Illinois-based special bar quality steelmaker Alton Steel closed abruptly last week because a supplier took possession of raw materials as collateral, leaving it unable to continue operating, according to a letter it sent to state officials.
Alton Steel announced the closure of its 750,000 short ton/yr electric arc furnace steel mill in Alton, Illinois on 27 January, four days before the first tranche of layoffs would take place, according to a letter the company sent the Illinois Department of Commerce and Economic Opportunity.
Alton's financial position was precarious leading up to the closure, but the steelmaker did not expect to shut down so suddenly, it said in the letter. Major employers are required to provide 60-day notice of significant layoffs or plant closures.
Alton Steel said it could not give enough notice because of "unforeseeable business circumstances" and the "faltering company" exceptions under the state and federal Worker Adjustment and Retraining Notification Act.
"Such circumstances include, among others, Alton Steel's material supplier took possession of substantial property, including raw materials, that the supplier claims as collateral leaving Alton Steel without the necessary material to continue operations and without the ability to secure another source due to its financial condition," the company said.
Alton Steel planned to lay off 253 employees starting on 31 January and finishing on 31 July. Nearly 200 of those employees are members of the United Steelworkers.
The union could not be reached for comment.
