NLMK plans $80 million project

CORY BYKNISH | HeraldBob Miller, CEO of NLMK, believes the new equipment will help improve the quality of goods made at the plant.

FARRELL – NLMK Pennsylvania Corp. on Wednesday announced it was embarking on a huge, $80 million improvement project for its Farrell steel plant.

The announcement came on the heels of word earlier in the day that the steelmaker was awarded a $1 million state grant to improve its 13-mile rail network at the steel mill.

In addition to the rail improvements, the mill will be adding a reheating furnace, said Bob Miller, president and CEO of NLMK.

“This is a great day not only for the company, but the Shenango Valley as well,’’ Miller said in a phone interview.

The furnace will reheat steel slabs NLMK buys elsewhere that are delivered to the Farrell plant. After the slabs are heated they will be rolled to the desired thickness for a customer and then into steel coils.

The steel rolling process is the industrial equivalent of rolling pie dough with a kitchen rolling pin. With steel, however, it goes in the oven first. Slabs must be heated to red-hot temperatures, usually above 2,200 degrees.

NLMK will begin work on the project next year with a 2018 completion date, Miller said.

The goal is to crank up the plant’s steel production, he added without giving any specific production goals.

The new equipment will produce more steel and increase the quality of the steel the plant produces, Miller said.

The railroad work will be needed to process and transport additional steel production, he added.

The rail project will include rehabilitating 8,300 feet of track, cross ties and ballast and improving grade crossing in the rail network. The company also will replace locomotives, install additional loading docks and modify other docks.

Miller said there are no projections on how many new jobs would be created at the plant. However, the Pennsylvania governor’s office said the rail project would preserve 700 jobs at the steelmaker.

Two months ago United Steelworkers representing production and maintenance employees at the plant ratified a new labor contract. It appears the new contract was a key to sealing the project.

This project comes in at the same price tag as Ellwood Crankshaft Co.’s recent $80 million project to build a crankshaft-forging complex in Sharon. The combination of these two projects, along with Wheatland Tube Co.’s more than $10 million upgrade of its Wheatland tube plant, are the biggest industrial projects within Mercer County in more than half a century in terms of overall cost, even when factoring in inflation.

However, these projects won’t deliver anywhere near the number of jobs at the same sites several generations ago. NLMK once had been a Sharon Steel Corp. mill that employed thousands, and Ellwood is in part of the former Westinghouse Electric Corp. plant that was the area’s biggest industrial employer in its heyday.

The steel industry lost 400,000 jobs – 75 percent of its workforce – between 1962 and 2005. But steel production didn’t decline over that period, according to a study published in the American Economic Review last year. Improved technology eliminated much of the manpower needed for steel production.

Penn-Northwest Development Corp., Mercer County’s lead economic development agency, submitted the state rail grant application on behalf of NLMK.

Michael joined The Herald in 1985 as business writer and is now business editor, overseeing veterans, business and consumer coverage, and takes photos. He graduated from the University of Pittsburgh with a degree in communications, writing and economics.