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November 17, 2019, 02:03:45 PM

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Author Topic: Is another shut down near?  (Read 1061 times)
JW
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« on: September 03, 2019, 12:17:02 PM »

The word out of Butts St. is the steel mill owners have threatened to shut it down again if they don't get their rezoning request. Since they will be shutting down for the storm this week anyway why not just go ahead and close it now and save a lot of us the trouble of fighting with Tupelo about the city council voting against the zoning change. The people who actually live in the city want it gone. Paige Sawyer has decreed it.
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forklift driver
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« Reply #1 on: September 03, 2019, 02:03:47 PM »

Said it before and I'll say it again. Jamie Sanderson did not return to the Steel Mill this time after it reopened. There is a reason. Think about it. We all know Jamie thought he would take up where his daddy leaves off one day. Only that day will never come. The Steel Mill is at the end of the road. SOON.....
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Tom Rubillo
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« Reply #2 on: September 03, 2019, 03:48:07 PM »

This is a particularly important time in the history of the city in which the members of city council must stand firm and not be bullied.  If they simply cave into threats from the owners, the union or both, and simply rezone the property for unlimited heavy industrial use indefinitely as requested, they will very substantially strengthen the mill owner's legal claims against the city should the mill  close and it take longer than a year for the present owners to find a buyer.  Right now, owners have one year after closing to sell the mill with a new buyer being able use the land for ANY heavy industrial purpose, whether the production of steel or otherwise.  After that, neither the land or any equipment on the land can be used for heavy industrial purposes.  As to the land, the new buyer would be restricted to use it in strict conformity with the "mixed use" designation for which it has been earmarked once the mill is closed for more than a year.  A buyer would have to move the equipment on the property to some other location in order to use it or turn it into scrap.  As a practical matter, what that means is that after one year of mill idleness, the equipment at the mill has little more than a scrap value.

 The way things stand right now, mill owners can't complain about any of that.  They purchased knowing of the one year time limit in the zoning ordiance.  Put another way, they gambled that the steel industry in the US would make a comeback and bought a pig in poke.  They can't complain if the pig dies, not in court anyway.  If, on the other hand, the city council changes the zoning ordinance as requested or demanded, they will be putting that pig on indefinite life support.  If, after years and years and years of idleness, a new city council were to want to tear down a rusting old eyesore in the center of town and rezone the property for some other use,  mill owners would be able tol complain that their legal right to "use" the rusting equipment on the property for heavy industrial purposes for an indefinite period of time is being "taken" from them.  They city would have to pay "just compensation" for that "taking" 

 The city hired lawyers who are expert in constitutional law to advise council members when this specific zoning/taking question came up before.  Those attorney warned the city council about the dangers of a "takings" lawsuit when it comes to the value of the industrial equipment presently on site.  (There are different issues relating to the land.  The city's hand is much stronger there.)   

Based on the expert legal advice that the city received, an amendment to the old zoning ordinance was carefully crafted to keep the city and its residents and taxpayers from being sued, but still keep control over the future use of the land.  That is the ordinance that is now in place.  That is the ordinance that mill owners are reportedly demanding be changed.  They are doing so because they are looking out for their own financial interests, not those of city or the union or the non-union employees.  (All they have to do to protect workers is to stay open.) 

  I very strongly suggest that the city not remove the one year time limit on closure.  If it does, once this old, outdated and only marginally productive mill mill closes (which is inevitable, sooner or later), there will be two very bad consequences:  (1) the closed mill will sit idle, rusting, deteriorating and become an increasingly ugly eyesore in the very center of town, and (2) once people get really tired of that state of affairs and try, through their then elected city officials, try to do anything to remove the eyesore and revitalize the area, the city will be faced with a very large lawsuit that will end up costing the city and its residents a whole lot of money.  There is no insurance covering the city for any of this.  The city is "self-insured," meaning that it has to pay, dollar for dollar, both the cost of defending itself and any judgment rendered against it.

