ASHLAND, Ky. — The hulking AK Steel mill that sprawls beside the Ohio River and put generations of breadwinners to work is shutting down, leaving people in this Eastern Kentucky community to wonder what, if anything, might fill the void it leaves behind.
"The mill is an icon to this town," said Kendall Kilgore, president of the United Steelworkers Local 1865 in Ashland, which represents many AK Steel employees. "Everybody's disheartened."
The "Ashland Works" mill opened in the 1920s and inspired commitment among employees, Kilgore said. If you got hired there, you often planned to retire there.
In the 1950s and 1960s, the mill employed over 7,000 people, Kilgore said. And it still had over 800 employees when the latest waves of layoffs began in 2015.
But when the new decade dawns, no one will work there.
"You wish you could do more when there's nothing you can do," Kilgore said.
Replacing the jobs AK Steel used to provide will be tough.
Cleveland-Cliffs, a company poised to acquire AK Steel next year, has floated the possibility of firing up the Ashland mill's blast furnace again.
Another source of hope is Braidy Industries, which plans to build a $1.7 billion aluminum rolling mill nearby that's expected to eventually employ around 600 full-time workers.
"We are very hopeful that this comes in," Kilgore said, adding that AK Steel expats would be perfect hires for the company's aluminum mill.
More: Ashland college trains students to work at Braidy Industries' future aluminum mill
For well over a year, Braidy has been working to secure the funding necessary to build the mill. It previously has estimated the project will require around $500 million in equity and over $1 billion in debt financing, according to past public statements by Braidy.
Instead of opening sometime next year as originally planned, the mill is slated to begin producing aluminum sheet for cars and other products in 2021.
Construction hasn't started yet, though.
"That's exactly why people are getting worried," Kilgore said. "It's hard to hire someone when there's no facility to go to."
But a Braidy spokesperson says the project is on track.
"The Company continues to add shareholders and is very pleased with its progress to finalize its credit facilities. For the understanding of your readers, there is no scenario where we begin building on an ad hoc basis," the spokesperson told The Courier Journal in an emailed statement. "Equity and debt are negotiated and flow together contractually. When we have finalized contracts with all major parties, we will announce and begin construction. That moment could be as soon as the first quarter of 2020.
"Most of our strategic investors have been identified and are in diligence at this time," the spokesperson continued. "We are very happy with the quality of our investor group."
Read this: Senator calls Braidy's dealings with then-sanctioned Russian firm 'troubling'
Shuttering a beloved mill
Ashland native Rick Potter's nearly 20-year career at the AK Steel mill was cut short when he was laid off not long before Thanksgiving.
He saw the mill's demise coming, though.
A big warning sign flared up in 2015, when AK Steel announced it would idle key operations at the mill. Over 600 people were laid off that year, Kilgore said.
Potter survived that round of layoffs but knew he better save up some money.
"Yeah, I started prepping hard," he said.
AK Steel dropped more bad news in January 2019: The mill would close by 2020.
Working throughout the year knowing the mill's days were numbered was sad, Potter told The Courier Journal. “At the end, I told one of my friends it’s kind of like we’re sitting in hospice waiting for a family member to pass away."
Around 125 people, including Potter, recently lost their jobs, Kilgore said, and he expects the last 75 or so employees to all be laid off by Dec. 31.
The mill effectively has ceased operations, Kilgore said, so the remaining workers are mainly handling maintenance needs and preparing the facility for winter.
"There's no production at all," he explained.
America's steel industry is struggling despite tariffs President Donald Trump's administration levied last year on imported steel.
Moody's Investors Service recently downgraded the outlook for the entire U.S. steel industry to "negative," citing weak prices and a decline in American automotive sales.
The outlook for AK Steel's Ashland mill has been similarly bleak.
However, Kilgore said Cleveland-Cliffs' announcement this month that it plans to buy AK Steel has sparked some optimism, particularly because the company is considering using the Ashland mill's blast furnace to produce pig iron.
If Cleveland-Cliffs fires up that furnace, he estimated it could fuel up to 150 jobs. "When we heard the news, it gave us hope back for our mill," he said.
Opinion: Is Braidy Industries of Kentucky getting in bed with Russian mobsters?
In the meantime, a spokesperson for AK Steel said the company is sticking to its decision to shut down the Ashland mill by the end of 2019.
