Hutchinson: US Steel Project Positions Arkansas to Attract Automaker


Hutchinson: US Steel Project Positions Arkansas to Attract Automaker
Secretary of Commerce Mike Preston, left, looks on as Gov. Asa Hutchinson discusses U.S. Steel's plan to build a $3 billion mill in northeast Arkansas. (Scott Carroll)

Gov. Asa Hutchinson and Secretary of Commerce Mike Preston on Wednesday said a $3 billion U.S. Steel mill being built in Osceola will help advance the state's long-held goal to land a major automaker.

The mill, the largest economic development project in state history, will be capable of producing 3 million tons of high-end steel annually for auto manufacturers. 

"This puts us in a better position to say to the automobile industry, 'Locate in Arkansas. Put your next manufacturing facility here,'" Hutchinson told reporters.

Combined with U.S. Steel's Big River Steel mill in Osceola, the two plants form a mega mill capable of producing 6.3 million tons per year. Preston said automakers that are already buying from the company and looking to cut shipping costs might look harder at northeast Arkansas for their next facility. 

He declined to say whether the state was actively pursuing an automaker.

"We're always looking for our next opportunity in the automobile industry and now's a good time to do that," Preston said. 

Last year, Arkansas landed a smaller automaker in electric vehicle startup Canoo Inc. The company announced that it was moving its headquarters to Bentonville and opening a low-volume production facility and research and development center in the region.

Improving the state's chances for big-name car manufacturer is just one of the secondary benefits of the mill. The Department of Commerce estimates that for each of the 700 direct positions created by the mill, nearly three more will be created in the supply chain. About 2,000 temporary construction jobs will be created.

Hutchinson pointed to other "intangible" benefits.

"It is the success, it is spurring the economy on in ways that you really can't measure ... and the fact that Arkansas is going to play such an integral role in American-produced steel is pretty exciting," he said. "It's one of those calling cards. And you think about national security issues — one of the challenges is the import of steel from across the globe. Well, the more we produce in Arkansas and here in the United States, it's an intangible. It helps our entire country."

The mill's direct and indirect jobs, 900 in total, will account for $95 million in annual payroll.

With an average salary above $100,000, Preston was not concerned about filling the positions in a competitive job market. Workers have historically come from around the region to work at the mills in northeast Arkansas, and Arkansas Northeastern College in Blytheville has helped grow the labor pool with its two-year steel technology program.

Mississippi County has also given workers a good reason to relocate. The county is offering to pay 10% of the cost of a new home up to $50,000 for employees at the new mill. The incentive is funded by a half-cent economic development tax that voters first approved in 2003.

"I think people are going to want to come to that market," Preston said. "You might have people traveling in (to work) for a time but ... ultimately we'd like to get them here in Arkansas and have them become a resident of the state."

U.S. Steel qualified for state incentives including the Tax Back program, which provides sales and use tax refunds on the purchase of building materials and taxable machinery, and Create Rebate, an annual cash rebate based on the number of jobs added by a company. 

Final terms of the incentives were still being negotiated but lawmakers have authorized up to $11 million in annual income tax credits for the company and $50 million from the Governor’s Quick Action Closing Fund to be used for infrastructure. Preston said part of the infrastructure funds will be used to build rail spurs to ensure U.S. Steel can transport scrap and finished material to docks on the Mississippi River. 

Preston said supply chain issues that have disrupted the economy aren't expected to affect U.S. Steel's timeline for the project. The company wants to begin building in the first quarter of 2022 instead of waiting for the supply chain to possibly tighten, or for inflation to rise. And with the passage of the President Joe Biden's infrastructure law, which includes billions in funding for electric and alternative fuel vehicles, U.S. Steel sees an immediate need for its product.

The mill is expected to be completed and fully operational by 2024. 

It set a goal for zero-carbon production by 2050, looking to build on Big River Steel's federal recognition for environmental sustainability efforts and energy efficiency performance. Big River was the first in the world to receive a Leadership in Energy and Environmental Design (LEED) certification. 


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