If it is the intention of mill owners to make a substantial investment in new equipment so it can profitably operate for a long time, they need to disclose the details of their plans to the city council.  Under those circumstances, time limits can be removed AFTER THE IMPROVEMENTS ARE MADE.  Mill owners should also commit to cleaning up the portion of their property not being used for production at this point -- Wood to Dozier, Front to the Sampit -- and make it available to "mixed" use in accordance with the existing ordinance.   A carefully written amendment to the present ordinance can be written that protects both sides from being bamboozled by the other on these points.  But in the meantime the members of city council have to stand strong and not be bullied.  If mill owners want something important, they should give something important.  The members of city council have to have enough spine to demand that. 

All of the members of city council were elected to represent the people of the City of Georgetown.  They don't represent the union.  They don't represent the company.  They don't represent just those who voted for them.  They represent ALL the residents of the city.    It is time for those council members to stand up for the people of the city andnot be bullied.  Caving in like that would be cowardly.   

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concernedperson
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« Reply #3 on: September 04, 2019, 02:13:30 PM »

I wish Mr. Rubillo was our mayor again now. I am concerned that like he said this is a critical time for this city and the current council will fold to the will of the union boss. There is no legitimate reason to give the mill owners the rezoning. They are just trying to get a buyer for the pig in a poke they bought for pennies on the dollar. They have learned the hard way this steel mill is not viable as long as the union boss and his cronies are in charge.
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thewizard
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« Reply #4 on: September 13, 2019, 03:42:09 PM »

Hear that noise? That's right there is no noise because the mill is not making steel again this weekend. How many turns are you making at the mill James E. Sanderson Jr? Why did your son not return when the mill opened? Yep the order book is empty and Jamie was actually smart this time and kept his job outside the mill. Soon James. Soon.
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Tom Rubillo
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« Reply #5 on: September 30, 2019, 07:00:55 PM »

There were no cars or trucks in the mill's parking lot on Front Street at 3:35 p.m., Monday, September 30.  There were only a few vehicles in the parking lot across from the company offices.  The mill was silent.  HuhHuhHuh
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thewizard
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« Reply #6 on: October 02, 2019, 12:50:15 PM »

The order book is empty. The mill is idle. Just across the street IP has idled several machines lately also. The new owners are trying to get that rezoning done so they can sell the mill. If the rezoning does not happen soon they will shut it down and walk away just like the others have. They bought the mill for pennies and now want to make a profit and unload it on the next suckers.
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Tom Rubillo
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« Reply #7 on: October 02, 2019, 05:41:00 PM »

There are two ways to buy an existing business that is incorporated.  One is called a "stock purchase."  The other is called an "asset purchase."

A "stock purchase" occurs when the buyer pays to acquire a controlling number of shares of stock in the existing corporation.  A buyer who does that can choose whether to keep the same name or give the corporation a new one.  Either way, the new owner steps into the shoes of the old one, taking title to all the assets and assuming all of the losses and liabilities of the old company.  This can be a useful approach if the old company has a lot of losses still on its books which it hasn't yet claimed on its tax returns.  Losses acquired by the new owner in this way can help reduce the new owner's taxable income and, therefore, result in a tax savings.  But this same thing -- the assuming of losses and liabilities -- can prove to be a two edged sword. It can be a problem if the old company's outstanding or contingent liabilities are greater than any tax benefit the new owner might receive from "buying losses."  A careful analysis by lawyers and accountants is necessary to determine which way the hammer falls in this regard, including identification of all debts and "contingent liabilities."  The latter are those possible financial, legal or even environmental problems which may not have surfaced yet.  This careful analysis has a name.  It is called "due diligence."

The other way to buy an existing business is called an "asset purchase."  In an asset purchase the buyer only takes over the land, buildings, equipment, accounts receivables and customer lists of the old company   There are no shares of stock involved in the transaction.  That leaves the new owner free from any of the liabilities or debts of the seller. 

