JSW Steel is pouring $500 million into Mingo Junction, a plant about 40 miles west of Pittsburgh that has not produced steel for a decade.
March 18, 2019
Part of an occasional series, Recasting American Steel
MINGO JUNCTION, Ohio
On a December day in this quiet village of 3,000, John Hritz angled his phone in anticipation. A vat of molten steel tipped and an eruption of sparks burst as if to mark the occasion.
His photo of that first pour — along with one showing the first glowing-orange slab of steel melted, cast and rolled here in a decade — would soon illustrate JSW Steel USA’s holiday cards sent to employees and customers.
The magic of Christmas had arrived for Mr. Hritz — a steel industry veteran and believer in a coming renaissance for American mills. It’s a sentiment not uncommon among industry supporters, especially after President Donald Trump slapped tariffs on foreign steel last year to try to stem a flood of cheap imports coming from China.
But Mr. Hritz’s dreams are backed by something more: the deep pockets of JSW Group Limited, an Indian infrastructure-building conglomerate that has committed to spend $1 billion at Mingo Junction and another mill in Texas.
“We’re putting in the finest technology in the world,” boasted Mr. Hritz, who started his career in the 1970s as a U.S. Steel engineer in Youngstown, Ohio, and moved among companies as a corporate lawyer, consultant and executive. Today, he is the CEO of JSW Steel USA.
Previous Mingo Junction owners “tried to extract as much money out of it as they could, then it either went bankrupt or shut down,” he said. “The whole idea now is to reinvigorate and grow the steel industry — and put in jobs that will last for decades and decades and decades.”
But there’s a lot at stake for JSW Steel, with goals that extend beyond the walls of the mill and into Mingo Junction, a faded industrial town still coping with the mill’s closing in 2008.
As the news of the investment trickled out in the last year, it was considered something of a miracle:
- A restarted furnace and plans to construct a second one.
- The promise of 1,000 good-paying jobs.
- More money to hire police officers, rebuild schools, and fund bingo at the senior center.
- Street paving projects, expanded parks, businesses to fill vacant storefronts along Commercial Street.
In effect, the company is launching an unprecedented effort to find a lasting formula to “bring back” the American steel industry — to borrow words from Mr. Trump’s April 2016 campaign stop in Pittsburgh that resonated with many blue-collar workers who had watched jobs in steel, coal and manufacturing disappear.
Mingo Junction will be a testing ground for whether putting money back into steel can make the business work again and restore the sense of community and shared mission yearned for by so many residents.
“I just wish I was 30 years younger so I could go back in there and work,” said John F. Buchmelter III, 81, who retired in 1995 after four decades in the mill.
“We were all tied together, if not by blood, then by the work,” he said, recalling a Commercial Street packed with people after their shifts — a cacophony of accents like Slovak, Polish, Italian, Scottish, Russian, German. “The mill, though it might have had all the noise and the dirt and everything, it still was our little gold mine.”
From Iroquois camps to steel
The town of Mingo Junction greets visitors with an assault of colorful markers of the past, fragments of identity.
This is the home of Wild Cherry frontman Rob Parissi, of the 1976 hit “Play That Funky Music” fame. Here Joe Fortunato, the Chicago Bears linebacker great of the 1960s, walked the streets. Legendary Ohio State football coach Woody Hayes got his first coaching job at the high school in 1935.
A mural memorializes Mingo Junction as a setting for The Deer Hunter, a 1978 drama that brought a young Robert De Niro and Meryl Streep into town. (Mr. Buchmelter was cast as a “bar patron,” thrusting him into local lore and, by his telling, ensuring that a bottle of Rolling Rock beer made the final cut.)
Native Americans figure as prominently as steel in the town’s identity. Mingo Junction — its name a slang reference to Iroquois — traces its origins to Oct. 22, 1770, when George Washington camped overnight and discovered white settlers living among the Native Americans.
In the municipal building, a painting portrays Commercial Street running into the distance. A bare-chested Native American stands on a street corner, while the steel mill looms in the background, lighting the sky with brush strokes of fiery orange.
The mill dates back to 1869 with the Carnegie Steel Co. scouting out an ideal site along the Ohio River. It grew to house three blast furnaces and processing mills and joined with two more blast furnaces further north in Steubenville. The massive complex employed thousands of people who produced steel sheets, plates and coils to feed the booming American economy for decades.
Students could gaze out classroom windows at Mingo High School, perched high above the mill, and watch hopper cars — called skips — carrying iron ore, coke, and limestone to the furnace.
