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SeverCorr says it is prepared to meet challenges posed SeverCorr says it is prepared to meet challenges posed by revocation of steel tariffs, possible new mill in South.

Hard times ahead for steel industry in United States?

Two recent announcements in the steel industry — the lifting of tariffs on foreign made steel and a new steel mill in Louisiana, Arkansas or Alabama — could have an impact on the new $880-million SeverCorr facility in Lowndes County that started its first product lines late in 2006.

The Bush Administration has announced it is revoking tariffs on foreign-made steel 16 months ahead of schedule. Administration sources said the tariffs had done their job in helping the industry get back on its feet after a challenging period.

“These safeguard measures have now achieved their purpose, and as a result of changed economic circumstances it is time to lift them,” said a statement from President George Bush. “The U.S. steel industry wisely used the 21 months of breathing space we provided to consolidate and restructure. The industry made progress increasing productivity, lowering production costs and making America more competitive with foreign steel producers.”

The European Union (EU) had threatened trade sanctions if the tariffs were not lifted. Steelmakers in the EU were very pleased by the tariffs being revoked, as was the U.S. auto industry that hailed the news by saying it was time for American steelmakers to be globally competitive.

Sobering news

But it was sobering news in the areas of the country where the most steel making is concentrated such as Pennsylvania, Ohio and West Virginia. Large steel companies said there is still a massive oversupply on the world market caused by foreign subsidies. And the United Steelworkers Union called the action “a sorry betrayal of American steelworkers and steel communities.”

The government is evidently expecting a large number of layoffs of American workers as a result of the action. President Bush has proposed a major expansion of the National Emergency Grants program to help displaced workers with job training and other assistance. Bush said the program would help workers “find better, higher paying jobs to support their families and boost our economy.”

The other news that could impact SeverCorr is an effort by German steelmaker ThyssenKrupp Steel AG, which is reportedly seeking $300 million in state incentives, for a new steel mill in Louisiana that would create 3,000 new jobs. Alabama and Arkansas are also among states reportedly vying for the economic development project.

SeverCorr officials said they are prepared to compete in the marketplace by being a new, efficient, low-cost provider close to a large customer base.

“We have been in the business a long time,” said Mike Wagner, chief commercial officer, SeverCorr. “The steel industry is certainly a complex industry, and with the import and export and the continued globalization of the steel industry, you prepare for it by being a low-cost producer, by investing in technology, and by locating near customers. We have done all of that by locating in Mississippi. We’re building a facility and building a company that is in the heart of a growing automotive market.”

Even though the tariffs have come off, foreign steel producers are still a long distance away to ship products to U.S. auto and appliance makers. Wagner said SeverCorr is locating within 450 miles of 19 automotive assembly plants.

“Our logistics are much tighter and centrally located to supply on a short delivery basis as opposed to a steel mill from around the world trying to move products into the Southern U.S.,” Wagner said. “And if you look at worldwide demand, it is still pretty good for steel products. It isn’t moving just from other countries into North America. It is moving around the world. Other areas are active as it relates to construction or infrastructure repair.”

Serving a growing market

And the news of a new steel facility being built in the South? Wagner said the State of Mississippi and certainly investors supported building a new facility in Mississippi to be near a growing market that is underserved and doesn’t have any regional supply of high-quality steel for the automotive and appliance industries. Demand for steel in the region is growing.

Wagner said he doesn’t know whether the German steelmaker will be successful in finalizing the proposed venture. But even if it does, it would be two to three years before the mill would be up and running.

“The reason we came to the southern U.S. and the state of Mississippi is to serve the growing market around us,” Wagner said. “Our construction schedule is very, very aggressive. We will have everything operational in two years from when we started. I don’t know whether they can move that fast or not. But by the time you start construction, get equipment ordered and get processes in place, it doesn’t happen overnight.”

Wagner said SeverCorr remains on target with construction plans. The company started up one of its pickling lines before the end of the year, and will add additional pieces of equipment throughout the first half of 2007. Wagner said he expects everything to be operational by the middle part of the year.

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

About Becky Gillette

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