600 Mayer Street
The Company's mission is to be a leading, low-cost domestic provider of premium quality specialty steel products for our chosen markets.
Our mission is accompanied by two essential elements: 1. Work closely with our customers to understand and meet their needs through strate gic investments. 2. Maintain a unique alliance with employees and sup pliers to enhance productivity.
Universal Stainless & Alloy Products, Inc. is a producer of semif inished and finished specialty steel products. Stainless steel produc ts account for about 80 percent of sales. The company's facilities in Bridgeville and Titusville, Pennsylvania, make up its Universal Stai nless & Alloy Products segment. Dunkirk Specialty Steel in New Yo rk forms another segment.
Clarence "Mac" McAninch and Daniel DeCola formed Universal Stainless & Alloy Products, Inc. to acquire the assets of an Armco steel mi ll in Bridgeville, Pennsylvania, in 1994. (Originally incorporated in Pennsylvania in January of that year, it was converted to a Delaware corporation a few months later.) The pair had been managers at the A rmco plant; McAninch, formerly national sales manager, served as the new company's president and DeCola was vice-president of operations.
The history of the Bridgeville plant reflected the ups and downs of t he steel industry. In the early 1980s, the Bridgeville facility, know n as Universal-Cyclops, had employed more than 500 people; it was sub ject to intermittent shutdowns, however, as cheap imports flooded the specialty steel market.
Cyclops unsuccessfully tried to sell the unit at least three times fr om 1985 to 1989. By this time, Cytemp had 1,200 employees at three pl ants in Bridgeville, Titusville, and Pittsburgh, Pennsylvania, and po sted revenues of $168 million.
Cyclops split the Cytemp operation into two parts in 1990; the Bridge ville operation was renamed Bridgeville Stainless & Alloy Product s, while Titusville kept the Cytemp name. Titusville had about 700 em ployees producing high-temperature bars and billets. The Bridgeville plant, with 270 employees, focused on commodity stainless steel bars. Cyclops refocused the Bridgeville plant on semifinished ingots, bill ets, and blooms while shifting the stainless bars to Titusville.
A plan for Armco Inc. of Parsippany, New Jersey, to buy Cyclops for & #36;156 million collapsed in the spring of 1991. There was difficulty obtaining financing in a sluggish specialty steel market. The deal w as not entirely dead, however, and the companies would be combined in April 1992. (Armco also acquired the Cytemp Specialty Steel operatio n in Titusville.)
In the meantime, in January 1992, Cyclops announced that it was closi ng Bridgeville Stainless & Alloy Products after having failed to lift income or forge a new agreement with the United Steelworkers uni on (USW). According to American Metal Market, its capacity was 100,000 tons a year.
After the merger, Armco Inc.'s Baltimore Specialty Steels was combine d with Bridgeville Stainless & Alloy Products in a new division, Armco Stainless & Alloy Products. The Baltimore unit, which had 7 35 employees, made stainless steel bars, wire, and rods for sale to s teel distributors and machinery manufacturers.
Formation of Universal in 1994
The Bridgeville plant was virtually shut down in late 1993 during a r estructuring of Armco. In August 1994 it was bought for $3.7 mill ion by former managers, who had formed a company called Universal Sta inless & Alloy Products, Inc. The new owners had a four-year agre ement with the labor union, which allowed for lower wages and more fl exible work rules while including employees in a profit-sharing plan.
According to the Pittsburgh Post-Gazette, the reopening of the Bridgeville operation was part of a renewed interest in steelmaking as the industry experienced its biggest demand since the 1970s. Unive rsal capitalized on that interest in a successful initial public offe ring on the NASDAQ in December 1994. About 1.6 million shares were so ld at $8 each; within a month they hit $10. Universal sold an other two million shares at $9 each in a secondary offering in No vember 1995. Much of the $14 million raised was earmarked for new equipment.
Universal reported a loss of $2.5 million on sales of $7.4 mi llion for 1994. Aside from the usual start-up costs, earnings were hi t by a five-week shutdown of its rolling mill because of an electrica l fault. Fortunately, the company was able to hold on to customers du ring the crisis and sign on new ones afterward. The company ended the year with a backlog worth $10 million.