“You sit up there in school and you’re looking out the window and you … watch the skips going to the blast furnace,” recounted Mayor Ed Fithen. His grandfather and father worked in the mill and he joined the workforce in May 1978.
“That was before everyone was going to go to college, and it was like, ‘Well, when I get out of here, I’m going to the mill.’ It seemed like a lucky thing,” despite the known dangers. His grandfather had been killed on the job in 1967.
As with many towns tied to a major industry, there was some sense of invulnerability.
“No one ever thought that mill was going to shut down,” Mr. Fithen said. “That day it did, it was like, this isn’t happening. And that’s when you started seeing things fall apart.”
A bleak time
The mill, when operating at full capacity, accounted for roughly 80 percent of the town’s income tax base, officials said.
The revenue all but vanished the year after the mill closed in 2008. Income tax revenue fell to $800,000, down from $3 million when the mill was running. Mingo Junction Police Department’s force of 12 officers shrunk to one. The village cut pay 35 percent.
“The employees suffered,” said police chief Joseph Sagun.
The water department, which had once pulled in as much as $180,000 in monthly utility collections, suddenly faced monthly revenue of $25,000. The shortfall left officials saddled with debt on a treatment plant constructed to supply the mill, the biggest customer.
“All of us here took the brunt of it because there’s no other industry,” said Kim Crugnale, a deputy clerk who has worked for the municipality for 27 years.
Recovery has been slow. The police department is now up to five officers. Income tax revenue is expected to hit $1.1 million this year, still far below the early-2000s. Commercial Street remains mostly abandoned, with some buildings condemned and other structures collapsed.
When Mr. Fithen lost his job after 35 years of work, he joined the village administration, managing to keep Mingo Junction’s biggest park open.
Some people were mystified that he would run for mayor during such a bleak time, he said. Yet Mingo Junction voters elected Mr. Fithen in 2016 on the campaign motto, “There’s light at the end of the tunnel.”
“We always had our fingers crossed” the mill would reopen, he said.
The plant had seen so many owners since the days of Wheeling-Pittsburgh Steel, its longtime owner, that it was hard to keep track. No one had been able to run it.
In 2006, Esmark Inc., a Sewickley-based steel services company, acquired the mill from Wheeling-Pittsburgh. Esmark sold the assets to the Russian steelmaker OAO Severstal two years later. OAO Severstal sold the mill to Maryland-based RG Steel in 2011. One year later, RG Steel was bankrupt.
Frontier Industrial Corp., a Buffalo-based brownfield development company, purchased the assets at RG Steel’s bankruptcy auction in 2012. After demolishing most of the older portions of the plant, it found a buyer in Acero Junction Holdings in 2016.
Acero Junction, controlled by an unidentified group of private investors, promised to breathe life into the facility. The company began to bring in steel slabs and process them on Mingo Junction’s rolling mill.
But then Acero Junction, too, fell into financial hardship. It never could restart the electric arc furnace as planned.
In March 2018, a newly formed outfit filed paperwork to pay about $81 million for the operation, pledging — like so many others — to run the steel mill again.
The $1 billion bet
On a recent afternoon, the sterile conference room shook occasionally with the distant rumble of heavy machinery. The newly constructed JSW USA offices in Mingo Junction sit just steps from the mill.
Mr. Hritz, repeatedly side-tracked from a PowerPoint presentation of steel measurements and production statistics, was talking about how he convinced JSW Group’s board of directors to take over a barely functioning pipe mill in Baytown, Texas.
In 2015, the soft-spoken CEO flew to Mumbai to give his pitch. Mr. Hritz, combining his business, law and engineering backgrounds, thought he could turn that mill around. He knew the technology existed — though it was no longer manufactured by American companies. He would need a heavy load of capital, but return on investment figures looked promising from his visits to Baytown.
It may have seemed a tough sell to a global conglomerate that pours money into power plants, cement factories, port infrastructure and a wide range of holdings. JSW Group already had millions of tons of manufacturing capacity in India, where it is the largest private steel company.
But JSW told Mr. Hritz it viewed American steel as an opportunity to break into the North American market, produce new products, and have customers close by.
He got a $1 billion commitment to be split evenly between the Baytown plant and another facility: Mingo Junction.
When crews arrived at the Mingo Junction plant, they found heaps of trash, scrap metal, vandalism and rodents. The electric arc furnace, which melts scrap steel to produce a new batch of steel, required repairs. The caster, which molds the molten steel into a more solidified shape, needed to be rebuilt from the ground up.
