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Answer to SeverCorr skeptics? ‘We’re running’

There were grand hopes and an aggressive building schedule for the SeverCorr steel plant in Lowndes County, the nation’s newest steel producing facility. And on both counts, the new steel production facility has met or exceeded expectations.

“The SeverCorr project remains as we expected the day we met the leadership,” said Joe Max Higgins Jr., CEO of the Columbus Lowndes Development Link. “It is a signature project for Mississippi. In fact, the project that we initially expected to total around $600 to $700 million is now expected to top $1.3 billion. The project also has led to several other upstream and downstream locations. We expect more locations and investments as the mill matures, and we look forward to working with TVA, the Mississippi Development Authority and SeverCorr to maximize the state and Lowndes County’s investment. Special thanks to the Legislature, the Mississippi Development Authority and Gov. Barbour for giving us a chance.”

John Correnti, CEO of SeverCorr, said that to be able to say they are making steel less than two years after breaking ground is a testament to the dedication and hard work of the entire SeverCorr team — their equity partners, lenders, equipment partners, construction crews and contractors, and most importantly, the men and women who have joined SeverCorr.

“This is the announcement we’ve been eagerly waiting to make since the idea of building a steel mill began four years ago,” Correnti said.

Some doubted that the steel mill could be up and running in under two years of construction.

“A lot of people didn’t think we could build a mill that fast,” said Mike Wagner, chief commercial officer for SeverCorr. “We did. We’re running.”

SeverCorr held a special celebration this week to mark the great amount of progress made at the two-year anniversary of the ground breaking on the project. The grand opening for the facility is planned in the spring of 2008.

Teamwork made it happen

Wagner said the company was able to meet the aggressive construction schedule with teamwork among SeverCorr, its construction contractors and equipment suppliers.

“The way you do it in a 24-month period is you have a lot of people, companies and entities all working together in the same direction with a goal in mind, the goal of having the plant up and operational in 24 months,” Wagner said. “We utilized companies that have worked with us in the past and done this before with us. We utilized equipment suppliers. Everybody was aligned and focused on getting it done in a very shortened time frame. We laid out what the plan was. We tracked our progress and where there were any issues. We targeted and resolved anything that stood in our way and then moved forward.”

SeverCorr produces steel for use in the automotive, building, agricultural, pipe and tube and appliance industries. The plant is located on a 1,400-acre megasite allowing for future growth of the company, its customers, vendors and suppliers.

The company’s first shipment of hot rolled coils went out in early October to a customer in Birmingham, Ala., Southland Tube, that will make it into tubing. SeverCorr has been selling its product to distributors or service centers in the U.S., and also has even been shipping product down to Mexico.

“We have just finished shipping a barge of hot roll coils within the last week,” Wagner said. “Also, since we have started we have had two processor customers announce and start to build facilities here. Heidtman Steel, which is based in Toledo, Ohio, has broken ground and will open a facility adjacent to our plant on the property. New Process Steel from Houston, Texas, is set to begin to break ground on facility. They’ll take our big coils and process them into smaller coils or pieces.”

Long-term potential

Wagner is also pleased with discussions with automakers in the Southeast regarding their possible use of steel manufactured at SeverCorr. Having just started production, it will take the company some time to go through quality certifications. But Wagner said he is very encouraged by early discussions and where it could lead longer term with potential supply into the automotive market.

“Locating in Mississippi allowed us to be in close proximity to the Nissan plant in Canton,” Wagner said. “And after we began construction, having Toyota announce in Tupelo was another positive. Hopefully we can earn ourselves a supply position with both of those. There is a logistic advantage to being in the state and in close proximity to both of those automakers.”

Other potential customers in adjacent states include the Isuzu plant and a Bird Steel Pipe facility in Alabama and Wellspun in Arkansas. In closer proximity are Skyline Steel and the Roll Form Group in Iuka.

Approximately 2.4 million tons of new consumption of steel has been announced in area.

“When you thrown in Toyota, Isuzu and others, a lot of new capacity that has been opened up or announced in the area in the past 12 months,” Wagner said. “

Construction to production

As construction has progressed, workers on the site have transitioned from construction to production. Currently, SeverCorr employs 365 people, and plans to continue to add until they reach full employment of 450 planned by the spring of 2008. “So we’ve reduced the number of construction contractors on the site as we have moved from a construction project to an operating environment,” Wagner said. “SeverCorr employment has gone up and contractor employment has gone down.”

The weak dollar has had a positive impact on the plant as it makes its product less expensive for foreign manufacturers. The company is currently in negotiations to ship their product offshore into the world market. South America and Europe are possible markets.

“The demand for steel in the world is still at good levels, and with the value of the dollar, it allows us to look at export opportunities which we are currently doing,” Wagner said.

Automobile manufacturers are still reducing capacity here in the U.S. In the fourth quarter, some of the larger automotive manufacturers have announced reductions in production schedules. That would reduce domestic demand for steel.

At the two-year anniversary of starting work on the mill, Wagner said SeverCorr is pleased with how everything is coming together from the amount of business it is attaining, the customers that are signing on and the employees it is hiring.

“It is coming together pretty well,” Wagner said. “We are very happy. We’re thrilled with the support in the state since we arrived here two years ago from a local and state level. We’ve been happy with all that. We’ve been happy with the support we have gotten from the Legislature, and the quality of employees we have gotten through the Mississippi Department of Employment Security and the WIN Job Center. It has been a real positive, a real win-win for SeverCorr and for the state.”

Construction of the SeverCorr facility has been one of the largest projects in the southern United States in recent years. Plans for an additional construction phase to expand capacity are currently in development.

Contact MBJ contributing writer Becky Gillette at bgillette4@cox.net.

About Becky Gillette

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