Arkansas Money & Politics: U.S. Steel Doubles Down on Arkansas
There’s a lot about the new $3 billion U.S. Steel plant, bound for Osceola in Arkansas’ Mississippi County, that’s just this side of surreal.
The growing presence of steel, an industry that’s cropped up in this flat, open corner of the state only in the last several decades, is one thing. But opening what the project’s parent company calls its most technologically advanced facility – and what is the largest private economic development project in the state’s history – stretches the imagination well past the rolling farmland of today.
And that forward-looking vision, say officials, is precisely the point. For, in addition to the 900 jobs paying upwards of $120,000 and the 3 million annual tons of advanced steel-making capability, the new Big River Steel Works brings a compelling, audacious view of the state’s industrial future.
As U.S. Steel President and CEO David Burritt put it in a presser, released in advance of Feb. 8’s groundbreaking ceremonies, “Several years ago, we embarked on a transformative vision for U. S. Steel. Now we celebrate, as we take another significant step forward in becoming the steel company of the future.
“This facility is engineered to bring together the most advanced technology to create the steel mill of the future that delivers profitable sustainable solutions for our customers.”
Not surprisingly, state officials are similarly enthusiastic about the forthcoming plant, which will reside next to the company’s existing Big River Steel facility following two years of construction.
“(The plant) is yet another opportunity in northeast Arkansas to transform the region,” said Randy Zook, president and chief executive officer of the Arkansas State Chamber of Commerce and the Associated Industries of Arkansas. “It’s a big opportunity, and we’re encouraging an innovative approach to this that might be helpful in that regard.”
Dan Brown, senior vice president of advanced technology, steelmaking and chief operating officer of Big River Steel Works, said a combination of factors has elevated northeast Arkansas into the country’s newest hub for the steel industry and a jewel in U.S. Steel’s crown.
“The combination of workforce, public and private support, logistics and energy supply have made this region the best choice for U.S. Steel,” he said. “Our strategy is focused on advanced and sustainable steel production so the combination of these factors, along with access to markets, makes this an important capability for us. In addition, many of our strategic customers will benefit from the geographic location.”
Zook, himself a former industrialist prior to leading the state chamber, agreed.
“The biggest advantage is the proximity to the river,” he said. “It’s the transportation of scrap into those mills. They function on scrap steel totally. They’re downriver from major population centers. Easy rail access, easy trucking access. It’s a function of location that’s the initial driver.”
Arkansas’ steel story begins with Nucor Steel commencing operations in Blytheville in the late 1980s. The company reaped the benefits of physical proximity to markets and robust transportation and shipping options, as other companies quickly noted.
“Once Nucor put one mill, then two mills in there, the word was out,” Zook said. “That’s a pretty tight fraternity in that industry, and they watch each other closely.”
Big River Steel was one of the companies to follow Nucor’s lead, breaking ground on its Flex Mill in 2014. In just five years, U.S. Steel announced it had reached an agreement to buy a minority stake in Big River Steel, with an option to purchase the remaining piece by 2023. It didn’t need nearly that long, gobbling up the remaining 50.1 percent stake in a deal that became official in January of last year.
Brown said the latest announcement spoke more about product diversification than it did mere elbow room.
“We are not building for additional capacity but for enhanced capabilities,” he said. “More sustainably produced steel is critical to the long-term viability of the industry, and this technology will allow us to produce products with a quarter or less of the carbon intensity of integrated mill operations.
“We will be supplying more value-added steel products from this plant for the automotive, appliance, electrical and construction sectors, where demand remains high.”
Zook noted the spillover effect from the announcement has the capability to attract a diverse group of new industries moving into Arkansas, entities that rely on steel to manufacture products and therefore wish to be closer to suppliers.
“You’ve got the largest investment Ford Motor Company’s ever made underway 80 miles due east of Osceola, as the crow flies,” he said in reference to Ford’s planned production facility in Stanton, Tenn. “That’s one of the main reasons it will be there, proximity to that mill. Just look around. You’ve got that mill and plants in Jackson, Miss.; St. Louis; Nashville; Tupelo, Miss. All those plants are within a relatively short truck haul to deliver products.
Electric arc furnaces, like this one in Alabama, will be used at U.S. Steel’s new facility in Mississippi County.
“Then, that will drive downstream entities pretty quickly to be in there making and shipping components and other stuff for those auto plants that are already there.”
Zook said state and local entities — from economic development to higher education — deserve a lot of credit for pulling off this kind of generational investment, something Brown also noted as a primary draw for the company to sink its roots deeper into Arkansas.
“State and local support has been overwhelming, along with energy supply and logistic capabilities required for a project of this scale,” he said. “Entergy played a critical role in helping make this project successful, along with BNSF and other logistics providers.
“We are also pleased with the partnership with Arkansas Northeastern College as its steel tech program is providing a great foundation for future employees, enabling us to hire the workforce of the future.”
For his part, Arkansas Secretary of Commerce Mike Preston put the lion’s share of the credit at the feet of local officials, saying their commitment and foresight were critical to attracting, retaining and now expanding steel’s presence there.
“I give a lot of credit to Mississippi County and the region,” he said. “Back in the ‘80s when they said, ‘Here’s the direction we want to go,’ the state got behind it, and they made it happen. There was a real willingness there. They’d lost jobs in the agriculture sector, they’d lost jobs associated with the air base up there, and they needed a new industry.”
In addition to the physical amenities of the region, Preston also listed labor as a key differentiator between northeast Arkansas and other candidate locations for the Big Steel plant. At the same time, he said, labor is also the biggest hurdle for the new venture once the plant is completed.
“The X-factor that people maybe don’t realize is the quality of the workforce that we have in our state,” he said. “A lot of folks who were formerly working on the air base or in the agriculture sector have that can-do spirit and attitude. They go in, they see a job, they learn how to do it. They roll up their sleeves, and they get it done.
“That’s also the challenge that we face now, to hire 900 employees. That’s a lot. But what you have to look at is, it’s a regional impact. You have folks not only in Mississippi County, you have people all over the region, coming from Jonesboro and even across the river from Memphis and Dyersburg [Tenn.]. We’re going to pull people from the region.”
Preston said another benefit of the high-profile deal is it raises the state’s profile and sends a positive message to other firms about the business climate in Arkansas especially at the speed with which this deal happened. He said the company called state officials in September, at which time 40 sites in 13 states were in play, and by January the plant found its home in Arkansas.
“This got national media attention for a number of news cycles and a number of days afterwards. Even after we put the shovel in the ground, people were still celebrating and talking about it,” he said. “I heard from colleagues and companies from all over the country who were very impressed with it. Now, in our recruitment efforts and strategy, it comes up in every conversation we have that, ‘Hey, we heard about the location of this mill. We’re interested in doing business in Arkansas.’”
Brown said the palpable sense of welcome and appreciation for the company’s presence can be felt daily, and that feeling is mutual.
“We see a wealth of positives in northeast Arkansas, and we see an obligation to continue to contribute to the community in ways that will be helpful for our employees and neighbors,” he said. “It’s clear that Arkansas wants U. S. Steel to operate within this state, and we are looking forward to helping the community reach its full potential.”