After filing for bankruptcy in March, Sivyer Steel has been purchased by a group of local investors, who plan to increase production and jobs.
The investor group acquired Sivyer, based in Bettendorf, for $6.5 million on July 28. The company will continue operations under a new corporate name: Sivyer Steel Castings LLC. Michael Baxley, one of the investors and Sivyer's new CEO, said the company plans to renovate the 325,000-square-foot facility and update equipment.
"As for Sivyer Steel, with an annual payroll of $11 million and local vendor payments totaling an additional $11 million, the positive economic impact of this company on the Quad-Cities region is enormous," Scott Tinsman, Bettendorf, representing the Tinsman family investment, said. "I am very pleased to report we have weathered the storm and the best days of Sivyer Steel are ahead of us."
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Founded in 1909 in Milwaukee, Sivyer Steel moved to Bettendorf in 1962. It produces medium to large steel castings for the mining, military, passenger rail and oil/gas industries.
Due to a slow-down in orders and a difficult recovery over the past few years, Sivyer filed a Voluntary Chapter 11 Petition for Reorganization with the U.S. Bankruptcy Court for the Southern District of Iowa. President Keith Kramer said in March Sivyer will continue operating and employs around 230 people.
Since the acquisition in July, Baxley said Sivyer now employs 241 people and hopes to add more jobs in a couple of months. He claimed union employees, through United Steelworkers, took a 10 percent pay cut during the reorganization, which is now being paid back, along with 401(k) contributions.
The new owners hope to increase capacity as the factory takes on more orders.
“We have a big factory and we need to retool,” he said. “We’re putting quite a few dollars and hours into putting the plant back on its feet in a cost-effective manner, and increasing capacity. We’re probably at one-third capacity right now.”
Baxley, of LeClaire, said a global downturn in the mining industry resulted in fewer orders in 2014. Sivyer experienced "significant losses" in 2015, and despite a slow recovery process, the company could not overcome the losses and cash shortfall, he said.
Today, with a growing demand for American steel due to an escalating trade war, Baxley expects the company to pick up speed and increase production.
"The phenomenon occurring today is there's uncertainty in U.S. trade policy," he said. "That's causing a lot of people to evaluate the supply chain and say, 'well, I better get things locally.' ... So it was attractive to see what we could do. There were sales to be had."
With manufacturing booming in the energy, mining and construction industries, steel products are in high demand, according to a Wall Street Journal report.
“In the last 2½ years ... major steel foundries (have gone) under, so that exacerbated the supply-and-demand issue. And it put us in a more favorable condition,” Baxley said. “What we were doing before wasn’t impacted by the trade policy. But then foundries go away, the market comes roaring back with demand, and then add that uncertainty (from the tariffs), and here we are. People are calling us up.”
Investor Joel Lorentzen, who operates Crestwood Capital Management Inc., said “intensifying market demand, reduction in competitors and a plant operating at 30-40 percent of its capacity right here in the Quad-Cities,” were the main reasons for the new ownership.
The Wall Street Journal reported factories are facing a shortage of parts, including steel castings, which Caterpillar Inc. is specifically lacking.
“We’re working to get (the factory) pumping out orders again. We have past orders, and we need to get those caught up, and we’re ready to take on new orders,” he said. “We haven’t sold to Caterpillar since 2005, any significant order. And they came back to us with a very large order.”
Sivyer Steel is owned by 14 individual small investors, according to a news release. Around 80 percent of Sivyer Steel equity is now owned locally.