10/28/2007 - Steel primed for surge

By Jack Mazurak The Clarion-Ledger COLUMBUS — Mississippi’s steel industry is on a long-term rise, and Ben Bourland feels it. The Louisville native left his plywood mill job this summer and signed on at SeverCorr as an assistant steel roller. “I actually took a $2-an-hour pay cut to come work here, but I expect it will be better in the long run,” he said. The steel-making plant in Columbus is in the last stage of its year-long opening, but the state is just beginning to see the long-term effects. The cavernous, 1.13 million-square-foot complex cost $880 million to build and is already in line for a $500 million expansion. More immediate jobs are available. The mill has 360 and promises 600 after the expansion. And two steel producers already have committed to build next to the mill. But SeverCorr’s opening and the confluence of other factors, including China’s steel consumption, the weak dollar and Toyota’s Blue Springs plant, could boost manufacturing of steel products in Mississippi. “For years, you saw the steel industry leaving the country,” said Jay Moon, president of the Mississippi Manufacturers Association. ”Mills that were in Pittsburgh and other places up North closed. Now, the industry is growing again, and the state is in a good position. Steel’s very heavy and the closer you can have your manufacturing operation to the mill, the more you’re going to save on shipping.” Moon predicted a preponderance of companies will choose Mississippi, some automotive related, some spin-off industries like specialized coating application. “And I think we’ll also have companies that we don't know right now coming in here that will make things out of steel,” he said. “ThyssenKrupp is building a $3.7 billion mill in Mobile, and there’s a lot of supposition that we might be able to attract some companies to locate on this side of the border that will use their steel.” The national steel-making industry has been riding high the past few years for several reasons, said Thomas Danjczek, president of the Steel Manufacturers Association, a Washington-based advocate for electronic-arc-furnace scrap steel recyclers. SeverCorr is not a member of SMA. China’s rapid use of steel has driven up prices, the weak dollar has made U.S. steel cheaper than foreign-produced steel, and while the costs of energy, scrap steel and raw materials are up, labor is not, further ensuring the U.S. a competitive edge. “These have been good days, very profitable days,” Danjczek said. “And because of that, expectations of profits in the future have driven more investment — one of the three major ones being SeverCorr.” Those same factors will translate into cheaper material for makers of steel products. The Roll Form Group, a Canadian steel products maker, was quick to jump on those advantages. It built a $22 million plant in Tishomingo County to produce rail car and barge sections, as well as heavy-gauge sheet piling for construction. The plant opened in August and with 40 employees it is ramping up production with steel bought from SeverCorr and a Nucor plant in Alabama. “We expect to employ 80 to 100 within a year,” Brandon Suga, Mississippi plant controller, said. “We’ll start making sheet piling within a few weeks.” State and local incentives helped convince Roll Form Group of Tishomingo County, Suga said, but the clincher was the Tennessee-Tombigbee Waterway and its proximity to SeverCorr. “The location makes it more efficient to barge in supplies, a major cost of business,” he said. “A barge can carry about 16 truckloads. Our building is right at the port, so they bring (steel coils) right to us on forklifts.” The automotive industry is one of SeverCorr’s biggest targets. While it doesn’t have contracts with Toyota or Nissan, SeverCorr spokesman Mark Bula said it has the technology to produce automotive-body grade steel and is working to become a supplier for the two. Toyota plans to open an assembly plant at the Wellspring industrial site in Blue Springs by 2010. Suppliers, some of which will provide steel stampings, already are announcing locations. Five large tier-one suppliers are expected to build on the Wellspring site, and up to 30 others will locate in surrounding communities. Workers at Toyota’s $1.3 billion plant will make Highlander crossover utility vehicles. “We feel certain that one of the reasons Toyota located here was because of us,” Bula said. “Certainly, the proximity of Nissan and Toyota in Mississippi and Mercedes in Alabama cuts down on freight costs and ability to supply just-in-time. “We’ve only been operational for two months and automotive manufacturers require quite a process to get approved as a vendor. But we’re working on it.” Bourland, the SeverCorr worker, said he’s looking forward to the contracts and increased production the mill can handle. His pay, at about $15 an hour, will increase based on the quality and quantity of the steel made and how safely workers can do it. PHOTO: Scrap metal is heated so it can be processed into rolled steel inside the SeverCorr mill at the Golden Triangle Industrial Park between Starkville and Columbus. Photo by Rick Guy/The Clarion-Ledger.

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