Nucor, the state’s largest steel manufacturer, warned lawmakers Monday that a new Mississippi County steel mill, bolstered by tax credits and state-funded bonds, will undermine the state’s existing steel industry and could lead to a cutback in jobs.
But officials with Big River Steel said their proposed $1.1 billion Big River Steel plant will be good for Arkansas’ economy.
The company wants Arkansas’ lawmakers to sign off on a $125 million bond issue.
“I don’t even blink at the prospect of having 525 jobs at $75,000 [a year salaries],” said John Corrrenti of Blytheville, chairman of Big River Steel LLC, which plans to build the steel mill.
“People will come from a 250-mile radius for these kind of jobs,” he told lawmakers amid a more than four-hour-long public hearing by the House and Senate Agriculture, Forestry and Economic Development committees.
Correnti said Big River Steel and Nucor would only have a 20 percent overlap of their steel products.
Cliff Chitwood, Mississippi County’s economic development director, said Big River Steel’s mill wouldn’t affect Nucor’s operations in northeastern Arkansas.
Nucor operates two steel mills near Blytheville in Mississippi County - Nucor Steel Arkansas and Nucor-Yamato, a joint venture with Japanese company Yamato Kogyo Corp.
Oseola Mayor Dickie Kennemore said, “We love Nucor up there.”
Big River Steel would expand the steel industry in the region and “a rising tide lifts all boats,” he said.
But Sam Commella, vice president and general manager for Nucor Arkansas, said Nucor isn’t afraid of competition but the firm isn’t interested in competing with the state of Arkansas.
Big River Steel will make products similar to Nucor’s and drive up the cost of labor, transportation and supplies, he said.
“All options are on the table” for Nucor, including moving jobs out of state, Commella said.
“Believe me, this is not intended to be a threat,” he said. It makes little sense to have three mills so close together, he said.
Donna Reams, contractor coordinating for Nucor Arkansas, said, “I am pleading with you: Don’t use any taxpayer dollars on Big River Steel.”
Earlier in the public hearing, Rep. Matthew Shepherd, R-El Dorado, asked about the effect of the Big River Steel project on the two Nucor Corp. steel plants in northeast Arkansas.
John Anton of the IHS Global Insight consulting firm hired by the Legislature said he wants to disclose that Nucor has been a client of his for some years.
“In the short term I think they can co-exist, but there would be growing pains,” he said. “A new sibling coming into the family is not always accepted easily. Eventually they get along, but it’s naive to think there wouldn’t be some problem initially. I don’t think it is necessarily fatal.”
House Speaker Davy Carter, R-Cabot, asked the consultants whether it’s likely the state will be able to recoup the money it spends bringing Big River Steel to Arkansas.
If the plant operates at its proposed production level and the state keeps its recycling tax credit, Phil Hopkins of IHS Global Insight said he believes “it’s a close call.
“There is no slam dunk and there is no guarantee,” he said. “Under those circumstances, it is going to be a tough call. It could be a little positive. It could be a little negative. … I couldn’t guarantee that you will get all your money back when this thing is done.”
Scott Nystrom of the Regional Economic Models Inc. firm, hired by the Legislature to study the project, said the consulting firm concluded from an economic and budgetary standpoint “there’s not a ton to worry about.”
Even in the event of a recession such as in 2007 and 2008, the Big River Steel plant could survive, he said.
Sen. Bruce Holland,R-Greenwood, said he didn’t know that Nucor was a client of Anton’s.
Anton said he considers himself to be impartial and he hasn’t contacted Nucor about this report.
“My client is the state of Arkansas. My client is not Nucor. My client is not Big River Steel,” he said. “To me, this is not Nucor vs. Big River. This is state of Arkansas. That’s who I am representing here and that’s why I did not disclose it [previously]. … I apologize for any potential conflict or even the appearance.”
Anton said he has worked under contract for the majority of steel companies in North America.
Front Section, Pages 1 on 03/26/2013