ThyssenKrupp picks Alabama for $3.7 billion steel plant

ThyssenKrupp picks Alabama for $3.7 billion steel plant

MOBILE, Alabama: German steelmaker ThyssenKrupp AG chose Alabama over Louisiana on Friday for a $3.7 billion (€2.74 billion) steel plant, described by steel industry experts as the first large-scale project of its kind in the United States in decades.

Set to open in 2010, the plant will employ as many as 2,700 workers when fully running, company officials said in selecting Alabama.

The site is near Mount Vernon in the Calvert community on the Tombigbee River, some 25 miles (40 kilometers) north of Mobile. It's on a river route to the Gulf of Mexico and near Mobile's rails and interstates.

Along with tax breaks and $400 million (€297 million) in financial incentives, Alabama offered a site with a route to a Brazil plant that will provide slabs for processing in Mobile.

"It doesn't get a lot better than this," Gov. Bob Riley said at a Montgomery news conference. He described the project as "the largest economic development project in the history of this state" as well as for ThyssenKrupp, long a prominent German industrial giant.

"Only in one generation do you have opportunities to truly transform areas of a state. This is one of those opportunities," Riley said.

When ThyssenKrupp's supervisory board announced its selection Friday morning in Germany, the company said the investment in the plant would be €3.1 billion, which converts to $4.19 billion. But Christian Koenig, vice president of public affairs for ThyssenKrupp, said later news releases by the company that put the converted investment at $3.7 billion (€2.74 billion) were correct. He said he could not explain why the initial figure was different.

Until a few years ago, industry experts were saying that a plant of this kind might never again be built in the U.S., said steel specialist Dr. Frank Giarrantani, director of the Center for Industry Studies at the University of Pittsburgh.

Update: January 19, 2009

Update on ThyssenKrupp Alabama
It is reported that two American subsidiaries of ThyssenKrupp AG has undertaken the construction of a USD 3.7 billion new hot strip mill at Allegheny Ludlum's Brackenridge Works in Alabama.

Mr Scott Posey spokesman for ThyssenKrupp Steel, one of those subsidiaries, said that "I can tell you right now that, certainly in the current economic climate, the local community is pretty excited that we are building this facility."

The project is taking shape on a 3,500 acre tract near Calvert. Construction has been under way since November 2007 and the mill is expected to be in operation in 2010. The ThyssenKrupp mill is expected to add USD 965 million a year to Alabama's economy.

Mr Posey said that "Our stainless colleagues are building a furnace, a melt shop and a cold rolling facility and they will actually use our hot rolling mill." He added that they have hired more than 300 people so far. When the project is completed, it will employ 1,800 on the carbon steel side and about 900 on the stainless steel side.

According to company officials, the facility is designed to roll 5 million tonnes of steel per year, 4 million tonnes of carbon and 1 million tonnes of stainless. Two of the lines at the plant will be capable of producing products as wide as 74 inches.

Mr Walt Hill president of United Steelworkers Local 1196, which represents 1,100 workers at Brackenridge, believes it at least figured in ATI Ludlum's decision in some measure. He added that "With ThyssenKrupp going on line and being able to produce the wider material, if Ludlum does not have that capability, it will probably hurt us down the road. We are looking 20 years down the road. Obviously, if we sit here and do nothing and the market goes wider, then that is going to cut into our business. I think the writing is on the wall and they know, business-wise, if they don't take advantage of this opportunity, in 10 years we could be hurting."

ThyssenKrupp's facility is being constructed on virgin ground and expected to have a building footprint of about 1,200 acres under roof. That is 12 to 13 times the size of the 97 acres occupied by the Brackenridge Works, which is almost entirely in Harrison.