Liberty is reported to have acquired the steel mill by way of a "stock purchase."  Its owners could have avoided any debts or "contingent liabilities," but reportedly did not do so.  It bought the steel mill "lock, stock and barrel" so to speak.  If this previously reported detail of the sale is true -- that this was a "stock purchase" rather than an "asset purchase" -- one of the serious consequences of doing so would have left Liberty on the hook for the cost of environmental cleanup.   By looking for a new buyer to make a similar stock purchase, the owners of Liberty can get themselves off of the hook.  But there's another problem.  It has to do with zoning.

Under existing zoning, the land on which the mill presently sits can only continue to be used for heavy industrial purposes if it keeps operating.  If the mill goes idle for more than a year (for any reason other than a bona fide labor dispute), the zoning changes and the property can't be used for heavy industry -- can't continue to be a steel mill -- any longer.  That fact is probably what is behind its request that the city remove the one year time limit. 

The mill parking lot on Front Street has been mostly empty for several days now.  The mill doesn't seem to be producing steel any longer.  The clock on "idleness" has started ticking. 

If Liberty can't make a go of it producing steel, it is unlikely that anyone else will be able to do so either.  From all outward appearances, the time may be rapidly approaching when the mill closes permanently..  The present zoning ordinance contemplates that possibility and puts the city in the position to move forward with redevelopment of the property once environmental problems are resolved.  To that end -- redevelopment -- I am of the opinion that the city would be wise to apply to the Environmental Protection Agency to designate the steel mill as a "brownfield" and request "Superfund" assistance in cleaning it up.  If the mill closes, the entire property would be included in the application.  Unless and until it does, the application should focus on the portion of the property bordered by Wood and Dozier Streets, Front and the Sampit.  This part is not being used to produce steel.  The application could be amended to add the rest of the mill property once all production has ended and has done so for more than a year.

Liberty bought the "contingent liability" of the cost of cleanup.  While the "superfund" will advance all the costs of cleanup, EPA will look to Liberty's owner to be reimbursed.  That will prove to be a huge "liability." once it is no longer "contingent."  If Liberty's owners are upset about that, they should direct their displeasure at those responsible for "due diligence" prior to purchase, not the city.  If it wants the city's help with this, it should be in the form of a friendly request that the city not oppose a claim by Liberty that, because, as a relatively new owner, it did not cause the vast majority of the problem so it would be unfair to stick them with the whole bill.  The city can be hard nosed and oppose that argument if it chooses.  Liberty had lawyers and accountants and knew (or with the exercise of reasonable diligence should have known) what it was getting itself into when it made a stock purchase.   All the fighting over that will likely take place in bankruptcy court, largely between the federal Environmental Protection Agency and Liberty's owners, but with the city playing an important role..

Given all of the complex legal and financial realities involved here, any attempt to bully or threaten city officials here would be very foolish.  The city cannot remove the time limitation of mill idleness from its present zoning ordinance without causing bit and expensive legal problems for itself and its residents and taxpayers.  Those have been discussed in earlier postings.  Attempts to twist arms (either directly or by using surrogates)  to get it to do so will, in the end, bite Liberty's owners in the ass.  They need to be careful.  They need to be polite.  They need to understand that they are not dealing with folks who just fell off of the back of the tater truck. 
   

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PBSIAT
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« Reply #8 on: October 04, 2019, 03:21:48 PM »

Boy old Tom Rubillo has made Paige Sawyer's day. I didn't know what Paige was boasting about on this web site so I had to go get a look. So the mill is about to close again? That's a real shocker. The question is will council give them a rezoning so they can sell it. Without the zoning change no one is going to buy it and that should be the end of the mill for good.
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Tom Rubillo
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« Reply #9 on: October 04, 2019, 07:28:10 PM »

The mill have withdrawn the request that the city rezone the property or amend the ordinance to remove the one year closure limit.  They have asked that the city cooperate in opening their pier to barge traffic.  That is a reasonable request.
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PBSIAT
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« Reply #10 on: October 07, 2019, 04:16:18 PM »

The local press and blogger are reporting the mill owners are going to invest in upgrades at the mill now. What about the people that just got laid off? I think this is BS and the local press is falling for it again. Just like last time the mill shut down.
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Tom Rubillo
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« Reply #11 on: October 10, 2019, 01:28:05 PM »