In December, the furnace roared to life and Mr. Hritz snapped his photo.
The furnace’s restart created about 230 jobs, according to the company. In another 16 months or so, after the construction of a second furnace and more capital investments, the mill’s annual capacity should reach 1.2 million tons and as many as 1,000 jobs, Mr. Hritz said.
Mr. Trump’s tariffs, which Mr. Hritz supports, played into the decision to build the second furnace. Currently, Mingo Junction is paying tariffs to import steel slabs for roughly half of its production. The second furnace would allow the company to melt and manufacture all its steel and qualify it for defense and infrastructure projects, for which imported steel is currently banned.
In the weeks since the furnace restart, technical hiccups have thrown challenges at a crew that mixes called-back veterans who retired from the plant in 2008 with 20-somethings who have never set foot in a steel mill before.
One headache comes when plant operators try to summon water to cool the steel. The water lines that haven’t been used in a decade sometimes don’t work or break the aging equipment.
On a recent afternoon in a control room, a rush of water broke off a pipe fitting and sent water cascading onto the plant floor, causing a temporary shutdown of furnace operations.
Another day, a computer error drove a glowing slab slightly off the rolling mill’s conveyor belt, causing a jam. Workers scrambled to get the mill rolling slabs again in about 15 minutes — a recovery time that delighted Mr. Hritz.
To lead the crew, the company called in Steve Guzy, a Mon Valley native who left the Mingo Junction plant when it closed and was working at a U.S. Steel mill in Gary, Ind. when he was called back.
The precision of steelmaking is a big part of the learning curve for young employees, he said.
In another control room, supervisors coached young employees on how to toss in metal alloys into the molten steel and manage the temperature — 2,880 degrees — to produce the precise blend of steel requested by a given customer.
At the caster, experienced steelworkers watched newcomers as the molten steel slowly poured into a mold, firming into a slab.
Mr. Guzy and others said the opportunity to fire up the mill was too good to pass up — and that attitude carries down to the workers who feel an obligation to make it work.
“There’s a lot of pride here,” said Jim McCormick, a casting supervisor who left the plant when it closed in 2008 and came back in October. “This is our lifeblood. We want to see it run.”
Light at the end?
Along Commercial Street, it is clear the town of Mingo Junction’s comeback needs more than steel slabs.
“I would say we’re cautiously optimistic,” said Ms. Crugnale, the village’s deputy clerk. “We’ve been able to sustain. But we’re trying to improve conditions.”
If it had been painted in 2019, the town hall’s mural might feature more nonprofits like the Bay Six Project, founded three years ago by a Mingo Junction native who moved back home.
Bobby Westfell, 39, returned with his wife after several years in Nashville, Tenn., to start a community center for teenagers, with video games, air hockey and honest talk about their problems.
Part of the nonprofit’s message, Mr. Westfell said, is to present construction trades and manufacturing as a good-paying career. JSW Steel’s purchase of the mill last year provides hope, he said, with the operation offering some residents pay of at least $18 an hour with the possibility of earning more.
“I envision one day that the downtown will be alive again, and not just a couple bars and condemned buildings,” said Mr. Westfell, who also works for the water department.
Next door to the Bay Six operation, eight people finished up a round of bingo at the Mingo Junction Senior Activity Center. Fred Pernick, the 83-year-old director of the center, said he’s scraping by with a small percentage of tax revenue from the village.
While he is thrilled with JSW Steel’s investment, he sees Commercial Street as a casualty of a much larger economic story.
“When Walmart and Lowe’s and all those big stores [in Steubenville] rolled in … all these small stores down here couldn’t compete,” he said. “When the mill pulled out, it got worse. That’s what happens in these towns.”
As his wife, Debbie Pernick, counted coins for the center’s treasury, Mr. Pernick said, “You have to modernize with the times. When they get full operation, I hope we boom.”
Across the street, Spuds Parkview Inn might serve as a proxy for the direction the local economy takes.
On a recent cold afternoon, the dark, smoky bar filled with regulars as the afternoon light faded. Mr. Fithen, who is also the owner of Spuds, slid onto a bar stool to join them.
The bar has stayed alive on crumpled dollars from the retired steelworkers who have been ordering drinks and food for years.
A job fair hosted by JSW Steel a couple weeks ago at the municipal building — where Mr. Fithen has his other office — was packed with people interested in a job.
Mr. Fithen could envision those younger workers stopping by the bar when they punch out after a shift at the mill.
“People in Mingo are strong,” he said. “They were going to survive no matter what.”