Omaha Steel Castings Co.'s move from its ancient foundry in midtown Omaha to its new plant in Wahoo, Neb., ran into cost overruns and unexpected expenses that threatened not only the relocation but the company itself.
But Allan Lozier said Friday he bought the foundry and erased its debt, and the north Omaha industrialist is applying the financial muscle needed to complete the move and put the 125-employee company back on track to become a modern producer of steel products.
He declined to tell the purchase price.
“I did a lot of thinking about, 'How deep do I want to get into this?' I did a lot of research,” Lozier, 80, told The World-Herald on Friday. “If I would save the jobs, that was important. If I would save a 100-year-old company, that was important.”
Former owner Phil Teggart had hoped to buy used equipment, but it wasn't available when needed. Air quality standards and other environmental rules added other costs that weren't in the original plan.
“Phil is sort of a dreamer,” Lozier said. “He has all the right objectives, but probably not the kind of cost estimate that was necessary.”
The price tag for the new plant and the relocation grew from $12 million to $17 million and then nearly $20 million. Instead of moving in by the end of 2013, as Teggart had planned, the move stalled and about 95 of the company's 125 people are still working at the Omaha facility.
“We were in a situation that our bank would no longer fund any increases to the project,” Teggart said. “We had to go out and find an investment partner or somebody that would inject cash to complete the project.”
Without Lozier's purchase, he said, the company's future was in jeopardy. “Now, this is going to allow us to complete the dream.”
Mike App, chief investment officer for Lozier Corp., heard about Omaha Steel's financial predicament from Rob Johnson, CEO of Javelin Capital, an Omaha investment company.
He and Teggart are members of Vistage International, a networking group for top company executives.
Lozier has purchased 10 percent or 15 percent of several companies as a passive investor, supplying capital but letting others run the businesses. Initially he thought Omaha Steel might simply need a similar investment or a 50-50 partnership.
“It didn't work out that way,” he said. “The hole was so deep and required so much capital, we basically had to take it over. Now that we've got the resources that are needed, we'll be able to speed this up,” with the goal of moving completely to Wahoo by the end of July.
One winter day, Lozier toured the old facility at 46th and Farnam Streets (“It's like something out of the 1800s,” he said) and the new Wahoo plant, which he said has the potential to be a successful competitor in the steel casting business.
“It is a long ways from being complete,” he said, lacking production and safety equipment that will be purchased or moved from the Omaha facility. “It's a bigger job than Phil thought it was.”
Lozier did extensive research into the foundry business before deciding to purchase the company so he would understand its challenges.
Teggart agreed to the sale. “The more we got into it, Allan felt it would put us in the best financial position if he purchased all the financial assets and bought down the debt, allowing us to become debt-free.”
App will be in charge of the company temporarily while Lozier searches for a permanent president, which he said is a top priority. Teggart will remain in management as executive vice president of sales and customer service and has an option to discuss buying the company back after a year. All other employees also will be retained, Lozier said.
His main business, Lozier Corp., manufactures store fixtures at its plant on Abbott Drive north of Eppley Airfield. He said he has always had an affinity for blue-collar workers and businesses that could employ semi-skilled people as well as those with more skills.
Omaha Steel will be run as a separate company, he said, with no connections with Lozier Corp. except for the common need to find a “sweet spot” with customers and provide high quality, competitive prices and dependable delivery of their orders.
“I think we're going to be able to build it into a nice company now,” Lozier said. “We'll probably be able to find that sweet spot.”
Besides the fixtures company, Lozier's other investments include a half interest in American National Bank and partial interests in Javelin Capital and New Street Properties, a real estate company. He said he has younger people running each of his businesses. “When you get to be my age, you never know. You might be dead tomorrow.”
But he has no plans to retire.
“I have an insatiable curiosity about things,” he said. “If I retired, I don't know what I would do. This (steel foundry) should relieve the boredom for a while. ... If I live to be 90, I might be able to squeeze a couple more of these in.”