Reading the article on the GAB News website about Liberty's plans, I got the very distinct impression that the company is keeping its options open.  If I read the article correctly, it says that it wants to install a lot of expensive new steel making equipment but will have to reinforce foundations to support its weight.  To do that it -- to reinforce foundations -- the company will have to remove everything that is presently in place because it would be in the way of doing that work.  That would include all the existing electric arc furnace and all the transformers and associated electrical equipment.  There's probably lots of other stuff that would have to be removed too.  While some of this stuff could be moved off site by rail, the most efficient way to remove the heaviest of it would be by barge.  Liberty's request for the city's cooperation in opening up the channel to barge traffic is consistent with this fact.  In any event, once the existing steel making equipment is removed, Liberty will be free to sell any or all of what is removed for scrap or ship it overseas and use it elsewhere like, for example, Southeast Asia or South America where environmental regulations are much looser and labor is a lot cheaper.  That is all up to the company and is nobody's business here in Georgetown.

What is "the business" of folks here in Georgetown is what happens next, once old equipment is removed.  That "business" has two parts.  The first involves the cleanup and redevelopment of the stretch of land between Wood and Dozier/Front and the Sampit.  That is very valuable property and Liberty could ultimately profit from its redevelopment for "mixed" use as provided by the existing zoning ordinance. 

The second or other "business" in which the entire community has an interest is what happens once old steel making equipment is removed.  If Liberty goes ahead with plans to upgrade the mill and get back to work, there is little that anyone can do or say to oppose that decision.  The only rub there would be whether the time it takes to retool could be counted as "idle" time causing the property to lose its "heavy industry" zoning.  Quite frankly, I don't think that argument would pass a red face test -- a proponent of it couldn't say it without showing signs of severe embarrassment.  Unless I miss my guess completely, that argument would be a sure loser in court.

On the other hand, if Liberty changes its mind about reinvesting for any reason and doesn't start work on foundations and/or install new equipment, after one year from NOW, under the existing ordinance the zoning of the property will change.  The mill will have been "idle" for a year.  The entire site would no longer be available for any heavy industrial use.  At that point the whole place would need to be cleaned up and made ready for redevelopment for "mixed" uses.  Previous postings discuss some of what would be involved there.

Different folks have different views about the mill.  Some hate the place and say that it should never have been allowed to be built in the first place.  The problem is that sort of griping and grumbling is that it doesn't  change anything.  At this point it doesn't matter whether their initial premise is right or wrong.  In point of fact the mill exists and important decisions about its future are being made.   Those decision will have a direct and lasting impact on the future economic health and well being of the entire community.

Georgetown has many things going for it.  One of its shortcomings is that it does not provide sufficient economic opportunities for its residents.  Put another way, the community does not make a place at the table for its children.  The result:  many of those with get up and go have to get up and leave to find opportunities that match their talents.  This needs to change.  Those responsible for shaping the community's future will be called on to make a lot of important decisions as events involving the mill unfold and its future becomes clearer,  Meanwhile, I suggest that everyone stay awake, watch and listen.  The fat lady ain't sung yet, so the opera ain't over.   
   
 
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thewizard
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« Reply #12 on: October 12, 2019, 09:13:47 AM »

So if I understand what Mr. Tom just said? The steel mill is closing to supposedly upgrade. But the mill owners could just take the equipment out and sell it to some country south of us and never put new stuff in? Then the mill would be finished for good since no equipment will be there. I like this plan. But what about the employees during this closure? Oh never mind James E. Sanderson, Jr. will take care of them.  Quick boys get those lawnmowers tuned up.
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thewizard
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« Reply #13 on: October 20, 2019, 11:47:51 AM »

Looks like the shutdown is already happening? There were no trucks in the parking lot Friday, yesterday or today. Are the employees already on unemployment? Maybe the Times can send a reporter to see? Maybe that on the spot reporter Scotty Harpers could check in?
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