By Jamie Smith Hopkins, The Baltimore Sun
8:28 PM EST, January 23, 2013
Hundreds of people gathered on site and online Wednesday for the first public opportunity to buy the silenced remains of the Sparrows Point steel mill — from forklifts and slab haulers to cabinets and snowblowers.
Among the hopeful bidders: welders, scrap dealers, equipment resellers and steel companies, some as far flung as Egypt and others just down the road.
"We're doing some purchasing to help with our expansion," said Stacy Casey, project manager and bookkeeper for Tiemann Construction, a welding company near the mill. Getting equipment at auction seemed "cost-efficient — unfortunately at the loss of Sparrows Point. But somebody's going to buy it anyway."
Illinois-based Hilco Trading, owner of everything at the Baltimore County property except the land itself and some of the buildings, expected to auction off about 1,600 lots of equipment over Wednesday and Thursday.
That doesn't include several hundred lots the company is selling through a separate, online-only auction of tools that ends Tuesday.
"This is probably one of the largest steel auctions ever conducted," said Stephan Wolf, a managing partner of Hilco Industrial, the arm of the company that liquidates manufacturing plants and similar facilities. "Without question, a lot of equipment here."
Hilco employees sifting through buildings on the more than 3,000-acre site found salable items everywhere: new motors under tarps — apparently left there and forgotten, Wolf said — and locked cabinets full of tools.
It doesn't surprise him. Sparrows Point had well more than 100 years to accumulate stuff.
The mill, which produced its first pig iron in 1889, was the state's largest employer in the post-World War II heyday of American steel. The last few decades have been a slow, terrible slide to the moment last August when bankrupt owner RG Steel sold the plant for $72.5 million — less than a tenth of the price it brought just four years previously.
Sparrows Point's 2,000 laid-off employees — and those who counted on the mill for their jobs with vendors and contractors — had hoped a new operator would step in. But no steelmakers bid at the August auction.
Hilco teamed with redeveloper Environmental Liability Transfer to buy the mill. They said it wasn't necessarily too late for an operator, and scheduled a January auction of the entire property — in whole or in part.
Last month, that was called off. An out-of-state competitor had bought the plant's most valuable steelmaking asset, reportedly for spare parts — to workers' anger and despair. Local leaders of the United Steelworkers union said at least two potential operators were planning to bid, though Hilco insists it seriously considered all companies with the means to purchase.
As he took a break from auctioning off items Wednesday, Hilco's Robert C. Levy said the company truly wanted to find an operator capable of buying the property or part of it. The company marketed Sparrows Point for several months before pulling the plug.
"We tried," said Levy, a Hilco Industrial managing partner. "We tried. … There were a lot of inefficiencies in this facility."
When a plant closes, the key is to "repurpose" it as quickly as possible so it can employ people again, he added.
There's a lot of work to do before new users are likely to come in. Levy expects all the buildings will be demolished — carefully, because everything from the glass to the metal has resale value. Wolf, his colleague, thinks the property will be cleaned up and in use within five years.
Environmental Liability Transfer, the landowner, has called the site — with its deep-water port and proximity to Interstate 695 — "ideal" for industrial and distribution uses. Wolf said the odds are good that at least one tenant will manufacture there.
"Your initial reaction is it's a very sad situation — you hate to lose industry," he said of the closure. "But what's coming out … is almost like a phoenix. It's a rebirth."
Nearly 170 people were online for the auction Wednesday morning, with more than 350 people registered to bid in person. A shuttle took would-be buyers on a continuous loop to the tin mill, the tractor repair shop and other buildings full of equipment with Hilco's lot tags.
The vehicle, bumping over the railroad tracks crisscrossing the property, passed by brightly colored locomotives, a pile of metal scrap, buildings with rust-eaten doors and a faded sign proclaiming "America Strong as Steel!"
The auction was inside the human resources building, in an auditorium packed last summer by anxious steelworkers looking for retraining, new health insurance and jobs. Wednesday's crowd was more optimistic — or at least very ready to plunk down money to get pieces of Sparrows Point.
Levy told everyone Hilco would be donating a dollar per lot, plus the amount of the winning bid on one of the forklifts, to Goodwill Industries of the Chesapeake, a Baltimore-based workforce training nonprofit. Then he warned the crowd that there were hundreds of lots to get through that day.
"Bid high, bid fast," he said.
First up: a walk-behind snowblower, appearing in full color on four screens around the room. That went for $450, with other snowblowers quickly selling for $425 and $275. Items came and went rapidly: a portable magnetic drill for $550, a pressfit tool for $375, a band saw for $150.
Levy pointed, gestured, urged and last-called. Some of the winners were there, and others — their disembodied voices coming through phone lines — were elsewhere. Hilco says the online crowd hailed from 10 countries.
Four or five years ago, many of Hilco Industrial's winning bidders were foreign and had their new purchases shipped out of the country, Wolf said. Now, as U.S. manufacturing picks up, the majority of buyers are domestic.
Maryland's manufacturing employment continued to fall last year. But Wolf said about half the people who registered to buy Sparrows Point equipment are regional, within a 150-mile radius of the plant.
Mike Wherry and Gary Trate, each of whom owns an equipment resale company in Pennsylvania, stood near the back of the room and shook their heads over the morning's bids. Too pricey for them. Take, for instance, a saw that sold for $300 — plus a buyer's premium of at least 15 percent and the state's sales tax — even though Wherry's sure you could get it new for $250.
"I want to ask the guy what he was thinking," said Wherry, of Sunset Industries.
The two men go to a lot of auctions. Trate, of Trate's Surplus, figures his count is at least 50 a year. Buyers who intend to use the equipment themselves can afford to bid more than resellers, and some newbies inevitably overpay, but Wherry and Trate bide their time and hope for good deals here and there.
Just before 6 p.m., as the auction was winding down, they called it a day and left empty-handed.
"Things were really going crazy," Wherry said.
He was a bit disappointed, but he wasn't sorry he made the trip. A friend who worked at a steel mill in Pennsylvania told him about Sparrows Point years ago, piquing his curiosity, and he wanted to get a glimpse.
"It was just worthwhile to see, to come down here and look and see what the place was like," Wherry said.
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