Thursday, July 1, 2010

Longview Port Attracts Third Steel Manufacturer

The Washington state Port of Longview has signed a 12-year lease with a subsidiary of Luxemburg-based ArcelorMittal that will see the construction of a $9 million pipe fabrication facility at the port.

Under the terms of the deal, the port will lease 15 acres of its West Industrial Park to contractor IDM Longview. IDM will build the proposed 156,000 square foot manufacturing facility and sub-lease it to ArcelorMittel's New Jersey-based subsidiary Skyline Steel. The port will also lease 20 adjacent acres--to be used for storage and parking--directly to Skyline.

At the end of the lease in 2022, Skyline has the option to buy the facility from IDM. The lease also provides that if Skyline does not buy the facility at the end of the 12 years, the port can purchase the facility from IDM for a maximum of $9 million.

ArcelorMittel, the world's largest steel manufacturer, plans to use the Longview facility as Skyline's main production facility for western North American, with a distribution area ranging from Canada to Mexico. The facility will manufacture large spiral-welded and straight-seam steel pipes mainly for the construction industry.

Because the lease contains a buy-back clause that could lead to the port authority owning the pipe factory, IDM will be required to pay prevailing, or union, wages during the construction of the facility--whether or not they hire union workers.

The pipe facility, the third steel-manufacturing facility at the port, is expected to open in February, 2011. Once open, according to the lease, Skyline will be eligible for a monthly lease break of $3,500 if it can generate ship calls to the port.