Steel Enjoys Resurgence Across Northeast Ohio
A train courses through Youngstown, its cars loaded with scrap metal. At the crossing wait several semi-trucks, bearing raw materials for a local plant. Youngstown's name is synonymous with steel, and from his office on the 16th floor, Thomas Humphries watches the renewed activity happening across the city. Humphries himself worked for Republic Steel during the industry's hey-day of the 1960s and 70s.
"I remember you could always tell if the economy was good, by how lit the sky was," recalls Humphries. "Because of the furnaces blasting. It would be an orange glow at night. And you would see women…cleaning their front porches from the ash that would fall all over the community because of those mills, there were so many."
Humphries is now president of the Youngstown-Warren Regional Chamber of Commerce. He's seen the industry go through its highs and lows, including the massive shutdowns of the 1980s. But Humphries points off to the horizon…where a row of construction cranes are piecing together a new, $650-million plant for V & M Star, a leading producer of steel pipe. Full production is expected by the end of 2012, and the company will add 350 new steelworkers to its roster. Humphries keeps a chrome-plated shovel from the site's groundbreaking.
"It is the rebirth, in a sense, of the valley," says Humphries. "It's been a long time since we've seen a dozen cranes in the area, doing construction in new facilities. In 2010, it was one of the largest projects in the country, to be announced, and to have it in your hometown, you feel very fortunate."
Rebirth may be a stretch, but certainly part of Youngstown looks less like a graveyard. Other parts of northeast Ohio are also experiencing a bit of a steel buzz. U.S. Steel is investing nearly a hundred million dollars in its operations near Lorain.
Ned Hill, Dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University, says there are several things driving the uptick.
"First, five to six years ago, the state changed its business tax structure," explains Hill. "So essentially a profits tax, inventory tax, and a tax on plant and equipment, was replaced with a much broader, flatter tax, that also starts to tax services and lower the tax burden on manufacturing. So we're now beginning to see the benefits of that change."
Hill adds natural gas drilling is also driving up steel. In fact, V & M Star's new plant is making the large steel tubes essential for the Utica-Marcellus Shale operations going on in Ohio, Pennsylvania, West Virginia, and New York. That proximity to fracking operations has nice dividends for the state’s steel makers, says Tom Stewart, Executive Vice-President of the Ohio Oil and Gas Association.
“That gives them security of supply, it washes out volatility in the natural gas prices that they must pay, and they love that dependability factor of local supply," says Stewart. "In fact, local supply can save consumers …like steel industries… upwards of $60-million a year by avoidance of interstate transportation costs and through price mitigation of having that incremental supply coming in the system right outside their back door.”
And there's another industry that's helping. At General Motor's metal fabrication plant in Parma, robotic arms press, cut, and weld pieces of steel. GM's double-digit growth in sales from last year - particularly of its Ohio-made Chevrolet Cruze - has plants like this one working around the clock. Visiting U.S. Representative Betty Sutton says the automotive and steel industries are linked, so this bodes well for many steel-making communities in her district.
"It's important for our automotive industry to stay strong, because there are so many auto and related jobs, including in steel and parts," says Congresswoman Sutton. "Ten jobs are supported by every auto manufacturing job, so it's critically important that we remain a leader well into the future, because manufacturing has to be a key part of our future success, not just part of our history."
The auto industry's drive for better fuel efficiency has also lead to lighter, yet more durable grades of steel.
Many manufacturers are reinvesting in their technology, to accommodate the latest trends and demand. Lorrie Crum, spokeswoman for the Timken Company, says its considering a $225-million upgrade at its Canton plant. She says it would be the single largest investment since the facility was built in the 1980s, and would boost Timken's production by at least 20-percent.
"Our steel is industrial technology that is focused on very high strength and high performance applications: deep well drilling and wind turbines, and heavy machinery where you really need very high performance for engineered steels, that are performing hard work," says Crum.
But for all of these developments, the heyday of the steel industry is long-gone in Ohio, says Ned Hill. He says nothing will compare to half a century ago, when steel was king.
"In the 50s we were building the interstate highway system, which required a lot of steel," says Hill. "We were doing major city-building, because all of a sudden this new form of housing called the suburbs occurred. And the suburbs actually used a lot of steel. Think about all those shopping malls. And all that massive building for downtown skyscrapers took place. Well, it's all been built! So you had no one to buy the stuff."
Nonetheless, analysts predict the outlook for steel consumption will continue to rise over the next year or two....or at least remain stable. So, steel’s surprising Ohio comeback --albeit a small one -- looks pretty solid.