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City stays upbeat on $1B V&M growth plan
V&M’s Youngstown employees are working only 24 hours a week due to the ailing steel industry.
YOUNGSTOWN — The city administration is hopeful enough that V&M Star Steel will proceed with a potential expansion project that the board of control agreed to a one-month extension on a purchase option for land needed by the company for the nearly $1 billion proposal.
The optimism remains even though V&M Star laid off about 50 of its workers last month and delayed a decision on moving ahead with the project.
Also, V&M Star President Roger Lindgren confirmed Thursday that his employees had their weekly hours reduced from 40 to 24 because of the struggling economy.
The company employs more than 400 workers at its Youngstown plant.
Lindgren declined to discuss the proposed expansion.
The city board agreed Thursday to the one-month extension on the $360,000 purchase of 15 acres at the former Demsey Steel facility in Girard. The city’s six-month purchase option for that property, near V&M’s location on Martin Luther King Jr. Boulevard in Youngstown and near the Girard line, expired Wednesday.
The city also has an option-to-buy agreement with Brier Hill Slag Co. in Youngstown for 80 acres at a cost of $3.9 million. There’s still three months’ worth of options on that proposal.
The city wants to buy 12.5 acres owned by Shelly & Sands at a cost of up to $400,000, but hasn’t signed an option-to-buy deal with that company.
The three properties are needed by V&M if it is to expand, said city Finance Director David Bozanich, a board of control member.
V&M has agreed to pay the city for the land purchases regardless of whether it moves ahead with an expansion that would add about 400 jobs with an average annual salary of $80,000.
The city is holding off on finalizing any of the property deals until V&M can reach an agreement with Norfolk Southern to purchase about 30 to 40 acres from the railroad company needed for the potential expansion. That land is vital to the project, Bozanich said.
The state announced last month that it was providing the $20 million from the federal stimulus package needed to buy the railroad property and relocate the rail line to help V&M.
Talks between V&M and the railroad company are still ongoing.
“They’re going well,” Bozanich said of the negotiations, “They are time-consuming issues due to the final project layout of where the railroad sits and where it will sit.”
Bozanich said he hopes the negotiations between the railroad and V&M, which manufactures seamless tubes used mostly in the gas and oil industry, will wrap up shortly.
“It’s real simple,” he said. “We have to have it done by 30 days.”
He added that he expects the negotiations to be complete by that time.
While Lindgren didn’t say specifically what’s causing the downturn in his business, a complaint filed with U.S. trade officials by the company and other producers of steel pipes used in gas and oil drilling sheds some light.
The complaint filed Wednesday with the federal Commerce Department and the U.S. International Trade Commission allege Chinese producers have sold supplies of the pipe at prices below the cost of production — known as “dumping” — and then benefit from massive government subsidies. That has led to financial declines for American companies making the same product.
skolnick@vindy.com