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Houston in dark on V&M project


Published: Sun, November 15, 2009 @ 12:10 a.m.

By David Skolnick

The global steelmaker’s plant in Texas competes with Youngstown for a $970M expansion.

YOUNGSTOWN — Though V&M Star Steel officials have repeatedly indicated that Houston is Youngstown’s biggest rival in the race to get the company’s potential $970 million expansion, it hasn’t bothered to tell Houston.

“We know V&M Star as a company, and they have not contacted us” about a proposed expansion, said Tim Douglass, Houston’s deputy director of finance, responsible for spearheading the city’s economic development efforts.

“I don’t know anything about it,” he said.

Douglass also said officials with the Greater Houston Partnership, an economic development organization in the city that includes its chamber of commerce, has “not been contacted about any kind of expansion” by V&M.

V&M’s North American headquarters are in Houston as is a company plant. During multiple conversations, Mahoning Valley officials say V&M has mentioned Houston as a potential location for the expansion.

Top officials with the Vallourec Group, V&M’s parent company, met Nov. 2 with Youngstown Mayor Jay Williams at its Paris world headquarters to discuss the proposal.

Vallourec officials talked about Houston and made a passing mention about Brazil during the conversation, Williams said. Vallourec has a plant in Belo Horizonte, a city in southeast Brazil.

V&M officials have said in discussions with local officials that they have “viable options” in Houston, Muskogee, Okla. [V&M’s other North American plant location], and Brazil, said Walt Good, Youngstown/Warren Regional Chamber’s vice president of economic development, business retention and expansion. Good has been involved in the V&M discussions.

But, like Houston, V&M executives haven’t contacted Muskogee officials about a potential expansion there, said J. Gregory Buckley, Muskogee’s city manager.

Williams said V&M’s lack of communication with officials in Houston and Muskogee doesn’t concern him.

“It doesn’t change our position on incentives we’re offering or our plans to make [Youngstown] the preferred and only site” for the expansion, he said. “I don’t want to be too optimistic or too pessimistic” about getting the V&M facility here.

V&M officials mentioned Muskogee in earlier discussions with Youngstown leaders, but there hasn’t been a mention of that city in quite some time, Williams said.

V&M management has frequently talked with officials in Youngstown, Girard and the state of Ohio for more than a year about the project.

Also, the two Valley cities and the state have taken significant steps — including $5 million worth of land acquisition and agreeing to spend $17.4 million in federal stimulus funds for site preparation — to persuade the company to build here.

Williams and Good say they strongly believe that the Valley is the preferred site for the expansion project that would employ about 400 people.

The decisions on if and where the facility would be built is expected by the end of January.

V&M President Roger Lindgren declined to discuss the company’s preferred site or anything about the expansion project. He’s repeatedly refused to comment on the company’s plans.

Among the areas mentioned, Williams said the Valley best suits the company’s needs if it expands.

Williams said Vallourec officials mentioned those assets during the Nov. 2 meeting: the company already has a facility here that employs more workers than its two other North American locations combined; the Valley workforce; the financial incentives put together by Youngstown, Girard and the state; and the proximity of Youngstown to V&M’s main customers in New England, New York, Pennsylvania and the Carolinas.

V&M manufactures seamless tubes used mostly in the oil and gas industry.

The Youngstown plant employs about 450 compared to about 200 at the facilities in Houston and Muskogee, Lindgren said.

To show the benefits of selecting the Valley over Houston, the Ohio Department of Development compared the estimated business tax liability for V&M’s new facility.

The report states V&M would pay $7.4 million annually in taxes in the Valley compared with $21.8 million in Houston before tax incentives. The biggest difference, according to the state study, is V&M would pay $12.8 million in personal-property taxes in Texas compared with nothing in Ohio. If V&M wants to expand in Houston, Douglass said, “We have a toolbox of everything from tax abatements to grants to economic incentives to do the right thing and build” there.

Though V&M hasn’t contacted Houston or Muskogee officials, there’s been a lot of movement in the Valley during the past year regarding a potential expansion.

Youngstown and Girard recently agreed to provide about 200 acres to V&M for the expansion if the company builds here. Most of the industrial-zoned land is in Girard, but is being annexed to Youngstown at the insistence of V&M officials, who want all of the property in Youngstown. The two cities would evenly split 2.75 percent corporate-profit and employee-income taxes.

On top of that, Youngstown spent about $5 million to purchase the land from companies with an agreement from V&M that it will reimburse the city regardless of whether the project moves ahead.

The city, with the help of the state of Ohio, secured about $17.4 million in federal stimulus funds to make improvements to the property.

Also, the state has approved $2.6 million in tax incentives for a potential expansion, and the Public Utilities Commission of Ohio agreed to discount electricity rates at V&M’s proposed facility.

skolnick@vindy.com


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