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As Steelmaker Shuts Plant, Governor Points to Tariffs

Jeremy Hill

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Bayou Steel Group filed for bankruptcy Monday, threatening hundreds of jobs after the company ran low on cash and defaulted on its debt.

The steelmaker idled most of its operations and sought Chapter 11 protection in Delaware, it said in a statement. Close to 400 workers may be impacted by the shutdown of Bayou’s plant near New Orleans, Natalie Robottom, a local government official, said.

The company sought protection from creditors after a “severe lack in liquidity” led to a default on its senior secured debt, according to the statement. Bayou, which produces steel products like reinforcing bars and beams, will offload its remaining inventory and hopes to sell its assets to a buyer who will restart operations, the company said.

Bayou Steel is “particularly vulnerable” to tariffs because it uses imported scrap metal, Louisiana Governor John Bel Edwards said in a statement following the layoffs. Scrap steel was not included in the broad steel tariffs imposed by the Trump administration last year. But the administration has hiked tariffs on a wide range of scrap metal products from China as part of its trade war.

“Louisiana is among the most dependent states on tariffed metals, which is why we continue to be hopeful for a speedy resolution to the uncertainty of the future of tariffs,” said Edwards, who last year wrote a letter to President Donald Trump about the way tariffs would hurt Louisiana. “Meanwhile, we will do everything within our power to help those displaced workers.”

The company will also close its operations in Harriman, Tennessee, affecting 72 workers, according to a filing from the Tennessee Department of Labor.

Bayou listed liabilities of as much as $100 million in its bankruptcy petition.

The company did not immediately respond to a request for comment regarding the impact of tariffs on its business.

The case is Bayou Steel BD Holdings LLC, 19-12153, U.S. Bankruptcy Court for the District of Delaware.

(Updates with details on possible sale in third paragraph. A previous version corrected to show that the Trump administration has implemented tariffs on scrap metal from China)

To contact the reporter on this story: Jeremy Hill in New York at jhill273@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Nikolaj Gammeltoft

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