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SUNDAY, JULY 1, 2007

Did TVA kill steel plant chances?
Without assurance of river access, state’s biggest industrial project went to Mobile

By Eric Fleischauer · 340-2435

“German steelmaker picks Lawrence County for 2,700-worker plant.”

But for inaction by the Tennessee Valley Authority, that might have been the headline in the Press-Register of Mobile on May 12. Instead, the headline substituted “Mobile” for “Lawrence County.”

Whether a site in Lawrence County would have survived the competition for the biggest industrial project in the state’s history is unknowable, but two things seem clear:

  • The steelmaker eliminated Lawrence County from the competition because it could not get timely assurances that TVA would provide the site with river access.

  • Other issues eventually might have knocked Lawrence County out, most significantly its distance from a Gulf Coast port. But TVA’s failure to provide river access was the issue that killed its chance.

    “When we couldn’t get a clear and firm agreement that the TVA land would be made available to get to the river, that got us cut,” said Alabama Development Office Assistant Director Linda Swann. “It was frustrating.”

    Swann, a Lawrence County native, worked the project from the day it came to her office Feb. 24, 2006, as “Project Compass,” to May 11, the day Thyssen-Krupp chose to place the $4.2 billion plant in Mobile.

    TVA officials declined comment on the site-selection process, as did ThyssenKrupp USA officials.

    Bound by confidentiality agreements, local officials and U.S. Rep. Bud Cramer, D-Huntsville, waged a quiet but ugly battle last summer trying to get TVA’s attention.

    “I pleaded with TVA, wrote to them, talked to them on the phone, essentially begging them to please consider the extraordinary nature of this project,” Cramer said Wednesday.

    “With the size of this industry and our narrow window of opportunity, we just couldn’t wait on TVA’s processing. We needed them to make an exception.”

    Cramer’s unsuccessful efforts included taking TVA Chief Executive Officer Tom Kilgore to the site, near International Paper Co., by helicopter.

    “I didn’t think we were going to get the chance to get another project like this, especially for Lawrence County. I was frustrated. They had to make an exception,” Cramer said. “But they wouldn’t do it.”

    Unfortunate timing

    The timing was awful.

    Just days after ThyssenKrupp asked the state for a list of sites, TVA switched from having a three-member working board to a more traditional corporate structure with a CEO, a board chairman and eight board members.

    In May, due to public concerns about the proposed sale of TVA land for residential development, the new board issued a moratorium on all major land transactions.

    As explained by Director Susan Richardson Williams in a public hearing in August 2006, the purpose of the moratorium was “to provide ... the board time to review past land transactions and current policies. ... We apologize for any inconvenience.”

    On Nov. 30 — too late for Lawrence County — the TVA board rescinded the moratorium.

    “It was unclear (in the late summer of 2006) when that moratorium would be lifted,” Swann said. “At that point, ThyssenKrupp didn’t feel like they could wait.”

    ThyssenKrupp USA’s vice president of public relations, Christian Koenig, said the company does not discuss sites that it cut because “we do not want to get the wrong message out. They were all great places to do business.”

    Those involved in negotiations over the site location suggest the project continued to evolve as the company whittled sites.

    Initially the main requirements were that prospective sites have at least 1,500 acres, barge access and massive availability of electricity.

    Power requirements

    George Kitchens, general manager of Joe Wheeler Electric Membership Corp., said the company expects the plant to consume up to 450 megawatts of power. That’s about twice what Nucor Corp.’s Decatur plant consumes, and would swallow one-third of recently restarted Browns Ferry Nuclear Plant Unit 1’s total output.

    “That’s a scary amount of power,” said Kitchens. “Not knowing if (Unit 1) was to come online and run well, I think TVA was a little intimidated.”

    Whatever the concerns, though, it was access to TVA power that vaulted Lawrence County over many of the 67 initial sites that 27 states submitted to ThyssenKrupp.

    “There weren’t that many sites where the electric utilities could meet that capability,” said Swann. “There may have been one or two other (Alabama) sites that we considered in the early stages, but the two main ones were always Mobile and Lawrence.”

