AK Steel to permanently close Ashland coke plant

AK Steel announced Tuesday it will close a coke plant that has been a fixture on the Ashland skyline and economy for decades.

The plant, which produces blast-furnace fuel for the company's iron and steel plant on the other side of town, will begin shutting down next week and will probably be closed by April 1, officials said. Two hundred sixty-three hourly and salaried employees will be affected.

The iron and steel plant, which employs about 900 workers, will remain open.

Ohio-based AK Steel Holding, the third-largest steelmaker in the U.S., said it would do its best to find work at its Ashland Works or other plants for many of those who are losing their jobs.

"The coke plant is no longer cost-competitive due to increased maintenance and increasingly stringent environmental regulations," AK Steel said in its news release.

Rep. Rocky Adkins, D-Sandy Hook, called the news "devastating" to the region he represents.

"Those types of jobs are hard to replace. I am hopeful AK Steel will live up to what they say and relocate those people," said Adkins, who is majority floor leader of the Kentucky House.

Adkins said he hopes many workers will get similar high-paying jobs with health insurance and benefits at the Ashland steel plant, but that won't solve the larger problem for a region dependent on industrial and refining-related employment.

"We're still going to have a coke plant sitting there closed. It leaves a sick and empty feeling for the economy and the families of the workers," Adkins said. "There's no question this is a dark day for this community."

Adkins said the focus now must be on making sure the steel plant "will be here for many, many years to come."

Gov. Steve Beshear said that the Economic Development Cabinet had offered state assistance to upgrade the decades-old coke plant. Previously, the state provided about $68 million to improve the steel plant.

Officials had hoped to put together a similar economic incentives package that could entice AK Steel to keep the coke plant open, but a company spokesman said it just wasn't realistic.

AK Steel vice president Alan H. McCoy said that the company "could see needing to spend as much as $50 million over the next few years" just to comply with federal environmental regulations. "The commonwealth doesn't have $50 million to help us with this problem," McCoy said.

Also, the coke made at the plant is the most expensive that AK Steel uses, he said, and that still would have been the case after the upgrade.

Instead, the company will take a pre-tax charge of about $80 million, including about $50 million to write off the property. About $18 million will go to employment costs and about $12 million to closure costs, according to company filings with the Securities and Exchange Commission.

Despite the high charge, most of which will occur in the fourth quarter, the company said it expects the move to strengthen its overall balance sheet and help Ashland's steel plant.

"AK Steel recognizes that this is a difficult time for the employees who are affected," said James L. Wainscott, head of AK Steel, in a statement. "We are committed to helping them as much as possible during this transition, including, where possible, placing them in jobs available elsewhere at the Ashland Works or operations within the corporation."

Beshear said the state "will continue to actively assist AK Steel in sustaining and growing those operations," as well as working with soon-to-be-laid-off employees.

Barry Webb, spokesman for the United Steelworkers Local 523, said the union will meet with company officials on Jan. 6 to hear transition details.

Webb, who also works at the plant, said employees were "stunned" at Tuesday's news.

"We were hoping we could come up with some alternative solution," Webb said. "We were expecting some announcement but not a total shutdown."

Webb said he'd been fielding calls all afternoon at the union hall after word of the closure started getting around. "It's been a pretty emotional day," Webb said. "A pretty sad day."

He estimated that the 200-plus workers paid about $500,000 in city payroll tax each year.

With the plant closure, the work done by at least 150 contract workers — pipe fitters, carpenters, maintenance workers and repairmen and other workers — will be eliminated, widening the financial impact on the community.

The city also will lose out another way, city manager Steve Corbitt said. The coke plant paid the biggest water and sewer bills to the city-owned utilities, he said.

"It's going to have a big impact on our utility fund," Corbitt said. "We're going to have to make adjustments. ... We don't have enough information yet as to how much we have to cut."

AK Steel's stock closed at $16.53 a share Tuesday, up 10 cents.