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Columbus Day: $880 million steel plant breaks ground

[From East Mississippi Business Journal, 11/30/05. Reprinted by permission.]

COLUMBUS - The largest 2005 economic development project in the United States broke ground in late October with all the pomp and pageantry one would expect.

Although dirt work on what will become an $880 million steel mill began at the site located near the Golden Triangle Regional Airport several weeks before the official groundbreaking, it didn’t dissuade more than 600 attendants from attending a ceremony commemorating a project that will have economic ramifications not only in the Golden Triangle, but the entire state.

“There were some people who thought this day would never come,” said John Correnti, president of SeverCorr before the groundbreaking. “We’re here because of a lot of hard work by a lot of different people. Those people put in a lot of hours on this. Something like this can’t come together unless everybody is pulling in the same direction.”

Correnti was joined at the event by Gov. Haley Barbour and members of the state Legislature, as well as local officials.

The 1.2 million-square-foot plant, which will eventually produce high-quality rolled steel suitable for the likes of the automotive industry, is expected to be operational by the fourth quarter of 2007. The plant will employ about 450 workers, making an annual salary of about $70,000.

Joe Max Higgins, president of the Columbus-Lowndes Development Link, said in order to make the plant a reality in Lowndes County, everyone had to be involved. “When we lose, we lose together. When we win, we win together,” Higgins said. “On this project, we all put our chips together and pushed them to the middle of the table.”

Choosing Columbus

Although Columbus had been pursuing the lucrative steel plant for more than a year before October’s groundbreaking ceremonies, the plant was originally planned for Arkansas.

But Arkansas’ disorganized economic development team and the aggressive action by Higgins’ team, led to a last minute change, giving the area an edge in landing the plant.

SeverCorr officials said complications arose because of a multi-million dollar surcharge on the plant by a power provider.

Eddie Lehner, chief financial officer for SeverCorr, said it was just one more example of a “dysfunctional” economic development team in Arkansas. “Arkansas’ economic development is just not organized,” Lehner said. “Nothing was integrated, so we were left to make separate deals with every entity. We were making deals with the state government and then the local governments and then the power providers, so we were dealing with three or four levels of politics with all the partners.”

The surcharge by the power provider was the last straw, according to Lehner. It was at that point the Columbus location moved to the forefront. Although the site was large enough and fit SeverCorr’s criteria, Lehner said going to investors at the last minute and telling them about the site change was challenging.

“We had been raising money for the project for a year, and usually if you go in at the last minute and say we want to change the site, the project ends up dead,” Lehner said.

But Tennessee Valley Authority's Megasite Certification program eased investors’ minds. “It was critical,” Lehner said. “Those investors have to carefully check all the information we bring them regarding the site, and because so much of the groundwork had already been done by an independent consulting firm, that job was much easier.”

Normally qualifying such a large site for investors would take 12 to 18 months. This time it took only six months.

For TVA, the program’s first site was now a huge success. “We always thought it was a good idea, but this is just beyond our wildest expectations,” said John Bradley, TVA’s senior vice president for economic development. “When we started this, we wanted a way to have a good catalogue of sites ready for large industrial projects, sites that had phase I and II work completed, environmental work done … all those details that eventually come up during the qualifying process.”

SeverCorr officials said TVA’s Megasite Certification program was not only a useful tool in their site selection, but should now be considered the “gold standard” for large economic development projects. “In order to be competitive in today’s market, people are going to have to implement this type of plan,” Lehner said. “That program has to be the template for projects of this magnitude now.”

Impact on the region

While the Golden Triangle certainly stands to benefit the most from the plant, other counties in the region are optimistic they too can cash in. Economic development officials have estimated companies who use SeverCorr’s high-grade steel moving to the area could create an additional 1,000 jobs or more.

Lehner said the thought of moving closer to the plant makes sound financial sense for many of the steel processing companies. “With today’s energy costs like they are and the expense it takes to move this steel, it only makes sense for companies to locate around the plant to save on freight costs,” he said. “If you can save money on those costs, then your final product is cheaper and you’re more competitive in your market.”

SeverCorr is already in negotiations with “several companies” interested in moving near the plant. But it’s not just the counties that directly surround Columbus that could benefit. Lehner said he believes perimeters with secondary jobs surrounding SeverCorr could extend all the way south to Jackson.

Some smaller counties in the area are already working on new industrial parks to lure some of those secondary jobs.

The presence of SeverCorr also boosts the state’s hopes of luring another automotive manufacturer. Recent talks about Kia Motor Company’s interest in a location near Meridian for an American assembly plant could be bolstered by access to SeverCorr steel, located only about 85 miles away.

“I would hope our presence here would be a positive catalyst for Kia,” Lehner said. “They obviously use a lot of steel in their cars, and I would think having us that close would make the site even more desirable. We would love to see them in Mississippi.”

By Ben Alexander