Production has ceased at Columbus Steel Castings Company following several weeks of scaling back and employee layoffs, and now the Ohio steel foundry is part of a bankruptcy filing and potential asset sale. It represents the third significant outage this year among steel foundries, following Keokuk Steel Castings in Iowa and ESCO Corp.’s Portland plant in Oregon. Many steel foundries rely on mining, energy, and heavy-equipment manufacturing for their business, industrial sectors in which demand has declined since a boost of capital spending earlier this decade.
Columbus Steel Castings’ holding company Constellation Enterprises LLC filed for creditor protection under Chapter 11 of the federal bankruptcy code on May 17, indicating its goal is to restructure its debt obligations. The bankruptcy filing includes Columbus Steel Castings and three other manufacturers: Commercial Metal Forming, Jorgensen Forge Corporation, and Zero Manufacturing. Those three companies are continuing to operate, and Constellation Enterprises indicated that some of its lenders have proposed buying those companies following the bankruptcy reorganization.
According to the filing, the four companies total debts amount to $238 million. Apart from the debts and obligations of Columbus Steel Castings, the group’s other holdings have accrued losses that Constellation Enterprises attributes to cuts in U.S. defense spending.
The firm also filed notice that it has a letter from an unnamed source intending to buy Columbus Steel Castings, though such a transaction would require a final purchase agreement and an approval of the sale by the bankruptcy court. The value of the offer and potential buyer’s future plans for the assets remain unknown.
In its filing Constellation traces Columbus Steel Castings’ problems to a 2015 furnace failure, which it stated cost roughly $15 million to repair, but also disrupted production for six weeks and halted delivery of steel castings to its customers.
“Columbus is determined to continue to support its customers,” Columbus Castings interim CEO Gary Bernhardy stated in a release. “We continue to ship from inventory, having shipped much of our products to meet customer needs prior to our temporary production hiatus.”
His statement continued: “We firmly believe that a successful sale process will allow the company to emerge stronger and healthier, and better positioned once again to provide high quality products and services that our customers and industry expect from us.”
Columbus Steel Castings, which is often described as the largest U.S. steel foundry operating from a single location, supplied castings for freight and passenger railcars, locomotives, and mining = and construction equipment for more than a century. It began to lay off about 800 workers last month, and ceased production on May 9.