.7 million for school tax purposes in 2008, said Scotia-Glenville school district spokesman Robert Hanlon.
For its January 2008 bill, Super Steel Schenectady paid $19,000 to Schenectady County, $29,000 to Glenville and $55,000 to the Scotia-Glenville school district. This is based on 40 percent assessment on $5 million valuation.
Ray Gillen, chairman of the Metroplex Development Authority, called the existing PILOT bizarre. The PILOT was set up by George Robertson, Gillen’s predecessor.
Super Steel received two grants from the Empire State Economic Development Agency during its tenure in Schenectady County. The first was in 1995 for $400,000. Super Steel had to create 150 jobs by 2000. It met this goal, according to state officials.
The company received the second grant in two parts: $250,000 in 2005 and $250,000 in 2007. Super Steel had to create 90 more jobs, bringing the total jobs there to 240 by Jan. 1, 2006, and it had to maintain this number until Jan. 1, 2009, as part of the grant conditions, said Empire State Economic Development Agency spokesman Warren Johnston.
While Super Steel employed 240 people in 2006 and 2007, the state will check the company’s 2008 financial records to see it if was in compliance, Johnston said. If not, it will have to repay some of the grant, he said.
“We have no way of knowing if they met the job retention and creation goals until we do an audit,” Johnston said.
Gillen said the company did not tie its layoffs to pass the state deadline. “There is more at stake than that,” he said.
Super Steel also operates two other manufacturing plants in Milwaukee. It is not closing these plants or laying off people there, according to the Milwaukee Journal Sentinel. It is also building rail cars at one of the Milwaukee plants.
Super Steel had $100 million in annual sales and 800 employees in 2007, with about $30 million coming from the Glenville plant. The company also makes products for the auto industry as well as the construction, agricultural and industrial sectors.