May 12 2007

Alabama lands steelmaking giant

Birmingham News


Alabama landed its largest industrial prize Friday in global giant ThyssenKrupp AG of Germany, which will build a steel-processing facility near Mobile with a record price tag of $3.7 billion.

The coup shatters previous investment marks in the state's successful run of economic development projects. ThyssenKrupp's plant, which will have 2,700 workers, promises to have far-reaching effects across the United States and the steel industry.

In announcing its choice following a months-long, high-stakes competition between Alabama and Louisiana, ThyssenKrupp raised the bar even higher: The company increased its investment in the project from its original estimate of $2.9 billion.

Gov. Bob Riley said at a news conference that opportunities to transform a region of the state happen only once in a generation.

"This is one of those opportunities," Riley said. "We've seen this in other areas of the state, but never in south Alabama."

ThyssenKrupp, which is receiving an Alabama record incentive package worth at least $811 million, raised its investment at the facility because it plans to add capacity and additional equipment on top of its original plans.

Opening in 2010:

ThyssenKrupp expects to begin operations at the facility in 2010. The site covers about 3,500 acres straddling northern Mobile County and southern Washington County just north of where the Tombigbee and Mobile rivers meet.

"These jobs will support families in Alabama for a long, long time," said Bob Soulliere, chief executive of ThyssenKrupp Steel and Stainless USA, who was on hand for the company's announcement in Montgomery. "A steel plant of this size will operate for decades. We are here to stay."

Dusseldorf-based ThyssenKrupp, with $61 billion in annual sales and 188,000 employees worldwide, focuses on steel, stainless steel, elevators and technologies and services aimed at industrial customers.

The company began its U.S. site-selection process more than a year ago with 67 potential locations, and in February narrowed it to two: the Alabama site and a site south of Baton Rouge.

The competition came down to the wire, with lawmakers in both states pushing through incentives legislation in the past 10 days. On Friday morning in Dusseldorf, ThyssenKrupp's supervisory board approved the Alabama site.

Riley got the call shortly before 5:45 a.m. that Alabama had won the plant. He then called Alabama Development Office Director Neal Wade.

"The governor calls, and he says, `OK, some days are diamond and some days are stone,'" a reference to a John Denver song, Wade said.

"I said, `Which one is it?' He said, `It's a diamond.'"

In the past 15 years, Alabama has had a healthy share of diamond days.

The state has gained a prominent foothold in the emerging Southeast automotive industry, starting when Mercedes-Benz in 1993 announced plans to build an assembly plant in Vance. Honda and Hyundai followed, as did a host of suppliers.

ThyssenKrupp's Alabama project is aimed in part at serving that industry. The facility will import steel slabs that ThyssenKrupp produces in Brazil and turn them into steel suitable for a variety of applications, including vehicles and appliances.

A town celebrates:

From Washington, D.C., to Mount Vernon, the tiny Alabama town near ThyssenKrupp's chosen site, Friday's news had people talking.

In Mount Vernon, Bonnie Harper put up a sign outside her hardware store that read, "Welcome," in German.

"Everybody's excited, but a little bit scared of the change, because the community will change," Harper said. "I think it's going to be great for the area - a lot of jobs, a lot of growth."

Sen. Richard Shelby, R-Ala., said it is now up to the state to provide an educated work force, including the engineers, mathematicians and scientists needed to attract even more companies.

"I think there is more to come," Shelby said during a Friday morning interview.

Asked if the competition has driven states to become too generous with their incentive packages, Shelby said not yet.

"It all goes back to the Mercedes deal. It's paid off. I'm sure there will be a tipping point, but we hadn't gotten there yet," Shelby said. "We appreciate good companies coming to invest, but we are willing to invest, too."

Shelby also said the deal will help drive improvements at the state docks in Mobile. "We've got to make Mobile one of the most modern seaports in the country."

ThyssenKrupp said the decisive factors in its choice of Alabama included logistical considerations of the company's supply chain from Brazil to its projected customers, operating costs such as electricity and labor, and site-specific capital expenditures.

Wade said the Louisiana location was on marshy land that would have required extensive ground work. He also credited Alabama Power Co. for working with ThyssenKrupp on utility costs.

What had been a major disadvantage for Alabama - transportation - was solved, Wade said. Ships from Brazil couldn't travel up the river system to the site. As part of the incentives package, terminals will be built at Pinto Island so the slabs can be shipped upriver on barges.

State and industry officials were equally enthusiatic following ThyssenKrupp's announcement.

"It's great for everyone in Alabama," Alabama Power CEO Charles McCrary said. "It's more economic progress, more high-quality jobs. It adds to the image of the state as a `can-do' place."
Industry revival:

The ThyssenKrupp project, and its massive investment in steel-processing equipment, also illustrates a drastic change from just five years ago, when 33 steel companies in the United States were in bankruptcy, said Michael Austin, a former steel industry executive and executive-in-residence at the University of South Alabama's Mitchell College of Business.

The steel industry is becoming more of a global industry, he said, and ThyssenKrupp's plans represent that trend.

Mobile Mayor Samuel L. Jones predicted the city will prosper and grow from the effect of ThyssenKrupp.

"For us, this is not just a success story," he said. "We feel it rises to the height of a true blessing."

News staff writers Mary Orndorff and Russell Hubbard contributed to this report.