Scrap Industry News

TEWKSBURY ASSETS PURCHASED

The assets of the former Tewksbury Industries Inc., Tewksbury, Mass., have been purchased by the Hugo Neu Corp.-Schnitzer Steel Industries Inc. partnership known as New England Metal Recycling LLC (NEMR).

NEMR, based in Everett, Mass., has acquired the auto shredders and other scrap handling equipment previously operated by Tewskbury Industries at its sites in Tewksbury and in Madbury, N.H. NEMR has re-started the New Hampshire shredder and is collecting material at the Tewksbury site. NEMR has also signed an agreement to obtain stevedoring and other dock services at the Portland, Maine deep draft marine terminal operated by Merrill Marine Terminal Services Inc.

The former Tewksbury Industries Inc. filed for Chapter 11 bankruptcy in 1997 after a fatal accident at one of its facilities resulted in criminal charges and civil lawsuits. NEMR is one of two ventures operated jointly by Hugo Neu and Schnitzer, the other being Prolerized New England of Everett, Mass.

STOCK BUYBACKS ANNOUNCED

In moves to boost confidence, two publicly-traded players in the scrap recycling industry recently announced stock buyback programs.

Recycling Industries Inc., Englewood, Colo., announced the continuation of a stock buy-back program of up to 700,000 common shares. “The directors believe that our shares are undervalued at the current price and that the purchase of the company’s outstanding common stock is an effective use of our cash,” says Recycling Industries chairman and CEO Tom Wiens.

The scrap processing consolidator now owns and operates 42 metals processing facilities in 12 states. Under its buyback program, it has already purchased 66,000 shares of common stock. While the company’s revenues have grown steadily for the last two years, it posted a loss of 15 cents per share in the first quarter of 1998 and a gain of just two cents per share in the second quarter. Its pace of acquisitions has slowed, and the company may have to demonstrate that it can operate profitably before going back into an acquisition mode.

Birmingham Steel Corp., Birmingham, Ala., also announced the adoption of a program to repurchase up to one million shares of its common stock. “The board continues to believe that the stock, at its current valuation, represents an attractive investment opportunity for Birmingham Steel,” says chairman and CEO Robert A. Garvey. The company operates steel mini-mills as well as scrap processing and scrap substitute operations. The company’s stock recommendation has recently been downgraded by some investment analysts due to disappointing earnings.

OLD NAME IS NEW AGAIN

The name Harris Press & Shear will again be present within the scrap industry. Harris Waste Management Group Inc., Peachtree City, Ga., has announced that the Harris Press & Shear name will be reinstated for equipment that is part of its ferrous products division.

“Harris’ management team is sensitive to the evolving changes in the scrap industry,” says Harris Press & Shear division vice president Doug Sebastian. “We felt it was our duty to support the fact that the scrap industry is separate from the waste industry.” Among the equipment that will be part of the Press & Shear division are the TG, TGS and HRB model balers, and the BSH, ABS, and SS model shears.

HEAT WAVE HAS MINI-MILLS BOILING

An early summer heat wave caused problems for the operators of electric arc furnace steel mini-mills in parts of the U.S. The problem is not necessarily excess heat, but rather inadequate power. Air conditioners operating at full power have tested the power grids of several states, and have resulted in blackouts, “brownouts,” increased rates, and requests from utility companies to industrial customers to curtail operations.

In Ohio, one mill operator has asked the State to look into the rate charging practices of its electric power supplier during a June heat wave. In Indiana, Steel Dynamics Inc., Butler, Ind., says the June “short-term energy crisis” cost the company roughly 25,000 tons of production at profit margins of $100 per ton.

s [or $2.5 million], as well as power cost increases of more than $1 million. Steel Dynamics CEO Keith Busse estimates the June heat wave took $0.04 to $0.05 per share from the company’s second quarter earnings.

The slowdowns in mini-mill production also provided yet one more factor that softened prices for ferrous scrap.

August 1998
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