    Barge access

    The Lawrence County site would have met the requirement for barge access if TVA had provided river access, although as the selection process progressed, ThyssenKrupp expressed a preference for being closer to the Gulf.

    The plant will depend on raw material shipped from Brazil. It comes in on massive Panamax ships.

    One of the downsides of the Mobile location was that the Panamax must unload its cargo to barges at the Port of Mobile. A tunnel under the Mobile River is too near the surface to allow passage of the Panamax.

    The barge trek to the selected site is only about 30 miles. The much longer distance to the Lawrence County site could have turned out to be cost prohibitive for ThyssenKrupp even if Lawrence County had stayed in the competition.

    That provides a bitter sort of comfort for Kitchens.

    “The fact is that with the timeline they were on, Thyssen needed to know it could get title to the TVA land, and the river access it needed, in a lot more timely fashion than the TVA board would do,” he said. “It’s painful to say it, but that’s what got us scratched.”

    Like Cramer, Kitchens saw the opportunity of a generation dwindling before his eyes as the TVA board toyed with how to handle its land-use policy.

    “I hounded the tar out of them. I called the board members. I attended the land-use hearing,” Kitchens said.

    “I couldn’t get them to carve this site out of their overall land-use policy and make a decision so we could stay in the hunt.

    “I failed, I guess. I hate admitting that. If I think about it too much, my blood pressure still goes up.”

    Positive feeling

    Whether ThyssenKrupp ultimately would have selected the site is anyone’s guess, but at the time the players thought it possible.

    “It seemed to me the (ThyssenKrupp) consultants were very, very interested in this site,” said Cramer. “It seemed to me the deal-breaker would be if we couldn’t get a letter from TVA that lifted their moratorium.”

    “We don’t get into discussing any details of what goes into recruitment of industrial prospects,” said TVA spokesman John Moulton. “We’re going to continue to work with all economic development officials in North Alabama, as we always have, to encourage industrial development.”

    Signs of change

    Nonetheless, there are signs that the time is right for an increase in TVA responsiveness.

    One of those signs is Cramer’s elevation in January to the position of co-chair of the TVA Congressional Caucus. TVA ignores his pleas at its peril.

    He’s determined not to experience a repeat of the ThyssenKrupp debacle, and he said he has seen recent signs of progress from the board and Kilgore.

    “Since that time, we’ve discussed this pretty harshly,” Cramer said. “We’ve had some rounds ... so we could make sure we could find a way to get over this, that hopefully, this won’t happen again.”

    He said the healing process, while uncomfortable, has progressed.

    “It was a difficult time for all of us. It made me be very critical and very aggressive with them, just as the new board was pulling itself together, just as the CEO was putting himself in place,” Cramer said. “But we lost the chance to know if we would get this industry.”

    TVA is listening, said Moulton.

    “We did meet with Congressman Cramer. We understand his concerns,” Moulton said. “We appreciate his leadership as co-chairman of the TVA Caucus.”

    Kitchens points to TVA’s recent establishment of a “TVA Megasite” in Limestone County as a positive sign. The Megasite is being marketed as a turnkey site, with infrastructure in place and initial environmental assessments complete.

    A similar Megasite in Columbus, Miss., recently snagged steelmaker ServiCorr.

    A celebration of the Limestone County Megasite certification in April, complete with smiling TVA officials, did not play so well for those involved in the ThyssenKrupp negotiations.

    “We celebrated a big, empty field that had sewer and water on it,” Kitchens said. “I really hope someone will jump on that thing. But last year we had a live fish to play with, and it got away.”

    Swann hopes a more established board, combined with a workable land-use policy, will improve communications with TVA in the time crunch that inevitably follows a site-selection inquiry.

    “I think based on that experience, TVA has become more responsive. I don’t think you’ll see that happening again,” Swann said.

    A long pause before she continues belies her certainty, though.

    “The truth is, I haven’t had another project since then where we had to address the issue of including TVA land in the mix. So it’s hard to judge.

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