Osceola Mayor Dickie Kennemore calls Big River Steel “the gift that keeps on giving.”
Kennemore, who heads Kennemore Real Estate — serving the “Osceola, Blytheville, Wilson, Manila, Gosnell, and Keiser real estate market” — also calls it the biggest real estate deal he ever put together. And though he collected no commission for doing so, it’s a nice legacy to have.
After 28 years as Osceola mayor, Kennemore, a Republican, will be leaving office come January, having been defeated last month by Sally Wilson, a Democrat and member of the City Council. It hurt him to lose, Kennemore said, but at 76, he’s also ready to step down from the demanding job.
Big River Steel, which sits on 1,300 acres not far from Osceola in Mississippi County, employs more than 500 workers at an average annual salary exceeding $75,000. When the $1.3 billion plant was announced in January 2013, Kennemore called it a “godsend” to the area. “We’ve struggled to create jobs,” he told Arkansas Business at the time, noting the toll that the mechanization of farming had taken on Delta towns like his.
Now, Big River is growing. In June, just 15 months after the mill held its grand opening on March 1, 2017, the company announced a $1.2 billion expansion, creating another 500 high-paying jobs and doubling its steel-production capacity to 3.3 million tons annually. That’s the “keeps on giving” part of Big River’s initial bequest to northeast Arkansas, what’s been called the biggest economic development project in state history.
He’s proud to have helped bring Big River to the area, Kennemore said, particularly since he was mayor in 2000 and 2001, when employers like textile maker Fruit of the Loom, auto parts manufacturer Siegel-Robert and wire and cable maker Southwire closed.
“I’ve been mayor in a depression and nobody wanted the job,” he said. “But my proudest political moment or my star in my political crown — in my opinion — is that we recruited and got the steel mill.”
A number of satellite companies have joined Big River in locating operations in the region, among them Air Products, which supplies industrial gases to the steel plant; TMS International, which processes slag, a byproduct of steel manufacturing; and Arkansas Steel Processing, which produces flat-rolled steel products.
Kennemore estimates that these companies and others have added another 565 jobs in Mississippi County.
A few more numbers help tell the story: In October, the unemployment rate in the county stood at 4.4 percent, according to the Federal Reserve Bank of St. Louis, a fraction of its Great Recession peak of 16.3 percent in May 2009.
But another part of the story is that even with these new jobs, poverty remains entrenched in the area, visible in the run-down homes and empty storefronts in downtown Osceola and reflected in a median household income of only $36,417 in 2017, far below that of the United States as a whole last year, $61,372.
The poverty rate in Mississippi County was 25.6 percent in 2017, according to the U.S. Census Bureau.
Between 2010 and 2017, Mississippi County’s population declined 9.3 percent, that of Osceola dropped 10.7 percent, and that of Blytheville, the largest city in the county, fell 10.2 percent.
But without Big River Steel? That’s not something most people want to consider. And now Mississippi County, once far better known for the thousands of acres of cotton, soybeans and rice that still figure heavily in the county’s economy, is also a steel-producing center.
David Stickler has been CEO of Big River Steel since the death of John Correnti, founder of the company, in August 2015. Stickler told Arkansas Business that the company’s expansion was planned from the start.
“When Big River Steel’s investors first came together to form and fund Big River Steel’s $1.3 billion construction effort, a decision was made to fund an incremental $110 million to facilitate an eventual expansion,” he said in answer to emailed questions.
“For example, we dug and poured the foundations that would be needed in an expanded facility. We also entered into certain supply agreements that contractually allowed for the greater level of supply needed for an expanded operation.”
Steel prices in the United States surged at the beginning of the year, buoyed by the strong economy and the Trump administration’s 25 percent tariff on foreign steel, though they’ve slipped since their summer highs.
Stickler declined to comment on the effect of the tariff on Big River, saying only that “as a company we support free and fair trade.”
In late summer, reports surfaced that Big River Steel was looking for a buyer and that Big River competitor Nucor Corp. was the favored suitor. Fastmarkets AMM, an industry publication, reported that the price might top $3 billion.
Asked about the reports, Stickler told Arkansas Business, “We are flattered by the attention Big River Steel has attracted but we remain focused on growing and expanding our business in a manner consistent with our original strategic plans.”
The Hard Drive
Big River describes itself as “a technology company that happens to make steel.” And the technology — as evidenced by banks of computers and video screens in control rooms — is impressive, but it’s the 1,500-degree fire that generated literal jaw-dropping awe during a tour last week. Anyone raised in the hellfire-and-brimstone Christian tradition might turn immediately to a “maws of hell” comparison.
Big River calls itself the world’s first “Flex Mill,” a name it has trademarked. It’s a combination of an integrated mill, the kind of traditional steel mill that produces steel from iron ore in a great blast furnace, and a steel mini-mill, which refines scrap steel using an electric arc furnace, or EAF.
It produces a variety of steel products, products used in oil and gas drilling, in electrical generation, transmission and consumption and in transportation.
In its June announcement, Big River said that in addition to doubling its hot-rolled steel production, the expansion will allow it to produce higher grades of electrical steel. Demand for that product is expected to increase amid calls for better energy efficiency and an increase in hybrid and electric vehicle sales.
The Big River Steel project was the first to be implemented under Arkansas’ “superproject” legislation, Amendment 82 to the state Constitution. In 2013, the Legislature approved a multimillion-dollar package of incentives that included a $125 million bond issue. That bond issue included a $50 million loan, which the company paid off in September 2017, 17 years early.
As a real estate broker, Kennemore has considered the impact the company has had on the local residential market. “Before Big River came, we had an enormous surplus of houses,” he said. “You just couldn’t hardly sell a house. And we in the city now — most of the houses that you just had to give them away to get rid of one — well, now, most of our inventory is sold out. And what we do have that comes on the market, it’s pushed the price up.”
Clif Chitwood is Mississippi County’s economic developer. “From my viewpoint, it’s certainly an investment that’s paid returns,” he said of Big River Steel.
The companies that his agency has worked with since its formation in 2002, many of them linked to Big River, are creating a yearly payroll of between $175 million and $180 million, Chitwood said. “That is in exchange for a total expenditure of approximately $44 million in county incentives. So for a one-time investment of $44 million, we’re getting $175 million back every year, which is a phenomenal return.”
Those incentives, he said, included land purchases and the construction of rail spurs, roads, septic systems, wells and other infrastructure needed by industry.
“The addition of Big River, which gave Mississippi County three steel mills, transformed the county in the minds of many people in the steel industry from a bit of an anomaly, a place that happened to have two Nucor mills making completely different products, into a steel center,” Chitwood said. And that, he said, has attracted other companies and the workers they employ.
“The whole steel story over here has been remarkable,” he said. “For the county to convert itself from cotton to steel is highly unusual and we may be a singularity in the United States in that respect.”
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