Big River to turn out steel next month

A map showing the location of Big River Steel.
A map showing the location of Big River Steel.

The $1.3 billion Big River Steel mill under construction near Osceola is set to begin producing steel early next month.

The plant, built less than a mile from the Mississippi River, has enough orders booked to fill December, said Mark Bula, Big River's chief commercial officer.

There were about 2,000 workers at the plant at the peak of construction, but there are fewer than 1,000 now. About 260 employees -- the first two of four shifts -- are already working at Big River Steel, Bula said.

"Certainly construction is slowing down and coming to an end," Bula said.

Bula said the plant received almost 10,000 applications for 525 full-time jobs. Including bonuses, the average annual income for a Big River Steel employee will be about $75,000.

John Correnti, the force behind the creation of Big River Steel, died at the age of 68 in August 2015. Correnti proposed the mill in 2013 and persuaded the Legislature to approve issuing $125 million in general obligation bonds for the mill.

Despite his death, the project remained on schedule.

"John was a great force in our company," Bula said. "It has been difficult because we had personal relationships and feelings for John. But John hired a great team, built a great culture while he was here, and this team is committed to living up to what he wanted."

Many of the employees worked for Correnti at other plants he started, Bula said.

"There have been many times I've been out in the mill with fellow employees and we said, 'It's a shame John is not here to see this,'" Bula said.

The Arkansas Teacher Retirement System has one of the largest stakes in the plant, investing about $125 million, including $92 million in shares of the company, said George Hopkins, executive director of the system. The remaining $33 million is invested in part of the company's debt.

"The workers are totally focused on making this the best mill with the fastest startup of any steel mill in the world," said Hopkins, who travels to Osceola about every 10 days to observe work at the plant.

They are working seven days a week to finish the plant, Hopkins said.

"You can see the pressure in their eyes and their faces," Hopkins said. "But you can also see the dedication."

The mill is opening at a good time economically.

"The steel industry has shorter business cycles," Bula said. "The cycles run maybe four, five, six months. Right now we're entering an upturn in pricing, which is good. But sometimes when there is an uptick in our product pricing there's also an uptick in our raw materials costs. We're actually encouraged that we're entering the market at a good time."

The plant will use scrap steel to produce its final steel product.

"The spread between the price of scrap and finished steel, they are still strong," Hopkins said.

It will take time but Bula anticipates -- and Correnti planned -- that much of the steel would be used in the automotive industry.

"The product that we're looking to make is not for the hoods or the roofs or exposed applications," Bula said. "But we're more interested in producing the safety steel that goes into the cage that protects our children and spouses, our loved ones. We think that's an undersupplied market in the United States."

Big River Steel met with most of the automobile manufacturers and received positive feedback, Bula said.

Arkansas provided $120 million in incentives to Big River Steel with another $5 million used to issue the bonds, said Scott Hardin, a spokesman for the Arkansas Economic Development Commission. The state also provided Big River Steel with $10 million for workforce training. It was the largest incentive package ever offered by the state and the first use of Arkansas' Amendment 82 legislation that provided incentives for superprojects.

Big River Steel was required to invest at least $1.023 billion in the project and to employ at least 525 full-time workers at an average salary of $75,000 for the next 15 years, Hardin said.

The commission will begin auditing the plant in December 2017.

Arkansas Northeastern College in Blytheville trained some of the potential workers for the plant, said Mike Preston, executive director of the economic development commission.

Programs at Arkansas Northeastern College have been tailored specifically for Big River Steel, Preston said.

"They are going through a screening process [at the college] to find candidates who would be qualified to work in the mill," Preston said.

Big River Steel already is attracting related businesses to the area.

SMS Siemag of Dusseldorf, Germany, which sold some of the high-tech machinery at the plant, built a facility of its own near the Big River Steel mill, Preston said. It has about 50 employees who service the machinery SMS sold to Big River, Preston said.

Another is Blue Oak Arkansas, which includes owners of Big River among its investors, Preston said. Correnti was chairman of Blue Oak before his death. Blue Oak's $35 million plant, which has about 50 employees, recycles gold, silver, copper and other metals from cellphones and other electronic devices.

But indirect employment also is expanding near the plant, Preston said.

"It's virtually impossible to get a hotel room in Osceola because of the number of people working at the mill and coming to visit it," Preston said. "You're also seeing retail stores going in. They are not necessarily supplying the mill, but folks at the mill are going to that convenience store or that restaurant."

With the beginning of Big River Steel and the presence of two Nucor Corp. steel plants that also pay in the range of $75,000, Mississippi County is the largest steel-producing county in the country, Bula said.

But it also is in an economic downturn.

Its unemployment rate was 6.7 percent in September, the highest rate of any county in the state.

Not all of the workers at Big River Steel or the ancillary companies live in Mississippi County, Preston noted. They commute to Osceola but live elsewhere, so they are not counted as being employed in Mississippi County. That also is the case for some Nucor employees.

Mississippi County's per-capita personal income declined 3.5 percent from 2014 to 2015, the worst drop in the state. Mississippi County's per-capita income in 2015 was $31,150, 46th in the state.

A primary reason for the trouble is a series of layoffs this year at three Blytheville-area plants that cut more than 1,000 jobs, said Clif Chitwood, director of economic development in Mississippi County. That includes about 700 layoffs at Tenaris-Hickman Corp., 300 at Ipsco Tubular and about 100 at Atlas Tube.

"Those were good jobs, from $15- to $25- to $30-an-hour jobs," Chitwood said. "Net, we haven't made much advancement. I will admit to a degree of frustration that you can put in a [$1.3 billion] investment and [not move forward]."

Business on 11/26/2016

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