A stagnant scrap metal market and a glut of new steel has forced Two Harbors manufacturer Stanley LaBounty into layoffs, general manager Steve Tarr said Monday.
Tarr would not offer details on the number of layoffs or the number of employees at the plant but did say he expects the cuts to be temporary.
The plant manufactures specialized equipment including hydraulic metal shears for the demolition and scrap metal industries. Tarr said demand for the equipment is off as prices for scrap metal have dropped dramatically along with new steel prices, which are down because of a glut on the market.
Tarr said scrap metal is selling at $308 per ton today compared to $400 and more in May. That's a 25 percent decrease in prices that has scrap dealers holding on to what they have until prices recover, Tarr said.
"Scrap dealers have stopped buying and selling," Tarr said. "It crushes the scrap market."
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He said the trend is national and compounded by cheap new steel. Tarr said there were 2,000 tons of steel being made a week in the first quarter of the year. Today, just 1,800 tons are being made, another indicator of the flux in the industry, Tarr said.
Tarr said the downturn and layoffs are similar to what happened in 2009, when Stanley LaBounty laid off 31 employees --
28 percent of the staff at the plant, leaving it with about 80 employees. In March 2009, the company laid off 36 workers.
Tarr said that by the end of 2009, the market improved and the company work force was increased.
"It's a temporary malady," Tarr said of the waves in the heavy tool-making
industry. "A bump in the road."
In the past 10 years, the company has had its ups and downs, cutting workers in 2001 only to hire as many and more back in the middle of the decade to bring its employee number to near 200.
Gordy Anderson, president of the Two Harbors Area Chamber of Commerce, heard about the layoffs. He helped head a new program in Lake County schools to train more people for the skills needed for jobs at area companies like Stanley LaBounty, which had reported a dearth of qualified local applicants.
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The Lake Superior school district and Two Harbors Area Chamber of Commerce developed a vocational-technical education program to help students and adults get training. Mesabi Range Community and Technical College will offer a two-year welding certification program in Two Harbors and a millwright program in Silver Bay this fall.
