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Arkansas site selected over Cates Landing for plant; incentives the difference-maker

Arkansas site selected over Cates Landing for plant; incentives the difference-maker

By: John Brannon Messenger Staff Reporter

By JOHN BRANNON
Messenger Staff Reporter
Tennessee’s refusal to buy equipment for an Ohio-based corporation may have been a major factor in losing a $500 million steel mill to Arkansas.
Warren Fabricating and Machining Corp. — “WarFab” — of Warren, Ohio, chose Blytheville, Ark., over Cates Landing in Lake County as the site for its new plant.
Cates Landing, a $22 million economic development project, is located on the east bank of the Mississippi River about 10 miles from Tiptonville.
On Feb. 25, WarFab formally notified Tennessee Department of Economic and Community Development (ECD) commissioner Matt Kisber of its decision.
Over a period of several months, both Tennessee and Arkansas competed for the plant. Both offered WarFab a “package” of incentives.
But WarFab wanted Tennessee to purchase some equipment, including a huge furnace with a price tag of $7.5 million, according to Kingsley Brocik, ECD administrator of business development.
And that was something Tennessee was not able to do “from a legal standpoint.”
“It was a substantial amount of money,” Brock said. “Purchasing equipment for companies is not something we’re able to do. That was one of the stumbling blocks for the company. We did not put money in for equipment, which is one of the issues they had. I know they were disappointed with it. Arkansas figured out a way to do it. I don’t know the details of it.”
Instead, Tennessee offered to secure a federal grant to help WarFab offset the equipment costs. WarFab turned it down.
Joint effort
Brock said local, state and federal officials were involved in a campaign to convince WarFab to choose the Cates Landing site.
Included in the mix were Lake County Mayor Macie Roberson, Northwest Tennessee Port Authority chairman Jim-my Williamson, ECD and the Tennessee Department of Rev-enue, the Tennessee Department of Transportation, Congressman John Tanner and the Tennessee Valley Authority.
“We worked this project very hard,” he said. “We went to the mat on it because we wanted it very badly for Cates Landing and Lake County.
“The commissioner was very involved himself and consulted with the governor (Phil Bredesen) numerous times on it. Arkansas apparently put together a little better proposal.”
Disappointed
In an interview this week, Brock said Bredesen and Kisber and state revenue commissioner Reagan Farr “have done a great job” the last two years in making Tennessee competitive by increasing job tax credits and focusing on training and infrastructure needs “and going after these big deals.”
But you reach a point where you put your best foot forward and that’s all you can do. “At some point you have to say, ‘We put our best proposal on the table,’” he said. “You can’t keep going back and getting in a bidding war with another state. We land a lot of projects. There are some that we don’t. We compete very aggressively and want every one of them. But it’s a competitive business.”
Tennessee’s proposal to WarFab, he said, was a very aggressive one. “The only thing we did not address to their satisfaction was the equipment needs,” he said. “We wanted the project. I thought we had a very good shot at it because they really wanted to be at Cates Landing. That was their preferred site.
“I am disappointed in not landing this project. It was an important project for the area, and we really wanted it.”
Incentives
Tennessee’s package, valued at $219 million, contained a rich lore of inducements. It included tax abatement, job tax credits, job training, as well as state assistance with what is called “infrastructure,” meaning roads and railroad systems in the Cates Landing area. There was also a commitment to help build the deep water harbor.
And that’s not all the “package” contained. There was also “up-front” money.
“I’d rather not get into the details without getting permission from the commissioner to talk in detail about the money,” Brock said.
And still another part of the package was what TVA was prepared to do.
“The corporation (WarFab), based on their electric load, was projected to save a substantial amount of money through TVA’s enhanced growth credit program,” Brock said.
In December 2007, Kisber led an ECD team to WarFab’s headquarters to present Tennessee’s package of incentives. In early February, Kisber sent WarFab a revised presentation. “That was our final proposal,” Brock said.
And what of the Arkansas package? Brock and other officials agree it totalled about $60 million to $70 million in incentives, the exact details of which are not revealed.
Calls to Chamber of Commerce officials in Blytheville were not returned.
Big operation
Brock said the initial publicity that the WarFab plant would provide 500 jobs was incorrect. It’s much more than that. He said the overall operation would be comprised of a steel mill plant, a fabrication shop, a heat treatment facility and a melt shop. “So when you total all these, the job creation was projected to be from 850 to 1,000,” he said. “The initial phase was going to be 500.”
Optimistic
Brock said Tennessee lost this one but there are other industrial prospects waiting in the wings. Cates Landing is a natural draw for industry that needs to be located on a major waterway and also have rail and road access.
“We want something out there very badly,” he said. “I think it’s just a matter of time. It will happen. I’m very optimistic for the future of the area as the port facility continues to grow.”
The money trail
Roberson and Williamson said up-front money made the difference in this deal.
“Up-front cash money,” Williamson said. “But that’s the way it is. You win some, you lose some. We will eventually get some industry in here. I don’t like to lose industrial prospects, especially this one. It would have been a great anchor for getting the port up and running. Part of the state’s commitment was to build the port.”
Roberson said he isn’t upset too much about losing the plant. “Money. That’s what it is. Cash money that Arkansas is giving them,” he said. “And it’s easy money for somebody to take. It’s one thing to give away the farm. But if you’ve got to give away the farm and the cattle, too, it’s not worth it.”
Big outfit
According to its Web site — www.warfab.com — Warren Fabricating and Machining Corporation has three plants in Ohio and is “a unique manufacturer specializing in large steel fabrications and heavy machining.”
“The main industries we service are surface mining equipment, steel mills, power generation and large press manufactures,” the Web site states.
Published in The Messenger 3.6.08

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