Ashland — The national economic crisis has hit home in a major way.

AK Steel announced on Tuesday that it was planning massive layoffs at its Ashland steel mill and coke plant, and that its local steel-making operations would be shut down for an indefinite period.

In a news release announcing the shutdown, AK Steel said the closure was “due to the recent unanticipated and major downturn in the economy, which has resulted in sharply lower demand for some of the company’s products.”

The Ashland Works’ blast furnace, casting and coating operations will be idled later this month, the company said. Mike Hewlett, president of United Steelworkers of America Local 1865, which represents hourly workers at the plant, said the union had been told the shutdown process would begin by the end of next week.

The precise number of workers who will be affected was not known Tuesday. However, Hewlett said it was his understanding that between 600 and 650 of the roughly 700 hourly employees of the West Works would be furloughed.

Union leaders were not told when — or if — the plant might be restarted, Hewlett said. However, the company said that based on “currently foreseeable market conditions,” the facility will be mothballed until early to mid-January.

“We remain hopeful that we will be able to return our dedicated and hard-working employees to their jobs as swiftly as possible,” said James L. Wainscott, chairman, president and chief executive officer of AK Steel. “Of course, that depends entirely on credit availability and consumer confidence, which are at the heart of this serious economic downtown.”

AK Steel’s West Works and coke plant employ about 1,100 hourly and salaried workers. About 275 work at the coke plant, which the company said would remain in operation, but at a “reduced level.”

The company said the blast furnace at the West Works would be maintained at “hot-idle” status. A skeleton crew of hourly and salaried employees will be kept on to maintain the idled operations in preparation for a restart, the company said.

Hewlett said the layoff would be the largest idling of the mill’s work force in the 40 years that he has been associated with AK Steel and its predecessor companies. He also said he could not recall another time when the entire plant had been shuttered for an extended period.

Auto industry woes

The shutdown is a direct result of the nation’s economic free-fall, the difficulties of the auto industry in particular. As a major supplier to domestic auto plants, AK Steel’s fortunes are heavily tied to those of the auto industry, which is struggling mightily in the face of the mortgage and credit crisis.

A slowdown in new-car sales has resulted in a reduction in steel orders. AK Steel announced earlier this month that its fourth-quarter shipments would be negatively impacted by weak economic conditions.

The Ashland Works’ principal function is producing steel slabs, which are shipped to other AK Steel facilities for rolling and finishing. Some steel coils are returned to the local plant for coating and shipping.

AK Steel also announced on Tuesday that it had temporarily suspended operations at its Mansfield, Ohio, Works and laid off most of that plant’s 365 employees. The Mansfield Works produces stainless, flat-rolled steel which is used primarily in automotive exhaust systems.

The company also said it “continues to evaluate all its operations and administrative functions in light of the economic downtown, and will be prepared to adjust to continued rapidly changing conditions.” That could include restarting idled operations sooner than anticipated if “significantly improved business conditions” warrant doing so, the company said.

Hewlett said Tuesday that the Steelworkers were still awaiting several details, including the official notice of the shutdown under the federal Worker Adjustment and Retraining Notification (WARN) Act.

Under that law, companies are required to give 60 days’ notice when they plan to shut down a plant, and it wasn’t immediately clear how AK Steel intended to comply with that. One possible way it could do so, Hewlett said, is by paying affected workers their full salaries for two months.

Laid-off workers will be eligible for unemployment insurance benefits, as well as supplemental pay based on their years of service.

Hewlett also said the union had not yet gotten a plant minimization plan, which the company is required to submit to it under the terms of its contract with the Steelworkers.

Hewlett said he and other Local 1865 officials intended to meet with the union’s lawyers and with its international representatives to review contract issues. He also said the union would do all that’s within its power to fight for the jobs of its rank and file.

‘Idling’ not closing

“We have to look at this as an idling” and not a permanent closure, he said. “A lot of young peoples’ lives are at stake here. We’re here to defend that position and hopefully keep them working.”

At one time, the Ashland Works employed more than 5,000. The closing of the plant’s hot strip mill in the early 1990s took hundreds of jobs out of the facility. However, even in its downsized state, the mill is still one of the region’s largest industrial employers.

Officials weigh in

The shutting down of the mill is expected to have a ripple effect that will be felt through the area’s entire economy, local officials said Tuesday.

Greenup County Judge-Executive Bobby Carpenter said the situation had already hit close to home for him. He said his brother-in-law, who works for Stein Inc., which hauls slag from the Ashland Work, had just gotten his layoff notice.

“Anytime you have layoffs on this kind of scale, it’s serious business,” Carpenter said. “AK Steel is the backbone of this community. We need to do all we can to get these people back to work as soon as possible.”

“I don’t know what to say,” Boyd County Judge-Executive William “Bud” Stevens said. “I’m hoping it’s a short time situation for them. I’m hoping they get some orders after the first of the year to get these people back to work.

“It’s really going to impact the area economically without a doubt,” he said.

Stevens and acting Ashland Mayor Kevin Gunderson both expressed hope that a lame-duck congressional stimulus package would help turn the economy around and lead to the plant’s reopening.

Gunderson said he did not expect the layoffs to immediately affect the city’s finances.

“There will not be an immediate impact but I think the city commission has to be mindful of its spending practices over the remainder of the budget year,” he said.

CARRIE STAMBAUGH, Independent news writer, also contributed information to this story.

KENNETH HART can be reached at khart@dailyindependent.com or (606) 326-2654.