Likewise, Cleveland-Cliffs said in a statement that it expects to complete its AK Steel acquisition in the first half of 2020 and will evaluate the viability of utilizing the Ashland facility after that happens.
Local opportunities are limited for ex-AK Steel employees, Kilgore said. The area's other big employers include a hospital and a Marathon Petroleum refinery, but that's about it.
Some of those laid off were offered jobs several hours away at AK Steel facilities in other states, Kilgore said. Nearly 150 people his union represents already are working at other AK Steel operations and driving home every four days.
But a lot of folks aren't up for a commute like that, which steals time from their families.
Potter didn't want to take a faraway job because he has a child with special needs, and the rest of his family lives in Ashland, too. He expects to be eligible for retirement benefits and plans to find a job nearby to supplement his pension.
Even if the Ashland mill's blast furnace is eventually used again, Potter said other parts of the facility would likely stay shuttered. "They would have to sink a lot of money back into the steel-making department to get it back up and operational," he said.
Potter predicted Braidy's aluminum mill could backfill the steel jobs they've lost, though. "That would greatly help," he said.
Then again, Appalachians have seen other businesses make big promises and fail to deliver, Potter said. That's why some people around here can be skeptical.
"It happens in a lot of places like this," he explained. "Usually what happens is the company falls through or they get a sweeter deal from another state."
Opinion: Braidy Industries would bring hope and opportunity back to Appalachia
Cautious optimism
When two journalists from The Courier Journal visited Ashland in November, people there seemed cautiously optimistic about Braidy's promised mill.
Some businesses around town even display signs that say, "We support local business! Braidy Driven." (That's a tagline Braidy uses.)
Losing AK Steel has been a long, painful process, said Alison Christie, a real estate developer and business owner who grew up in Ashland.
She hopes Cleveland-Cliffs will fire the steel mill up again. Leaving it shuttered would be a shame. "That would be the worst thing that could happen: It just sits there reminding us about the past," she said.
Christie sees brighter spots in the local economy, though.
Houses are still selling, and she's even developing luxury condominiums overlooking the Ohio River — some of which are already sold or leased.
"We just keep plowing forward," she said of her hometown. "I'm a firm believer that when one door closes, another opens, and perhaps Braidy will be that door that will open for us."
Braidy's progress
An emailed statement from Braidy detailed the company's progress toward building its planned aluminum mill, noting that big projects take a lot of time.
"The Ironton bridge over the Ohio River to Ashland cost roughly $80 million and took 8 years to build. The Braidy Atlas mill remains on schedule to open in 2021. We have worked diligently to stay on this accelerated pace," the statement reads. "We are not aware of a project of the scale of the Braidy mill ever going faster in the United States.
"Braidy is working with some of the finest construction and equipment engineering firms in the world and our design document is now over 2500 pages long," the statement continued.
"There are over 20 man-years of work invested in the project spec. The Company has spent roughly $40 million preparing for construction. It is more important for our community and our shareholders for Braidy to be perfect in preparation than it is to rush for the benefit of newspaper circulation."
One of Braidy's earliest investors was Kentucky's state government, which contributed $15 million in 2017 through a deal spearheaded by former Gov. Matt Bevin's administration with the state legislature's approval.
The state is allowed to pull its money by requiring Braidy to repurchase the government's investment if the company doesn't invest $1 billion in the mill by Dec. 31, 2020, according to a past SEC filing.
Earlier: Braidy Industries breaks ground on Bevin-backed, $1.5B aluminum mill
The Courier Journal recently asked Bevin's successor, newly inaugurated Gov. Andy Beshear, about his stance on the state's investment in Braidy.
"It's my hope that that project is real hope instead of false hope," Beshear responded. "I know that there are some deadlines that are coming up where the company will be able to step out and prove its potential.
"I certainly hope that it provides a real opportunity for that area of Kentucky, but we are going to be involved," he said. "We're going to be involved, both because we want to create jobs in that community, but that we also have to respect our tax dollars and to make sure they've been spent wisely."
A Braidy spokesperson indicated the company will cooperate with Beshear.
"As Braidy Industries would with any administration, the Company is looking forward to working with Governor Andy Beshear to bring advanced manufacturing jobs and economic prosperity back to Eastern Kentucky."
Another construction project, apart from the mill itself, also hinges on Braidy's financing.
