Pacific Steel Casting in Chapter 11

Pacific Steel Casting in Chapter 11

80 years in business Lost 200 workers in Customs raid Promises to remain operating Purchase proposals expected

Berkeley, CA, steel foundry Pacific Steel Casting Co. filed for creditor protection on March 10, explaining its financial trouble stems from labor problems that have grown unmanageable since it was forced to dismiss almost 200 undocumented workers late in 2011. That step followed a U.S. Immigration and Customers Enforcement audit of workers at the company’s complex of three plants .

The foundry listed both assets and liabilities between $10 million and $50 million. It produces castings in carbon, low-alloy, and stainless steel up to 7,000 lb., for oil-and-gas drilling, mining and construction equipment, heavy trucks, and military equipment. It’s considered one of the largest steel foundries in the U.S.

In its Chapter 11 filing the foundry explained it has been unable to to replace workers it was forced to dismiss after an audit by U.S. Immigration and Customs Enforcement. The filing also explained that Pacific Steel Casting has yet to pay the $401,000 it was fined for violating employment regulations after that audit.

In addition to the undocumented workers case, the company settled a case with its employees’ union concerning break times. In that settlement, it still owes $5.4 million to more than 1,000 current and former employees. In its bankruptcy filing, Pacific Steel indicated it is not now in a position to pay that settlement. The plaintiffs in that case will be listed as creditors in the bankruptcy settlement.

Pacific Steel Casting wants the bankruptcy court to approve its use of available funds to pay current workers. The foundry’s line of credit from a bank loan was terminated last month after it failed to stay current on loan requirements.

The bankruptcy filing may be preliminary to a sale of the company, according to reports. It’s now owned by the fourth generation of the Genger family. As reported locally, a spokeswoman indicated offers for the company may be considered.

Pacific Steel Casting has been in the news frequently over the past decade as it dealt with environmental complaints over plant odors raised by neighborhood groups.

Notwithstanding its labor and legal costs, the spokeswoman indicated that Pacific Cast Steel is enjoying a steady demand for its cast products.

The foundry still employs 410 workers and there are no plans for layoffs, according to reports. COO Chuck Bridges stated: “Pacific Steel is not going anywhere. The process we have chosen is to restructure the company while preserving jobs and exploring the best way to continue making high quality castings for our customers.”

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