Columbus — Mississippi politicos breathed a sigh of relief when SeverCorr broke ground on the new Columbus steel mill earlier this month after the steelmaker experienced hiccups in structuring the $880-million project.
Longtime steel industry executive John Correnti is building the 1.2-million-square-foot mill, scheduled to open in summer 2007.
“I guess there’s a silver lining because it took so long to close the deal because we’ve completed 70% of the engineering work,” said Correnti, who will move the company’s headquarters in Birmingham, Ala., to Lowndes County before the plant opens. “Normally, we’re not that far along. Now when site work is 50% complete, we’ll start pouring concrete foundations.”
All new heavy machinery will be delivered to the plant within nine to 12 months, with two-thirds coming from Germany and other overseas equipment makers, said Correnti.
“We don’t anticipate any slowdown in construction or equipment delivery because of Hurricanes Katrina and Rita,” he said. “The heavy equipment will come in by ship, but I don’t know whether it will be unloaded in Mobile or Gulfport and then barged up the Tombigbee or some of it railed from those ports. We’ll get it here one way or another.”
Correnti is not concerned about a shortage of construction workers because of the recovery and rebuilding activities along the Mississippi Gulf Coast.
“If I were building an apartment complex or shopping mall or school, there might be a concern about getting enough construction people, but we’re building a steel mill and we need pipefitters, millwrights and welders, not sheet rockers, roofers or tile guys,” he said.
He is also not concerned about finding 450 workers for the steel mill, which will eventually make up to 1.5 million tons of steel sheets per year.
“I’ve found the best workforce in rural America,” said Correnti. “These young men and women have the right kind of work ethic. They’ll outwork and out produce anyone else in the world. You’ve just gotta do two things for them: give them the right tools and the right equipment and keep management the heck out of their way. I’m looking for high school graduates who are computer-literate, who want to work hard and make money. These jobs pay $70,000 salary, plus production bonuses. We’ll teach them to be the best steel makers in the world at the newest, most up-to-date steel mill in the world.”
The toughest workers to find are maintenance technicians, said Correnti.
“Of those 450 people, 100 will be maintenance technicians — electricians, pipefitters and millwrights — but we’ll draw them from contractors helping us build the mill,” he said. “Some of those guys may end up being supervisors.”
The construction workforce will peak at 2,000 for several months. The initial wave of 50 plant workers will be hired next spring. Another 50 workers will be added next fall. Within 18 months, 200 employees will be working on site. The plant should be completed within 21 months, said Correnti.
Correnti didn’t flinch about workforce training dollars being in jeopardy because Hurricane Katrina put thousands of people out of work, prompting thousands of unemployment claims to pour into the state. Mississippi unemployment claims are paid from the Unemployment Security Trust Fund, which has a balance of approximately $729 million. But if the fund falls below $500 million, the new workforce training money of $20 million would be cut off, and unemployment tax would rise from 5.1% to 5.4%.
“Nobody’s peddled back on their agreements,” said Correnti. “East Mississippi Community College already has a training center with open spaces just waiting for us to put warm bodies in there.”
Before the financial deal was sealed, the State of Mississippi reduced its loan guaranty to SeverCorr from $75 million to $60 million. Scott Hamilton, spokesperson for the Mississippi Development Authority, said the state “negotiated a better deal and lost some of our exposure.”
State lawmakers have been extra cautious about guaranteeing state funds since the beef processing plant failed in Oakland, forcing the state to retire a $35-million debt earlier this year.
“We had to raise another $15 million in additional equity, but it was certainly no deal killer,” said Correnti.
Charles Bradford, a metals research analyst for nearly 40 years, said he believes the market is ripe for another plant of this nature. “John Correnti has a pretty good track record,” he said. “A lot of steel consumers have moved to that basic area, and it’s the key to this type of business. One of the things I don’t know about is the raw material side. I believe initially they were going to use direct-reduced iron from a plant in Louisiana, which has been sold and moved away. I presume they’re going to buy pig iron, but I don’t know how much is available. If you melt scrap, you’re not going to get as high a quality product as they plan to make.”
Correnti said SeverCorr has two major contracts for raw materials. Jefferson Iron and Metal of Birmingham, Ala., one of the largest scrap brokers and dealers in the southeastern U.S. for scrap substitutes, will supply the plant with scrap metal-pig iron, direct-reduced iron (DRI) and hot briquetted iron (HBI). SeverCorr also has a contract with Stena Metal, a European company with facilities located in South America.
“I have absolutely no concerns whatsoever of being able to acquire raw material, either on the scrap or pig iron side,” said Correnti. “Like water flows to the lowest point, scrap and pig iron flow to the highest dollar.”
Bradford, who is affiliated with Soleil Securities Group and Bradford Research Inc., said SeverCorr has an advantage because the plant will make a wider product than other mini mills “and automakers prefer wider sheets because it allows them to be more productive.”
Kirk Schultz, dean of engineering for Mississippi State University (MSU), said there are no plans to build a physical facility near the new steel mill similar to the Center for Advanced Vehicular Systems (CAVS) built for Nissan North America.
“However, MSU engineering will work with steel mill officials to ensure that we are fulfilling their workforce and technology development needs,” he said. “This will include establishing a cooperative education program, summer internship program, full-time hires, research and development needs and ensuring that MSU assists them in solving any sort of technical problems that may arise. In my mind, a close proximity to a research university will result in significant interactions between local high technology industry and the Bagley College of Engineering.”
The advent of SeverCorr will “increase the opportunities for Bagley College of Engineering graduates to stay in Mississippi and continue to play a pivotal role in growing Mississippi’s economic base,” said Schultz. “With the addition of SeverCorr, this represents the fifth major company to locate in the Golden Triangle area in the last two years. If you look at places like Silicon Valley in California and The Research Triangle in North Carolina, research universities with a highly rated engineering school played a key role in assisting with economic development, and I would like to think that the Bagley School of Engineering is also playing a similar role in Northeast Mississippi.”
Correnti said he is pleased to get past the financial deal-structuring hurdle and begin construction on the plant.
“Every day, the good folks in the Golden Triangle area impress me more and more,” he said. “Back when we were applying for the agriculture loan, those folks wrote over 220 letters to the U.S. Department of Labor and U.S. Department of Agriculture to help us secure the loan. We’ll probably go after it later because it’s economical money. Then when we hit a snag with the Mississippi Legislature on wording, they flooded Jackson with phone calls, letters and e-mails, screaming to turn off the spigot. The citizens in the Golden Triangle, not us, initiated this. When I see things like that, it tells me the community really wants us.”
And when they want you, we want them. I’ve located mills in Utah, Arkansas, South and North Carolina, and this is my seventh time to work with everyone from state government to local chambers, and I’ll tell you what: Lowndes County takes a back seat to no one.”
Contact MBJ contributing writer Lynne Jeter at
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