To provide electric service to Braidy's future mill (as well as nearby businesses), Kentucky Power intends to build a transmission line and substation.
However, the Kentucky Public Service Commission has said the utility company can't start construction until Braidy provides "reasonable assurance" that it has secured sufficient financing to complete the mill.
To date, it appears Braidy has not provided that assurance.
When asked about the requested assurance, the Braidy spokesperson said: "Braidy is a cash rich and debt free company in good standing with all state agencies and all governmental entities in Kentucky and elsewhere."
Kentucky Power spokeswoman Allison Barker recently said the utility has completed preliminary engineering work and is ready to start construction once Braidy signs a letter of assurance about its funding.
Read this: When coal jobs leave a town, what happens to the families left behind?
Russian investment welcomed
A Russian firm, United Co. Rusal, agreed earlier this year to invest $200 million in Braidy's mill.
That raised eyebrows in Washington, D.C., where Russia is a touchy subject.
A major aluminum company with operations in various countries, Rusal used to be under U.S. sanctions and is partly owned by Oleg Deripaska, an oligarch with ties to Russian President Vladimir Putin.
Several congressional Democrats called for a federal review of the Braidy-Rusal deal after it was announced, including Sen. Ron Wyden of Oregon, who has continued asking questions.
American Oversight, a D.C.-based nonprofit, also sued the U.S. Department of the Treasury this month as part of its efforts to obtain records about the deal, including Treasury officials' communications with Rusal or Kentucky Sen. Mitch McConnell's office.
Back in Ashland, though, Rusal's investment doesn't seem to be as big a deal.
Mark Johnson, business manager of the Tri-State Building and Construction Trades Council, said he doesn't think it's been much of an issue for the 16,000-plus active workers his organization represents.
They hope to help build Braidy's mill — an undertaking that's expected to create up to 1,000 construction jobs.
"We don't care where the money comes from," Johnson told The Courier Journal. "We just want to build the project.
"I believe that project's going to happen, and I'm hoping it's going to happen this coming year. And when I look around, what other promise do I have here?"
Likewise, Boyd County Judge-Executive Eric Chaney said Rusal appears to be a legitimate company and its deal with Braidy is legitimate, too.
"I'm a free-market guy. Anyone wants to invest, that's fine," Chaney said.
Chaney understands the skepticism some people have, but he said they can't afford to play politics at the local level.
"Nobody understands that pessimistic view better than the people of Eastern Kentucky," he said. "But at the same time, Braidy has been that shimmer of hope."
Previously: Braidy Industries lands Russian investor for Kentucky aluminum mill
Brighter spots
The AK Steel mill's closure has been hard on the Ashland community, but 2019 also brought a positive development: The Delta Hotel by Marriott Ashland Downtown opened earlier this year, boasting revamped rooms and The Winchester, a steak and seafood restaurant.
Jim Nizzo of Long Island, New York — the managing member of the investment group that owns the 152-room hotel — said he and his partner, Andrew Spiros, bought the "deteriorating" property in 2017 and overhauled it.
Nizzo has been involved in development projects around town for about 15 years, and lately he's noticed local residents becoming more proactive about advancing Ashland.
"A lot of the younger 40-somethings are coming to take the lead and promote Ashland and do good things in the area, and it's very encouraging," he said.
He expects more restaurants and businesses to sprout near the hotel over time.
"We're in the heart of downtown," he said. "I think everything will grow around us."
The community still faces economic challenges, though.
Boyd County, where Ashland is located, had a 4.9% preliminary unemployment rate for October 2019, according to state data. That's lower than many other counties in Eastern Kentucky but higher than most of Kentucky's central and western counties.
"Honestly, I'm not sure this area ever completely got out of the '08-'09 recession," said Mike Williams of Power Products Inc., a longtime local business that handles industrial diesel engines, forklifts and other equipment.
Ashland traditionally has had an industrial economy, but Williams predicts it will become more retail and service-oriented. It'll always retain an industrial element, though.
"If the Braidy thing would happen, that could be a springboard to something bigger and better," he said. "I think there's a lot of hope for this community."
Opinion: Coal, iron and oil are gone, but what burns bright in Ashland is the people
Morgan Watkins: 502-582-4502; mwatkins@courierjournal.com; Twitter: @morganwatkins26. Support strong local journalism by subscribing today: courier-journal.com/morganw.
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