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State wins steel plant sweepstakes
German firm plans $3.7 billion facility at Mobile-area site

By Garry Mitchell
Associated Press Writer

MOBILE — German steelmaker ThyssenKrupp AG chose Alabama over Louisiana on Friday for a $3.7 billion steel plant, described by steel industry experts as the first large-scale project of its kind in the United States in decades.

Set to open in 2010, the plant will employ as many as 2,700 workers when fully running, company officials said in selecting Alabama.

The site is near Mount Vernon in the Calvert community on the Tombigbee River, some 25 miles north of Mobile. It’s on a river route to the Gulf of Mexico and near Mobile’s rails and interstates.

Along with tax breaks and $400 million in financial incentives, Alabama offered a site with a route to a Brazil plant that will provide slabs for processing in Mobile.

Historic development

“It doesn’t get a lot better than this,” Gov. Bob Riley said at a Montgomery news conference. He described the project as “the largest economic development project in the history of this state” as well as for ThyssenKrupp, long a prominent German industrial giant.

“Only in one generation do you have opportunities to truly transform areas of a state. This is one of those opportunities,” Riley said.

When ThyssenKrupp’s supervisory board announced its selection Friday morning in Germany, the company said the investment in the plant would be 3.1 billion euros, which converts to $4.19 billion. But Christian Koenig, vice president of public affairs for ThyssenKrupp, said later news releases by the company that put the converted investment at $3.7 billion were correct. He said he could not explain why the initial figure was different.

Until a few years ago, industry experts were saying that a plant of this kind might never again be built in the U.S., said steel specialist Dr. Frank Giarrantani, director of the Center for Industry Studies at the University of Pittsburgh.

He said it’s been decades since a plant of this size was built in the United States.

“Then to have that plant here with the most up-to-date technology is a great thing for American steel,” he said in a telephone interview.

But United Steelworkers International Vice President Tom Conway in Pittsburgh said the ThyssenKrupp project will “only eat up U.S. tax dollars and add unneeded domestic capacity. The last thing our industry needs is another mechanism to depress steel prices.”

But Giarrantani said it’s hard to predict the price effect of the plant because of changes taking place in the industry worldwide. He said it’s wrong to think about this as only taking market share away from other steelmakers.

“It may do that,” he said, “but it will also take market share away from imports.”

The Alabama plant would be Duesseldorf-based Thyssen-Krupp’s first steelmaking operation in the United States.

The plant will be “an integral part of the company’s plan to increase growth in the steel and stainless steel division in North America and Europe,” supervisory board chairman Ekkehard Schulz said in a statement.

ThyssenKrupp, the 51st Germany-based industry recruited to Alabama — most have chosen the state since Mercedes-Benz started construction in Vance in 1994 — was lured by several tax breaks and an incentives package approved by the Legislature.

Part of that package requires a statewide vote on June 5. Riley said he’s confident voters will approve it.

“They know the quality of life goes up” with such an investment, Riley said in Mobile.

Mount Vernon Mayor Cleo Bolden hopes the steel plant will improve life for his city, which has infrastructure needs.

“We do not have a city sewer system,” he said.

Alabama’s proposal also was endorsed by governors and U.S. senators in neighboring Mississippi and Florida, with potential workers living near the plant.

Alabama Power Co. President Charles McCrary, who accompanied the state’s industry recruiters to Germany to court ThyssenKrupp, said the plant would create “quality jobs” and would be the utility’s largest customer. It’s expected to require 300 megawatts of electricity, comparable to an amount generated by a mid-sized power plant.

Initially, ThyssenKrupp had said the project would run some $2.9 billion, but raised the amount because “higher capacities and extended plant configurations were shown to be feasible and economic.”

Louisiana also had offered tax breaks.

Louisiana Gov. Kathleen Blanco said it was a “tremendous honor” to be one of two finalists among 20 states that had bid for the project.

“We went to the major leagues and we proved that Louisiana can compete for any project on the horizon,” Blanco said at a Friday news conference in Baton Rouge.

The company said that once the plant is up and running, it could create as many as 38,000 new jobs related to the mill, from suppliers to transportation to dining and entertainment.

Bob Soulliere, president and CEO of ThyssenKrupp Steel and Stainless USA, said factors in choosing Alabama included the state’s logistical location to Brazil, electricity and labor operating costs, and site specific capital expenditures.

Soulliere, a Canadian who works in Detroit, said his family will move to Mobile next month and is looking forward to experiencing football in the state that’s home to Auburn University and the University of Alabama. “But we do have a problem which we need to help resolve,” he said. “We cannot figure out if it should be ‘Roll Tide’ or ‘War Eagle.’ ”

The Alabama plant will have an annual capacity of 4.1 million metric tons of carbon steel end products.

Soulliere said he was aware Friday’s announcement disappointed Louisiana, “particularly those who worked so hard on this project. But we believe the economic ripple effects of the new plant will benefit the wider regional economy as well.”


AP writers Matt Moore in Germany, Michael Kunzelman in New Orleans and Desiree Hunter in Montgomery contributed to this report
.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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