In a dramatic step, NS Group Inc. Thursday said it would stop making steel at its Newport Steel Corp. plant — cutting 280 jobs — to focus on making pipe for the oil and gas industry.

        The move, which takes effect today, eliminates about 40 percent of the work force at Newport Steel's 250-acre plant in Wilder, idles a $25 million electric furnace turned on just two years ago and deals a sharp blow to Wilder, a Northern Kentucky community of 2,600.

        After the cuts, Newport Steel will employ about 350 at the Wilder mill, turning purchased steel coils into welded pipe up to 16 inches in diameter.

NS GROUP

Here's a look at NS Group Inc., parent of Newport Steel in Wilder.     • Business: Manufacturer of seamless and welded tubular steel, mainly for the oil and gas drilling market.     • Employment: 1,300.     • Facilities: Operates two main businesses: Newport Steel Corp. in Wilder, which produces welded pipe from 4 1/2 to 16 inches in diameter. The Koppel Steel Corp. in Koppel, Pa., which produces seamless pipe, was acquired in 1990. Both plants produce steel by melting scrap in electric furnaces.     • History: NS Group traces its roots to the Swift Iron and Steel Works, started 1858 to make armor plates and iron castings. The company, which began making steel in 1908, was renamed Newport Steel Co. in 1956. As the U.S. steel industry struggled with foreign competition in the late 1970s, four managers led by Clifford Borland formed an investment group that bought the plant from the former Interlake Steel Co. Mr. Borland remains NS Group's chairman.     • Financials: Reported a net loss of $22.9 million, or $1.06 a share, on sales of $355 million in the last fiscal year.     • CEO: Rene J. Robichaud, former Wall Street banker, who was named chief executive succeeding Mr. Borland last year.

        Although the market for tubular steel is improving as oil and natural gas prices rise, it costs NS Group more to make its own steel than it does to buy it, company officials said.

        “Newport has been losing money for a long time. I think this will give Newport the greatest chance for success,” said Rene J. Robichaud, NS Group president and CEO.

        But he acknowledged, “It's like a bomb hit. It's a terrible thing, but we had to do it.”

        The company's action comes at a time when worldwide steel-making capacity is 300 million tons a year more than demand. With NS Group's pullout and a threat by Middletown's AK Steel to stop producing steel, Greater Cincinnati would be left with just one steel maker: Gallatin Steel near Warsaw, Ky., which makes flat-rolled steel.

        NS Group signaled its move two weeks ago when it announced negotiations with the United Steelworkers of America, which represents most hourly workers at its Wilder and Koppel, Pa., plants. It said it would provide severance pay and help workers find new jobs.

        Steelworkers' union officials didn't return calls for comment.

        Bricklayer Karl G. Miniard, a 14-year-employee from Williamstown who was terminated, said he was angry.

        He said officials of the Bricklayers union knew the job cuts were coming but didn't tell workers.

        “Our union is not doing (its) job. They knew a month ago. I'm really feeling disappointed about my union.”

        Mark Waller, 37, a 13-year-employee from Verona, Ky,, said he won't know until Monday whether he still has a job.

        A mill crane operator for barges on the Licking River, he said he can qualify for a job as pipe inspector or for other work on the barges.

        State Rep. Jim Callahan, D-Wilder, said there was little the state could do about the company's decision, but “anything it can do, it will do.”

        Gary Toebben, president of the Northern Kentucky Chamber of Commerce, said: “Many of the employees of Newport Steel have been there a long time. It's difficult for them and the community. But we understand the company's action.”

        W. Neal McAtee, analyst with the investment firm of Morgan Keegan & Co., said NS Group's decision was overdue. Most of its tubular steel competitors stopped making their own steel a long time ago. Analysts have estimated that it costs NS Group as much as $100 more a ton to make, rather than buy, steel for its tube mill.

        “They really haven't reacted fast enough” to market changes, he said.

        Mr. Callahan said the City of Wilder, which gets as much as 45 percent of its annual revenue from the steel plant, will be particularly hurt.

        “I think (Wilder officials) realize they're going to have to do some things differently,” he said. Terry Vance, Wilder administrator, didn't return a phone call for comment.

        Mr. Toebben and Danny Fore, president of Tri-County Economic Development Corp., Northern Kentucky's economic development agency, said their organizations would work with the company and state employment officials to help workers find new jobs.

        NS Group also announced plans to stop making bar steel at its Koppel, Pa., plant, eliminating 80 jobs there. Mr. Robichaud said the moves will save the company up to $18 million annually and increase earnings by about 80 cents a share annually.

        There has been speculation NS Group might be preparing to put itself up for sale, but Mr. Robichaud said that wasn't the company's intention.

        The company, which said the restructuring will result in a $54 million charge in the quarter ending this week, said it expects earnings of between break-even to 5 cents a share for the period.

        It was expected to lose 23 cents a share, according to the estimates of analysts surveyed by First Call/Thomson Financial.

        In the June quarter, NS Group expects earnings in a range from 35 to 40 cents a share, and it expects earnings before the restructuring charge of $1.35 a share for the full year.

        Investors pushed NS Group's shares up $1.28, closing at $10.78 Thursday.

       Enquirer contributor Ray Schaefer contributed to this report.
       

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