BY MIKE NOLAN
In full-page newspaper ads for GE Capital, brothers James and Craig Bouchard are seen standing inside the cavernous Sun Steel plant in Chicago Heights.
The picture is actually a bit dated – taken a few years ago when the brothers first owned the steel processing center – but it has new relevance.
Tom Modrowski, CEO of Esmark Steel Group, says the company expects steel demand to increase as the economy improves. (Larry Ruehl/SouthtownStar)
The Bouchards last month bought back Sun and another Chicago Heights steel plant, Century, from Russia’s OAO Severstal, betting that demand for steel will continue to rise as the economy improves. Their company, Esmark, is eyeing other acquisitions and is armed with a $100 million line of credit from GE.
Demand from automakers, appliance manufacturers and light-manufacturing industries for flat-rolled and bar steel is picking up, but nowhere near pre-recession levels, said Tom Modrowski, chief executive of the company’s Esmark Steel Group subsidiary.
“It’s going to be a slow climb out,” he said.
Esmark’s steel service centers have yet to hit full capacity and for now are following the lead of steel producers, which are operating at about 70 percent of capacity, Modrowski said.
“But consider that they were at 40 percent at the bottom of the (economic) trough,” he said.
Until about two years ago, the Bouchards had operated a network of 10 steel service centers around the Midwest, as well as Wheeling-Pittsburgh Steel Corp. They bought Sun, 2500 Euclid Ave., in February 2004, followed by Century, 300 E. Joe Orr Road, in early 2005.
In the summer of 2008 – just months before the financial markets collapsed – they sold the whole bundle to Severstal for $1.2 billion, including Severstal’s assumption of outstanding Esmark loans and debt.
A noncompete agreement kept them on the sidelines for a year, then last fall they plunged back in, paying $10 million for Amtex Steel, a service center in University Park. Amtex has been renamed Chicago Steel & Iron.
Along with Sun and Century, the Bouchards also picked up an Ohio steel service center they had sold to Severstal. Esmark didn’t say how much it paid for the assets. Combined, the service centers annually ship about 300,000 tons of flat-rolled steel, according to Esmark.
With financing from investors and the line of credit from GE, Esmark is on the prowl for other deals.
“We have our sights set on a couple other acquisitions already,” Modrowski said.
Esmark is concentrating on steel processors in the Midwest, specifically in the Chicago area, he said.
“We’re excited about what lies ahead in the future,” Modrowski said.
MORE THAN STEEL
Chicago-based Esmark, through its Esmark Steel Group subsidiary, is assembling a core of steel service centers – factories that process raw steel for durable goods such as cars and washing machines – but has interests in other areas.
Through other subsidiaries, Esmark:
- Sponsors the Pittsburgh Penguins hockey team and owns a tennis club in Naples, Fla.
- Owns oil fields in Nebraska and Oklahoma.
- Maintains a fleet of business jets available for lease or charter.