Williams, Melfi: Success shows value of regional cooperation
VM Star Expands
VM Star Steel announced a $650 million expansion in the Mahoning Valley during a Feb 15, 2010 news conference in Younstown, OH.
HAPPY MAYORS: While negotiations over V&M Star Steel’s $650 million expansion at times were tense, Youngstown Mayor Jay Williams, left, and Girard Mayor James Melfi were all smiles Monday when the company announced the project will be built here.
NEW FACILITY: Construction on V&M Star Steel’s $650 million expansion will start next month, company officials said. The blue section of the drawing is the addition location.
ALREADY OPERATING: This is the site of V&M Star Steel’s current mill on Martin Luther King Jr. Boulevard in Youngstown. The mill also is near the city of Girard.
YOUNGSTOWN — Though negotiations were often heated between Youngstown and Girard on a plan to persuade V&M Star Steel to expand here, the cities’ mayors said the result was well worth the challenges.
That result was Monday’s announcement that V&M would invest $650 million in an expansion plant next to its current location on Martin Luther King Jr. Boulevard in Youngstown on the Girard border. Construction is set to begin next month and will take 18 months to finish.
The expansion will create 400 construction jobs. When the plant opens, there will be 230 employees working directly for V&M and 120 specialized service providers who’ll work at the plant.
Most of the expansion location is on about 191 acres that Girard allowed Youngstown to take through annexation for the project. V&M would consider expanding here only if all of the land was in Youngstown.
But giving up that land was a major sticking point in negotiations between the two cities that dragged on for about four months.
“There were a couple of occasions where I feared that we would not be able to get beyond our past and beyond our inability to historically work together,” Youngstown Mayor Jay Williams said. “But we all realized that the greater good of the [Mahoning] Valley came first.”
Because of the success of this deal, officials in Valley communities now understand the importance of working together to attract future projects, he said.
“This is the first time the Mahoning Valley’s been challenged with this type of negotiations with another city’s land,” Girard Mayor James Melfi said. “At the end of the day, we’re pleased. How can you not be?”
The two cities will share a 2.75-percent income tax to be assessed on all employees, including the construction workers, at the facility as well as a 2.75-percent profit tax on V&M’s expansion plant.
The annual income tax when the new plant is fully operational should be between $600,000 and $700,000, said Youngstown Finance Director David Bozanich.
Bozanich and Williams said they were unsure about the amount of the annual profit tax because it depends on the state of the company’s business.
Williams called V&M’s announcement “one of the linchpins of the success” of the Valley’s economic renaissance.
“I hope that we all recognize that when we work together and do things together and check our egos at the door in the best interests of our community, great things happen,” said U.S. Rep. Tim Ryan of Niles, D-17th, whose office was involved heavily in the negotiations. “We are changing our reputation, and we’re seeing the results of that.”
Those from outside the Valley are investing in the area, he said, in recent months mentioning V&M, based in Paris, France; VXI Global Solutions, a Los Angeles call-center company; Severstal, a steel company based in Russia; and Revere Data of San Francisco.
Besides the two cities and Ryan’s office, negotiations with V&M also included the Regional Chamber and state officials.
“This is an example, I believe, of a public-private partnership involving every level of government,” said Gov. Ted Strickland.
The $650 million V&M project is “probably one of the largest investments being made in North America in these challenging economic times,” he said.
The state committed about $25 million to the V&M project with about $19 million coming from the federal-stimulus package.
Without the stimulus money, Strickland said the V&M project likely wouldn’t have occurred.
“The resources would not have been available for this purpose,” he said.
Ryan agreed, adding that “the state doesn’t have” the money that came from the stimulus package.
“Without the stimulus money, this wouldn’t have happened,” he said.
State Sen. Capri Cafaro of Liberty, D-32nd, said, “This is an unprecedented opportunity to create jobs in the Mahoning Valley that will have a far-reaching positive impact on our local economy. Thanks to the efforts of business and labor leaders, elected officials and members of the community, things are moving in the right direction.”
State Sen. Joe Schiavoni of Canfield, D-33rd, added, “This project is going to put many people back to work in the steel industry and create additional jobs in other related businesses.”
skolnick@vindy.com
SEE ALSO: V&M delivers plant, 350 jobs.
Here are key points that led to the announcement by V&M Star Steel that it is building a major expansion project in Youngstown.
September 2008: V&M and Ohio Environmental Protection Agency officials begin discussions on an expansion project near the company’s location on Martin Luther King Jr. Boulevard in Youngstown, near the Girard line.
December 2008: Youngstown signs purchase option deals with three companies to provide about 125 acres worth of land for V&M’s proposed expansion project. V&M agrees to reimburse the city for the purchases, which cost about $5 million.
February 2009: The project hits a snag as the company struggles to sign a deal with Norfolk Southern to relocate a railroad line that runs through the site of the planned expansion.
March 2009: V&M delays its decision on the expansion project till early 2010. The company had expected to decide by September 2009. Facing financial struggles, V&M laid off about 50 local workers and cut the hours of most of its other employees. Also, the Public Utilities Commission of Ohio approves discount electric rates for the V&M proposed site and allows FirstEnergy Corp. to recover money from its other customers.
April 2009: The state announces it would provide close to $20 million from the federal stimulus package to buy the Norfolk Southern property and to make improvements to the land needed by V&M for an expansion. The city comes to a deal two months later for the needed railroad property.
August 2009: Youngstown and Girard officials hit a major snag in negotiating the transfer of property in Girard to Youngstown for the expansion project. V&M insists that all of the land be in Youngstown. The problem is some Girard city officials, most notably Mayor James Melfi, are upset about the amount of land his city will lose. It ended up being about 191 acres. The deal calls for the two cities to split a 2.75-percent income tax to be accessed on all employees at the proposed new facility and a 2.75-percent profit tax on V&M’s expansion plant. A tentative deal between the cities is reached toward the end of the month.
October 2009: Melfi objects to the language in the deal between the two cities and says he won’t rush an agreement that is bad for Girard even though V&M officials wanted a deal done by late August. After further negotiations, a deal is approved in mid-October.
November 2009: Youngstown Mayor Jay Williams meets in Paris with officials of V&M’s parent company, Vallourec Group. The mayor said the meeting went well and says the Mahoning Valley location is the company’s preferred site for an expansion.
December 2009: The U.S. International Trade Commission votes to impose duties on pipes from China used mostly in the oil and gas industries, V&M’s business. V&M and other companies testified that the Chinese government had been subsidizing its pipe industry so it can unfairly dump products in the U.S. market.
February 2010: V&M announces it’s building its expansion facility in Youngstown.
Sources: Vindicator files