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Property Owner Wants Answers From VV Steel

By Staff | Aug 26, 2015

WHEELING – When more than 30 workers walked onto the familiar grounds of the former Ormet Corp. in Hannibal earlier this year, they did so with excitement.

Many had spent years working at the aluminum smelter, and were anxious to get back to work after months of uncertainty. They began working for VV Steel, producing billets, reconstruction bars and other steel products.

They had no reason to believe that within months, not only would they find themselves without jobs, but also owed thousands of dollars in back pay.

The same can be said for Eric Spirtas, owner of the property now known as Center Point Terminal, who is left to wonder why a project that promised an immediate impact and jobs fizzled so quickly.

Spirtas bought the property – including 12 miles of rail and enough waterfront space to hold 50 barges – out of bankruptcy for $25.25 million in 2014 via his company, Niagara Worldwide. Since then, he and his team have spent their time searching for tenants who can put the 1,700 acres to good use. Typically, that means “knocking on doors,” but that was not the case when VV Steel came calling.

“From our standpoint, we are not a quick-flip company,” he said. “We’re not just here to be a landlord, but we are willing to be that if a company has a good plan for the site.”

The VV Steel plan, Spirtas said, seemed solid.

“They came to us and said ‘we can have 30 jobs today,'” he said. “We’re more than all ears and want to bring that in.”

The company, lead by Ravi Kumar, put down “hard cash” for use of equipment at the plant, Spirtas said. They took over the former rod room at the plant and began fixing and updating equipment while training their workforce. Production began in May, and Spirtas said he heard of no issues.

In July, workers frustrated with being paid for four days of work in two months began forcing the issue with local and state officials. However, even after word of the non-payment spread, Spirtas’ hands were tied.

“Our job as a landlord is to manage the tenant, not their internal operations,” Spirtas said.

He referenced a “quiet enjoyment” portion of the rental agreement, which allows the tenant to operate without the landlord impeding – as long as conditions are met. Spirtas said those conditions include having safety and operations plans and providing up-to-date insurance.

“As long as they meet those requirements, I can’t walk in, I can’t lock anyone out – my insurance and bylaws won’t allow that,” he said.

Earlier this month, Spirtas was notified VV Steel not longer possessed insurance. He sent a letter to company officials – as well as the workers – asking for updated insurance. That never happened, he said.

“We asked them to please provide it, or else they wouldn’t be able to operate,” he said. “I have an obligation to stop them at the gate if they don’t meet those conditions.”

Lacking the proper documentation, workers were not permitted to enter the job site – something Spirtas said was not easy to see happen.

In addition to not meeting the conditions, Spirtas said his company is owed money for rent, utilities and other “all-encompassing fees.” While he could not give a definitive number, he said the amount owed is in the “six figures.”

“I want this to work for the workers and the tenant,” he said. “I hope they can figure this all out.”

Kumar could not be reached for comment Saturday or earlier this week after Ohio investigators announced he owes nearly $242,000 worth of unpaid wages. Despite this, Spirtas said he hasn’t given up hope on the venture.

“I believe he is an expert in the field and an has an expertise for this business,” he said of Kumar. “The only thing that seems off is his plan and his financial backing. … They hit some speedbumps, but with financial support they can be successful.”

Additionally, Spirtas said there are some positives that have come from the experience.

“VV Steel came and reached out to local labor, and local labor responded and showed up in droves,” he said. “The Ohio Valley has a qualified and capable labor force, and that is attractive to potential tenants.”

Even with VV Steel ceasing operations at the site, Spirtas said there is plenty of activity as he and other company officials continue to search for tenants. He said there are at least five companies operating inside and outside the former plant, with more on the way. He said the goal is to find manufacturing companies who “feed off” the natural gas industry, by taking that product and creating something completely different.

“We want manufacturing-based companies that create high-paying jobs for decades,” he said.

Spirtas said he has the support of JobsOhio, the state’s private economic development agency, as well as various economic groups, to find a way to employ as many local workers as possible at the site. He said when that day comes, he is certain the workers will be ready.

“This area has a great labor force … the infrastructure and the natural resources,” he said. “(VV Steel’s) failure could lead to success.”