ERIK SANZENBACH / L’Observateur / December 9, 2000

LAPLACE – Blaming falling steel prices and losses in the final quarter of the year, Bayou Steel has announced it will temporarily close its LaPlace steel mill from Dec. 17 to Jan. 2.Chief Financial Officer Richard Gonzalez said the shutdown is a stop-gap measure to balance supply with demand.

“We have more inventory than we need,” explained Gonzalez. “During theshutdown we will reduce our inventory and free up some cash.”Gonzalez said this is not a layoff and nobody will lose jobs.

Bayou Steel employees are being offered three options during the shutdown of the mill. They can take a paid vacation, take unpaid leave or borrow fromnext year’s vacation time and get paid for the time off.

“This will be an extended Christmas vacation for our workers,” said Gonzalez.

Bayou Steel officials explained that foreign dumping of steel on the American market has reduced steel prices from $373 per ton to a seven-year-low of $259 per ton.

Electrical and natural gas increases of over $3 million in the past year have also had a major impact on the mill’s operation and production. Bayou Steelreported a net loss of $5.6 million for the year ending Sept. 30, 2000.Company CEO Jerry Pitts said Bayou Steel is in a good position despite the turn-down in the steel market.

“We believe we are positioned to contend with the severe market conditions that have already forced several steel mills into bankruptcy and put others in a tenuous positions,” said Pitts.

Gonzalez backed up Pitts and said, “Bayou Steel is in good shape to weather this storm. We are just battening down the hatches for awhile.”Bayou Steel recycles scrap metal into a variety of products like mine and tunnel supports, joists, signs, guardrail posts for highways and parts for transmission towers and bridges.

Gonzalez said after the plant re-opens in January there should be an upturn in the market. He and Pitts see 2001 as a turn-around for the steelindustry.

“When we start up again in January we will have the right mix of production and demand.” said Gonzalez. “We should see an improvement in the springwhen our customers will have run out of their inventories and we will be getting more orders.”

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