Saturday, 24 March 2012 15:39

Decatur Plant on a roll

Nucor to invest $43 million in River City facility, receive $3.5 million in tax breaks

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The Decatur Industrial Development Board on Friday approved $3.5 million in tax breaks for a $43 million Nucor expansion that will create eight jobs.

Nucor’s abatement application described four projects with capital investments ranging from $2.8 million to $29 million.

In its application, Nucor said the investments “would enhance the security of all at Nucor and would help to secure the future of Nucor’s operations in Decatur.”

According to Morgan County tax records, the assessed value of Nucor’s Decatur plants and property was $676.3 million in 2010.

“I don’t want the impression to be that we’re just rubber-stamping these projects,” IDB chairman Jack Fite said after the board unanimously approved all four projects. “There’s a lot of thought that goes into every project.”

The IDB board has never rejected an abatement request.

“We get a number of requests that never even get to the board,” IDB attorney Barney Lovelace said. “We do some vetting there.”

Nucor Division Controller Chad Potter said a $15.2 million computer project would add eight permanent jobs and numerous contractor jobs during installation. The abatement request is only for taxes on $8.2 million of the investment, Lovelace said, because the other $7 million in consulting fees is not subject to an abatement.

Nucor will spend $3.1 million improving its pickling line, an acid bath that removes a layer of oxide from steel.

“It’s not a real nice, smooth surface, so we run the steel through a hydrochloric acid bath in the pickling line,” Potter said. “It goes in black and comes out this nice, gun-metal gray. It improves the surface quality. We sell that or we take it and further process it.”

The improvements will enable the steel to run through the pickling line more smoothly, limiting defects in the steel. It will include hoods that direct fumes from the pickling line to a scrubber.

A $2.8 million project will upgrade Nucor’s continuous castor. The castor cools the liquid steel into a solid, and the improvements will help employees monitor the process.

The most expensive project is a $29 million addition of compensators on the electric arc furnace, which Nucor uses to melt scrap steel. The improvement will permit Nucor to use a higher power input on the furnace, thus reducing the time it takes to melt the scrap.

“In its current form, it hinders our ability to produce more steel,” Potter said of the furnace. “Electricity is the agent to melt the steel. When you can melt it faster, you can produce more product.”

The IDB board approved $1.08 million in property tax abatements over the next 10 years. It approved abatements of $2.39 million in sales and use taxes during the construction phase.

The abatements do not affect school taxes. Lovelace estimated that Decatur City Schools will receive $100,000 per year in property taxes from the expansions. During construction, about $300,000 in sales and use taxes will benefit the Decatur, Morgan County and Hartselle school systems.

Lynn Fowler, chairman of the Morgan County Economic Development Association, said Nucor’s expansions are a welcome change from problems at Trico Steel.

Trico received $100 million in state incentives to build the plant in 1997. It was plagued by equipment problems before declaring bankruptcy and closing the plant in 2001. In 2002, Nucor purchased the plant out of bankruptcy for $117 million.

Nucor employs 716 at its Decatur mills. Its annual payroll is $56.5 million, an average of $79,000 per employee, including production bonuses.

Nucor laid off no employees during the recession, despite a national decline in steel sales. Steel demand nationwide fell 43 percent in 2009.

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