Joy Global reports lower net income; Talgo to create 125 jobs at Tower Automotive site; Super Steel files for receivership
Joy Global reports lower net income
Joy Global Inc. reported fiscal first quarter net income of $76 million, or 73 cents per share, which was down from $86 million, or 83 cents per share, in the same period a year ago.
The Milwaukee-based mining equipment manufacturer’s quarterly net sales fell 3 percent to $729 million from $755 million a year earlier.
"We delivered solid results in our first quarter that are in line with our expectations and are consistent with our outlook for our markets," said Mike Sutherlin, president and chief executive officer of Joy Global. "Orders were up from last year’s run rate, and translated to a positive book to bill. We continue to see strength in the international and emerging markets for all commodities, and the U.S. thermal coal market is correcting faster than expected. I was also pleased that we reduced our trade working capital during the first quarter as we continue to improve the efficiency of our processes. As a result, we are well positioned to take full advantage as the market recovery unfolds."
Talgo to create 125 jobs at Tower Automotive site
Spanish train company Talgo Inc. will create 125 jobs to assemble and maintain high speed trains at the former Tower Automotive facility in Milwaukee, chief executive officer Antonio Perez announced last week.
Perez said the supply chain for the Milwaukee plant will create an additional 450 jobs to support the operation. Some of those jobs will be created in Wisconsin, he said.
The company may eventually hire even more workers at the Milwaukee plant if more states purchase high speed trains from Talgo. Wisconsin is buying four train sets and Oregon is buying two trains sets from the company. Those trains will be built at the Milwaukee plant.
Perez said Talgo made a promise that the first U.S. state to purchase a high speed train from the company would be the site of an assembly plant for the company’s high speed trains in the U.S. market. Last year, Gov. Jim Doyle’s administration moved to purchase two trains to take advantage of that opportunity.
The Milwaukee facility will assemble Talgo high speed trains for the entire United States, Talgo spokeswoman Nora Friend said. The company hopes to sell trains to other states through President Barack Obama’s $8 billion high speed rail initiative, which includes $810 million to create high speed rail service from Milwaukee to Madison and $12 million to improve the Milwaukee to Chicago rail corridor.
It would be too expensive to build a plant in each state that purchases trains, Friend said. So the company hopes other states do not make that a condition of a train purchase, she said.
The Midwest high speed rail network, if fully developed, would need 65 train sets, which demonstrates the market potential for Talgo’s Milwaukee plant, Doyle said.
“This is going to be a place where a significant number of those trains will be built,” he said. "Wisconsin will see real economic benefits of high speed rail for generations to come. High speed rail is the future of transportation, and it is a really great thing for the state of Wisconsin to be leading the way."
In addition to the Tower Automotive site, Talgo considered two sites in Janesville, a site in Racine, a site in Appleton and the Super Steel plant in Milwaukee to assemble its high speed trains.
Perez said the company evaluated all of the sites based on: their economic conditions, technical and operational conditions, cost of living, training facilities in the vacinity availability of skilled workforce and logistical traits including rail access. The company needed a large amount of space with overhead cranes and room for expansion. The company preferred a site near a port, a major airport and near train centers.
Talgo will lease 133,000 square feet of space from the city of Milwaukee in building at the corner of North 27th Street and Townsend Street. The company will lease the space for $2.59 per square foot, or $344,470 a year, said Richard “Rocky” Marcoux, commissioner of the Department of City Development.
The city purchased 84 acres of the former 140-acre Tower site last year for $4.5 million. The property is bounded roughly by West Capitol Drive, the Soo Line railroad tracks, West Townsend Street and North 27th Street. The city plans to spend about $30 million to redevelop the property and attract new businesses.
The city is not providing any incentives to Talgo to locate at the Tower site, Marcoux said.
“This is a straight up business deal,” he said.
Super Steel files for receivership
Super Steel Products Corp., a Milwaukee-based manufacturer of metal products and equipment for the industrial, construction, agricultural and railroad markets, has filed a petition for receivership under Chapter 128 of the Wisconsin Statutes.
Super Steel president Jim Schmelzer said the filing, made last week in Milwaukee County Circuit Court, is part of a strategic business effort to reposition the company for new growth and success as the United States emerges from the current economic downturn.
Michael Polsky, a Milwaukee attorney, has been appointed as the court-appointed receiver of the company.
Super Steel operates at two facilities in Milwaukee – its headquarters and manufacturing facility at 7900 W. Tower Ave., and its transportation and manufacturing facility at 7100 W. Calumet Road.
The company, which employs approximately 250 people, has roots in Milwaukee dating back to 1923.
Schmelzer stressed that Super Steel remains in business, that it expects substantially all of its jobs to remain in place and that the company will continue to accept and fill all customer orders throughout the Chapter 128 process. The company has secured funding to cover its operations during the reorganization effort, he said.
“Today’s filing gives Super Steel the time and framework to reposition while we continue to operate our business as usual. We have a going business, a backlog of orders and excellent employees – this step changes none of that,” he said. “Super Steel will keep supporting its workforce, keep buying goods and services from its vendors and keep providing customers with the quality products and services they’ve come to expect from us. Our goal is to preserve and strengthen the business so that Super Steel can be an even more successful and stronger competitor in the future.”
In conjunction with the Chapter 128 filing, Schmelzer said that Super Steel Chairman Fred Luber, who currently holds a significant stake in the business, intends to submit a bid to purchase the company’s assets. Other interested buyers can file bids as well, with the winning bid to be determined by the court. No bid deadline has been set at this point.
Any buyer of the business is expected to immediately rehire substantially all Super Steel employees under its new ownership and operation of the business.
The decision to reorganize was difficult, but necessary, Schmelzer said.
“It’s no secret that times have been tough in the manufacturing industry. We’ve experienced significant challenges along with our customers, our competitors and everyone else,” he said. “But we also see good signs that the economy is improving. As that turnaround approaches, we want to ensure Super Steel is effectively positioned to maximize its opportunities. Many people, including our employees, customers, vendors and many others, want Super Steel to succeed – and for that, we are grateful. We look forward to the successful conclusion of this process and to continuing the quality work our company has done here in Milwaukee for decades.”
Super Steel spokesman Evan Zeppos said Super Steel’s decision to file for receivership was not related to the recent announcement that Talgo Inc., a Spanish train company, has decided to build a new assembly plant at the former Tower Automotive site, rather than at Super Steel. Super Steel had been one of six finalists for the Talgo site.
“One contract would not have reversed the economic impact we’ve been facing at Super Steel,” Zeppos said. “However, Super Steel would have done an excellent job with that contract. We’re still in a position to be a good subcontractor on that project. We have received some additional work and contracts recently and we have a backlog now. But those aren’t enough to overcome the stress we’re facing, so (the filing) is really not related (to Talgo).”
At its peak earlier this decade, Super Steel had more than 700 employees.
In 2008, the company closed its facility in Schenectady, N.Y., and the company is leasing out part of one of its Milwaukee facilities.
“Super Steel has experienced a difficult time related to the economic conditions,” Zeppos said. “In recent weeks, it became clear that reorganizing under Chapter 128 was the best option. I think this is a great company with a great future – there will be at least one other buyer who will look to buy the company as a going concern.”