SeverCorr: on target for steel mill by third quarter 2007

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Published: November 13,2006

COLUMBUS — It’s a big plan: building an $880-million steel mill that, when complete in the third-quarter of 2007, will have the capacity to produce 1.5 million tons of steel a year for use in the automotive, building, agricultural, appliance and pipe/tube industries. So far, everything is working out according to projections as SeverCorr celebrates a year of successful construction work on the Lowndes County project.

SeverCorr broke ground on the state’s current largest economic development project in October 2005, and was on schedule at the one-year anniversary. The company is hiring its first crews to operate the first piece of equipment to start up the pickling and oil line.

John Correnti, president and CEO of SeverCorr, said the company has made outstanding progress in the past year.

“We are on schedule with construction and will have our first production area on-line by the end of this year,” Correnti said. “It’s amazing to think it was just one year ago that we stood at this same spot and together broke ground to begin this journey.”

Correnti said response to the company’s hiring efforts has been exceptional. The company has received more than 9,000 applications for the 450 permanent jobs at the mill. Currently there are 1,265 construction workers on the 1,400-acre site.

The company reports good response from the targeted markets, as well. Correnti said its future customers have responded with excitement to the company they are building and the products they will provide.

“And that excitement is shared by our business partners who are locating new facilities here,” he said. “When we take a look at all these positives, we can’t help but be immensely excited about the future of SeverCorr and the future of the region we call home. We certainly have a lot more work to do and many more steps to take. But our path is clear — we are committed to building the finest steel company and the finest steel-making facility. And we are well on our way.”
It is obvious the construction of the mill is having a big impact on the local economy; sales tax receipts have gone up about 19%.

“Obviously all these construction workers, employees and vendors are coming in and spending money in the community,” said Mike Wagner, chief commercial officer for SeverCorr. “A lot of the local vendor companies are supporting us. People come here and see the benefits of the infrastructure that is already in place, a dedicated workforce, the enthusiasm of job applicants, and it is appealing to be located next to our steel mill with the ability to get to their customers in a more streamlined and expedited fashion.”

In late September, Heidtman Steel announced it will locate a 240,000-square-foot processing facility on the SeverCorr site. Heidtman expects to employ 75 employees at the plant scheduled to begin operations in mid 2007.

Kenwal Steel Corporation, which is headquartered in Michigan, is building a 140,000-square-foot downstream processing and distribution facility next to the SeverCorr plant. The plant expected to come online in the late spring of 2007 will feature state-of-the-art, surface-critical slitting and packaging systems with a broad range of coil-to-coil processing capabilities.

Two other companies are also locating on the site: Edw. C. Levy Company, a scrap handling and slag processing company out of Michigan, and Linde Gas, which will supply gas to the fuel melt shop.

“If you look at all four of those companies, it is close to $130 million in investment and 350 jobs,” Wagner said. “We are in conversations with multiple other companies whether suppliers or customers about locating here. There could be six to eight more companies who put facilities in on our site. People in the North who are looking to supply customers in the South has led to additional businesses talking about locating on our site.”

The market outlook is bright.

“The steel business is still good,” Wagner said. “We have had great response from future customers about what our company is doing. People from all over the world have come in to visit the facility. We have about 30% of our product for the mill already sold. Customer commitment and interest has been very high and positive.”

Texas and Mexico are two of the biggest target markets. The SeverCorr site has access to Monterey, Mexico, via the Kansas City Railroad. SeverCorr will be closer to the Texas and Mexico markets than competing northern steel mills in Michigan, Indiana, Illinois and Ohio.

“Mexico is a good opportunity for us because there is a direct rail link down there,” Wagner said.

Steel pricing in the fourth quarter of this year has softened a little bit, but demand is still strong. Wagner said the industry is seeing an end of the year short-term correction in pricing, which is not abnormal.

“This happens a lot as it relates to the end of the year,” he said. “Historically we see things come back around in the first quarter. Business levels and automotive, especially the big three domestic companies, has slowed a little.

Overall demand is still good. Steel as an industry grows at a rate of 1.5% annually. In the Southern U.S. markets, we are seeing probably more like 3% to 3.5% per year. It is a cyclical business. But earnings were released by all the steel mills in the last week or so, and all the steel companies are doing extremely well. Some are having record quarters.”

SeverCorr has been very pleased with the quantity and quality of applicants to work at the mill.

“We are certainly thrilled, excited and really heartened about the local candidates for jobs,” Wagner said. “In addition to applicants from Lowndes County, we have had applicants from the broader area who left because they didn’t have jobs.”

Right now, SeverCorr is up to about 51 workers for the mill, and the process of hiring hourly workers is expected to continue with 20 to 40 new hires per month starting in January and continuing throughout the year.

“We will be bringing more people in and creating a positive impact for community and state of Mississippi,” Wagner said. “We’re well on our way to doing that.”

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

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