By this time, Universal was employing about 90 workers. The plant con tinued to produce semifinished ingots, billets, and blooms and tool s teel plate. Steam and gas turbine manufacturers were a major market. "We're going to carve out niche markets," McAninch told American M etal Market. "We're not going to be all things to all people."
Acquiring Titusville in 1995
In 1995, Universal acquired the precision rolled products and remelti ng operations of Armco's Cytemp Specialty Steel facility in Titusvill e for $950,000. This business primarily machined parts for the ae rospace industry, but also supplied the power generation market. The company also was spending $3 million to upgrade Bridgeville. Equi pment included a 50-ton electric-arc furnace, a decarburization vesse l, remelt furnaces, and a rolling mill.
Power generation, heavy equipment, and aerospace were Universal's thr ee main markets after the Titusville buy. Stainless steel accounted f or the majority of production, though Universal also made tool steel. Revenues were up to $47 million in 1995, with stainless steel ac counting for $38 million of sales.
Sales were up to $81 million by 1997, producing net earnings of & #36;7 million. The Bridgeville plant was ISO 9002 certified in 1998 a nd installed a new $11 million round bar finishing facility. By t his time, the company had 290 employees at its two plants. Sales slip ped to $72.6 million in 1998 and $66.7 million in 1999 under pressure from imports. The power generation and aerospace industries were experiencing hard times in the wake of the Asian financial crisi s.
With natural gas costs escalating, in October 2000 Universal began im plementing a surcharge in October 2000. This was initially rejected b y the marketplace, according to American Metal Market, but qua drupling energy costs had other specialty steel producers studying si milar initiatives. A few years later, producers would add surcharges to cover price increases for iron, chrome, titanium, and other materi als.
Acquiring Dunkirk in 2002
Universal acquired a third location in February 2002, buying the Empi re Specialty Steel plant in Dunkirk, New York, from the state's Job D evelopment Authority for $4 million. Empire had been formed from AL Tech Specialty Steel, which Universal had considered buying for &# 36;38 million before it went bankrupt in 1999. At its mid-1990s peak, the site had produced revenues of $100 million a year. Empire sh ut the site down in mid-2001. The Dunkirk site dated back to the Atla s Crucible Steel Co., formed in 1907, which was later part of the All egheny Ludlum Steel Corp. Universal CEO Mac McAninch had reportedly h elped launch AL Tech in 1976. It was acquired by Korea's Sammi Steel Co. Ltd. in 1989.
The Dunkirk plant added finished specialty steel rod and wire product s to Universal's offerings. Dunkirk mainly served the service center market. Universal was initially investing $6 million in improveme nts there. Unfortunately, a sluggish economy did not help restore its profitability. Losses there helped lower Universal's overall profits 72 percent to $2 million in 2002.
Universal lost $1.4 million in 2003. Sales were flat at $69 m illion. The company attributed the results to a poor economy, weak ae rospace and power generation business, and price cutting by strugglin g competitors. The new Dunkirk unit was especially hard hit.
Universal benefited from a recovery in the United States in 2004. A w eaker dollar helped fight imports, while consolidation among domestic specialty steel producers raised prices. China's expanding economy p roduced demand for both steel and raw materials. Sales rose enormousl y in 2004, reaching $120.6 million, with net income of $7.1 m illion. The company boasted a record backlog of $72 million at th e end of the year.
The recovery in the power generation and aerospace markets continued into 2005, and Universal obtained additional financing to go on an ex pansion path. The company had to contend with a strike at its Titusvi lle plant, however, after its USW contract expired there in September 2005.
Principal Subsidiaries: Dunkirk Specialty Steel, LLC; USAP Hol dings, Inc.
Principal Divisions: Dunkirk Specialty Steel; Universal Stainl ess & Alloy Products.
Principal Operating Units: Bridgeville; Dunkirk; Titusville.
Principal Competitors: Allegheny Technologies; Carpenter Techn ology Corporation; The Timken Company.