Pipe firm to add up to 200 LR jobs

LITTLE ROCK — Welspun Corp. Ltd. announced Thursday that it will invest $100 million in a new pipe-making facility on Frazier Pike near the Little Rock Port and add up to 200 jobs.

That comes after the Bombay, India-based company’s statement of concerns about the fate of the proposed Keystone XL oil pipeline and its potential impact on the manufacturer’s operation.

But Welspun said that it will make smaller-diameter pipe in the new facility, giving the operation diversity.

Welspun has expressed fears that if the Keystone XL pipeline is not approved by the U.S. State Department, that could negatively affect the 530 people it currently employs in Little Rock, who include both Welspun employees and contract workers.

However, the smaller pipe will be used for transporting oil and natural gas over shorter distances. Welspun does not have any current contracts for the smaller pipe, but feels confident it will be able to sell it to its current customers, said Dave Delie, president of Welspun’s Little Rock facility.

“The growth in oil drilling and the need for pipe in that market spurred our interest for putting in an additional facility,” Delie said. “The increased drilling in the oil and natural gas industry is creating a demand that we perceive will be going on far into the future.”

The Keystone XL proposal calls for building a 1,600-mile pipeline stretching from Alberta, Canada, to Houston and Port Arthur, Texas, to transport oil from tar sands in Canada to refineries on the Gulf Coast.

Pipelines that originate in another country to the United States require approval from the U.S. State Department. Earlier this year, President Barack Obama said the pipeline could not be approved until an alternate route through Nebraska is determined.

Despite not having U.S. approval, TransCanada Corp. ordered about 800 miles of pipe from Welspun, of which 700 miles was manufactured in Little Rock.

Delie said recently that if the project were not approved, that pipe would be used for a different Trans-Canada project. Because the Keystone XL pipe is already “on the ground,” Delie said Welspun would have to lay off workers.

The delay caused Welspun in November to lay off about 60 contract workers hired to help load the pipe for shipment to TransCanada.

Those workers were cited in a national debate over the pipeline. Republican lawmakers sought to tie approval of the pipeline to a bill to extend payroll-tax cuts. The tax-cut extension was approved separately and the bill was signed by Obama on Wednesday.But the fate of the pipeline is undecided and remains a political point of contention as Obama seeks to win a second term and Republican hopefuls try to unseat him.

“Those workers have not been brought back yet [for other jobs],” Delie said. “The people we laid off before were out of the temporary work force. We have not laid off any permanent Welspun employees. That’s why we hire temporary workers so that we can go up and down a little bit. It’s a project-oriented business, when you’ve got a project you’ve got work and when you don’t you have to adjust quickly.”

Welspun received several state incentives, including a $4.5 million commitment from the Community Development Block Grant program for site preparations and building and infrastructure costs, a 3.9 percent tax rebate on the payroll for jobs created in the next 10 years, a sales-tax credit for qualifying construction materials, and $300,000 for training reimbursement.

Little Rock Mayor Mark Stodola said he will ask the City Council to approve $500,000 for infrastructure improvements near the Welspun site. The money will come out of the capital improvement fund created by the 1 percentage-point sales tax increase approved by voters in September as part of a plan to keep city jobs and add to the capital improvement fund.

This will be Welspun’s second expansion since it started operations in 2009. In 2007, Welspun announced its $100 million project near the Little Rock port that would employ 300 people.

In 2010, the company said it would add an additional 230 jobs and invest $30 million in its Little Rock plant.That project was completed last summer.

The latest expansion will come in two phases. The first is projected to cost between $70 million and $75 million and is expected to be finished by the end of the year. The second phase would begin shortly afterward, said Rajesh Mandawewala, managing director of Welspun.

Under the expansion, Welspun will add 44 acres, up from 740 acres. Currently, Welspun turns about 360,000 tons of steel into pipe a year. Once the new facility starts up it will make about 560,000 tons of pipe a year. The new plant will be a few blocks from the current facility, Delie said.

Delie said the new employees would be a mixture of contract workers and Welspun employees. Workers at Welspun are paid between $12 and $17 an hour.

Initially, there will be one shift, and that could grow to three shifts, depending on demand. The first-shift employees would not be contract workers. Delie could not say what the ratio of Welspun employees and contract workers would be.

“It’s hard to say an exact number all the time because it depends on what we’re doing,” he said.

During his speech in front of a crowd of more than 100, Delie said the expansion would increase Little Rock’s presence in the global pipeline business.

“I believe with this $100 million investment, Welspun will position Little Rock as an important player in the global pipeline industry,” he said.