Trading Yadkin River Control For Jobs?
Alcoa says it has a company ready to move into the former aluminum smelter in Badin and create 450 high-paying jobs. But the deal will only happen if Stanly County officials drop their long-standing opposition to Alcoa's quest for another 50-year hydropower license on the Yadkin River. Stanly County commissioners believe the state should control those lucrative dams and use them to drive economic development. WFAE has learned that negotiations between Alcoa and Stanly County have become so tense that a mediator is now involved.
Here's a look at the track record of the company promising to create those jobs if Stanly County and Alcoa can reach an agreement: Clean Tech Silicon and Bar LLC has never actually created any jobs. The company was formed in August specifically for this project in Badin. But the key players in Clean Tech do have a track record that includes at least one big success, a misfire and some hard-bargaining.
First, the big success: a steel mill that was built in Columbus, Mississippi in 2007. Today, more than 550 people work there earning an average of $80,000 a year. "That project has many of the same similarities as what we would like to put in Badin, North Carolina," says Dave Stickler. He's the dealmaker for Clean Tech - a role he also played for the Columbus plant.
The head of economic development for the Columbus area - his name is Joe Max Higgins - says officials there were wary about coughing up incentives worth more than $100 million for a brand new company with no track record. "But, we knew John Correnti was a master steelmaker who knew what making steel was about," says Higgins.
John Correnti is the other key player the Columbus and Badin projects have in common. He was CEO of Nucor Steel until 1999 when he left in a bitter dispute with management. Correnti's been out to compete with his old company ever since and the Columbus steel mill was his big play. But just months after it opened, Correnti sold his stake to a large Russian investor and was gone.
So, could a big investor also come in and buy out the guys making promises to Stanly County?
"It's certainly an option that would be on the table," says Stickler, but adds such an arrangement is not "what is currently planned." Stickler won't disclose the name of Clean Tech's largest investor but he says it's not Alcoa, which is investing $50 million in the company for a 20 percent stake.
While local officials in Columbus, Mississippi may have initially felt abandoned by Correnti and Stickler, they're happy now. The steel mill is expanding and the average salary of its workers is $10,000 higher than originally promised. But here's a key difference between that project and what's being proposed for Badin: The Mississippi mill makes sheets of steel for cars and appliances. In Badin, Clean Tech plans silicon metal which goes into everything from cosmetics to solar panels. The other half of the site will make rebar from recycled steel.
North Carolina steel industry analyst Alex Tereszcuk says that'll make sense as the economy improves. "That's where the growth is going to be if we're talking about infrastructure improvement - construction of roads, bridges and buildings - you need rebar to do that process," says Tereszcuk. At the moment, however, U.S. rebar plants are only operating at about 60 percent of their capacity. Stickler says that makes now a cheap time to build a plant that can sell rebar for less than its competitors.
But this also brings us to the misfire on the record of the guys behind Clean Tech. Three years ago Stickler and Correnti promised to create 200 jobs that pay $70,000 on average at a new rebar plant in Amory, Mississippi. The groundbreaking was a big to-do with golden shovels and the governor on hand. The plant was supposed to be operating by 2010. It has yet to be built.
Stickler says it was bad timing. "One of the investors got caught up in the Wall Street downturn and had to remove themselves from the Amory project," explains Stickler. If that were to happen in Badin, Stanly County Commissioners could end up dropping their opposition to Alcoa's 50-year hydropower license and have no new jobs to show for it. Stickler says it's a valid concern, so he's giving Stanly County extra assurances. He won't be specific in public other than to say he's securing loan guarantees and that the investors he's lined up for Clean Tech aren't likely to drop out if Wall Street tumbles. Given that, Stickler says, "any reasonable person would recognize that the risk of a project beginning and not being completed in North Carolina has been mitigated."
So far, Stanly County Commissioners are unconvinced. And this is a good place to touch on the "hard-bargaining" track record of Clean Tech's backers. Larry Collins has been opposite them at the negotiating table. He's the mayor of Ontario, Ohio. "Mr. Stickler did what he was hired to do and squeezed every piece of money he could get," says Collins. "He was very nice, but very forthright."
Last fall, Collins made a deal with Stickler and Correnti for a new silicon metal plant that would bring more than 800 jobs. Ontario and the state of Ohio promised incentives worth $95 million, plus a big discount on electricity. Six thousand people in the struggling community had already signed up for a training program to work at the new plant. And then, on Friday, July 1, 2011, Mayor Collins got a call.
"They said they were not coming here," says Collins. "Later we found out it was Mississippi, which was the choice of the chairman of their board, John Correnti." Mississippi legislators approved a slightly smaller incentives package than Ohio, but the state also has far fewer unionized workers.
Correnti has not elaborated on the last-minute switch, but he and Stickler have established a clear pattern of tough negotiating. Stanly County Commissioners must soon decide if they're willing to take a risk on the track record of these same men. . . or keep up their fight to force Alcoa off the Yadkin River.