The last of the government’s incentives to help fund Welspun Tubular LLC’s $75 million expansion in Little Rock is scheduled for consideration Tuesday night by the city Board of Directors.
The board will vote on whether to give Welspun $500,000 for the expansion, which was completed last year, Mayor Mark Stodola said.
In 2012, Welspun created a new mill for electric-resistance-welded steel pipe in an existing building the company owned in Little Rock, said Dave Delie, president of the company. The new mill is about a mile from its main facility at 9301 Frazier Pike.
Welspun Tubular is a subsidiary of India-based pipe maker Welspun Corp. Ltd.
The new mill, which started production in early winter, makes pipes that are 6 inches to 20 inches in diameter, Delie said. Welspun’s main facility makes pipes that are 24 inches to 60 inches in diameter.
“So this is increasing our size range,” Delie said. “And it’s all for the oil and gas [industry].”
Welspun counts 750 people on its employment rolls. That includes the 200 added jobs for when the new mill gets to full production later this year. Delie said most of the new jobs have been filled.
The city is just now voting on whether to give Welspun the incentive money because it had been waiting for the completion of an economic study on the expansion, Stodola said.
“Ultimately the city committed to some money, and we wanted to make sure we get the economic-development impact first,” he said.
The study, completed by Applied Economics of Arizona, said that Welspun’s expansion could create an economic impact of $295 million for the city in the next five years and directly and indirectly support about 360 jobs.
The study also said that the city could recoup the $500,000 it plans to invest in less than a year and that the city would receive a 491 percent return on its investment.
The money from the city will come from its economic development incentive fund, which was started in January 2012.
This will be the first time the city dips in to the fund, which is set to accumulate $6 million in the next 10 years and has already built up about $600,000. Revenue from the city’s sales tax supports the fund, Stodola said.
Welspun has already received other incentives from the state for the expansion, Joe Holmes, spokesman for the Arkansas Economic Development Commission, said in an e-mail.
The company was given a $4.5 million Community Development Block Grant for site preparation, building and infrastructure development, he said. The grant is federal money from the Department of Housing and Urban Development.
Also in regard to the state development commission, Welspun received a 3.9 percent cash rebate of total payroll for the new jobs added for the next 10 years; a sales-tax refund on eligible construction materials associated with the expansion; and reimbursement for training up to $300,000.
Last summer an electrical fire at Welspun’s main facility briefly halted some of the company’s operations. The fire, which wiped out the main control room, forced Welspun to lay off several employees for about 10 weeks, Delie said.
He said the company gave the laid off employees a bonus for every week they were out of work if they would return to Welspun.
“So we ended up getting 98 percent of the people back,” he said.
Construction for Welspun’s expansion had already started when the fire occurred and it did not affect construction, Delie said.
Business, Pages 27 on 06/14/2013