January 2023- Ohio Valley Startup has high hopes for gaining market share in heavy plate products.
On the banks of the Ohio River across from West Virginia, American Heavy Plates is still a startup at only three years in business, but one that arrived in the market at exactly the right time. Housed in a 300,000-square-foot revitalized mill complex in rural Clarington, Ohio, and run by a workforce of 135, the company was founded by industry veterans who worked at steel mills before, such as ArcelorMittal and Lukens. They saw an opportunity and secured funding from New York City-based equity partners to bring forward a niche player in the plate business.
Jack Biegalski, president and COO, who joined the company in 2021, likens AHP to the Little Engine That Could. He says co-founders Robert Schaal and Damien Brennan had an idea, found an overlooked idled asset and tapped resources and relationships they had built in the industry for many years to get this new entity under way.
Robert Schaal, AHP’s co-founder and CEO, served as president and COO of Lukens and as CEO of Jindal Steel, Baytown, Texas, among other executive roles in steel and manufacturing. Co-founder Damian Brennan, who serves as vice president-administration, spent 20 years in the metals industry, working in sales, supply chain, finance, operations modeling, government relations, import/ export, M&A and information technology.
Biegalski says the equity group “approached me to come in as president and COO to manage the operations and sales side.” He was previously director of sales and marketing for plate products at ArcelorMittal USA and left soon after it was acquired by Cleveland-Cliffs Inc. Biegalski has also served as chair of the MSCI Plates and Shapes Council.
MILL REBUILD
The Clarington complex “was an old aluminum rolling mill that went belly up,” Biegalski says. After equity funding came through, “the first year [2019] was spent just rebuilding the mill. The mill rolled its first steel in 2020.”
Fortunately, because of its well-developed relationships with potential customers, the team “hit lightning in a bottle,” he says.
When Biegalski was running the plate group at ArcelorMittal, “it kept coming up [in conversations that] there are guys starting up a mill in Ohio, and the last thing we need is another plate mill.”
That did not deter him from joining forces. “I am a big relationship guy. When I made the jump to AHP, I called all my friends and asked for a little help. I wanted to make this successful for American Heavy Plates and for the customers the team was working hard to sell. 2021 was a great year to be in the steel business,” Biegalski adds. “We filled our mill quickly and persuaded the owners to expand capacity.”
SCALE
At ArcelorMittal, says Biegalski, “our team was responsible for roughly 1.2 million tons per year.” Nucor Corp.’s Brandenburg mill will also be able to produce 1.2 million tons of plate products per year. By comparison, “our mill is full at 65,000 to 75,000 tons annually. ”
According to Brennan, AHP makes most carbon and light alloy grades in common use, including A36, A516, A572, A588, 1002-1045, 4140, 4130, 4340, A514, P20 and several custom grades for specific customers such as Caterpillar Inc. “Our ability to domestically source ingots quickly allows us to deliver custom chemistries in weeks rather than months,” he notes.
“Our size range is up to 22 inches thick and we will process and deliver in a very short period of time,” Biegalski says. “If a mill runs 100,000 tons a month, they will want to set up their rolling schedule for big orders and run the same grade and size for extended periods.” However, if a service center customer wants only two plates, which are not a standard size, “we will do it. A big mill doesn’t want that business. We cannot go head to head on large volume,” he says. Another difference in scale is that AHP can manage 98-inch-wide plate, while most large producers have 160- inch-wide mills.
AHP starts with purchased ingots and slabs, “which allows us to deliver finished plate that has been rolled to specific customer requirements for size and physical properties,” says Brennan.
PROCESSING
In addition to rolling plate to order, AHP performs flame cutting, beveling, flattening, heat treating, rough machining and testing. “Regarding heat treating, we normalize, anneal, stress relieve, and quench and temper,” says Brennan. “Customers can buy plate in railcar quantities or a single pallet. If they want us to cut it into parts rather than provide it in plate form, we’ll do that too,” he continues. “Our inhouse heat treating department and lab allow us to reach specific physical properties all under one roof.”
American Heavy Plates rebuilt an idled aluminum mill, installing furnaces to reheat slabs and ingots.
AHP has the ability to perform first-stage processes, Biegalski adds. For example, in 2021 many of the plate burning shops were filled to capacity and “we supplemented what they were doing, which allowed them to take on more business.”
LOGISTICS & LABOR
AHP supplies plate to service centers, heavy equipment manufacturers, tool and die, yellow goods, civil engineering, defense, energy production, oil and gas extraction, mining, and several other industries, Brennan says.
Besides using trucks, AHP both receives raw material and ships finished plate by rail. “We are starting to do more by rail,” Biegalski says. “We have customers who are stepping up [their order volumes] from full truckloads to railcar quantities.”
One might deduce that in the rural sections of the Ohio Valley, it is difficult to find skilled employees. However, “there are chemical and energy plants on the Ohio, and a lot of hourly workers. We have found a lot of good people,” Biegalski says, including some who used to work for the defunct aluminum producer.
“It’s no different than the complexion of the steel industry now: we have a lot of folks with a lot of experience, older workers,” he says. “But we are able to bring in young people from local trade schools.”
If the company brings in 10 to 12 interns, “more than half sign on after their internships. We do a lot of training and development,” he adds. However, competition for that labor pool is stiff. “If they can get $2 more an hour at a chemical plant, we do see that turnover. It’s a battle all the time, and we continue to work on compensation and development. We have a matching 401K plan; we have a bonus plan. These benefits are good.”
LEAD TIMES
AHP’s objective is to deliver finished orders within two to four weeks. In early December, the company was quoting six-week deliveries because it got backed up due to some maintenance downtime. “That’s farther than we would like,” Biegalski says. On the other hand, “we are not running massive quantities and can quickly change our rolling schedule. We are flexible. If Ryerson or Kloeckner want a plate next week and we have an ingot or slab in stock, there’s a good chance we can do it.” He says AHP wants customers to understand it can provide product in a relatively short amount of time. “We have built credibility by doing that already. Sometimes we can fill in during an emergency and sometimes we have to quote three weeks. Our model is two to four weeks. That’s usually better than the big mills.”
POTENTIAL
AHP is “not a big bureaucratic organization,” Biegalski notes. “Our management spends much time in the mill. I am at the Ohio mill every week. We want to be the first phone call customers make. Sometimes there is a run on 6-inch and then we are able to replenish the inventory quickly. Stock and quick delivery.” Regarding future plans, the equity owners will seek out sensible opportunities. “It would not surprise me if they looked to expand the footprint,” he says. Meanwhile, there is promise in the infrastructure spending that is coming down the pike. AHP relies on domestic slab and ingots, which means “we can meet melted and manufactured in the USA requirement for heavy equipment. If infrastructure takes off, we will see a big boost from those equipment makers,” Biegalski predicts. “We will continue to be a niche-market producer,” says Brennan. “We’re not aiming to be a top producer based on tonnage. We think the U.S. manufacturing base needs a JIT producer of heavy steel plate. That ties in perfectly with our nation’s efforts to focus on high value-added manufacturing. -MM
