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AM/NS Calvert

John Mohr, Auburn University
AM/NS Calvert is a large steel-processing facility located in Mobile County near Calvert, an unincorporated community located in both Mobile and Washington counties. Originally constructed and operated by ThyssenKrupp AG of Germany, the facility is now a joint venture between the Luxembourg-based ArcelorMittal and the Japanese company Nippon Steel & Sumitomo Metal Corporation. The AM/NS Calvert facility contains a wide range of state-of-the-art steel-finishing technologies for processing raw steel into refined products for industrial and commercial applications. AM/NS Calvert supplies the auto, pipe, appliance, construction, and other industries in the southeastern United States and throughout the North America Free Trade Agreement zone of the United States, Canada, and Mexico. AM/NS Calvert clients include the Honda and Hyundai automobile manufacturing plants in Alabama.
ThyssenKrupp agreed to locate its new steel-processing plant in Alabama in 2007 after receiving a package of state and local incentives valued at $905 million. Some observers criticized the high cost of the incentives package. Small government advocates considered the project an unacceptable use of tax dollars and argued that the projected economic benefits were unrealistic. US Steel, which operated several facilities in the state, also opposed the project as unfair aid to its competition. Alabama officials who supported the project, including Gov. Bob Riley and his economic development team, defended the incentives by highlighting the various economic benefits promised by the company: ThyssenKrupp had projected direct employment to be 2,700 workers at an average of salary of around $58,000, with many more jobs to be created through indirect employment and structural investment. The company also agreed to maintain an average annual employment level of at least 2,000 workers from 2011 to 2013 or return a portion of the incentive money. The Mobile Area Chamber of Commerce argued that the facility would become a significant source of tax revenue for the school system in Mobile County, because ThyssenKrupp was not exempted from paying school taxes. Alabama voters then approved Amendment 796 to the State Constitution in June 2007, thereby allowing the state to issue up to $750 million in bonds for the purposes of infrastructure improvements and industrial recruitment. The money from this bond issue was used to fund the ThyssenKrupp incentives package, as well as other development projects.
The facility opened in 2010 and was known as ThyssenKrupp Steel USA. It was built as part of a worldwide expansion plan that included a facility in Brazil to produce raw steel for processing in the Calvert facility. ThyssenKrupp invested more money in the facility after its opening to bring its total investment to $5 billion when the Mobile County Industrial Development Board voted to lower the amount of taxes owed by the company. This action raised the total value of the incentive package to $1.073 billion, the largest so far in Alabama history. The figure consisted of $487 million in property-tax abatements, $125 million in sales tax exemptions, and $461 million in cash, worker training, and infrastructure projects. Infrastructure investments included the construction of a specialized $115 million port facility on Pinto Island in Mobile Bay for loading and unloading steel slabs from ocean-going cargo ships that was financed by the state.
The long-term global recession that followed the 2008 financial crisis severely undermined ThyssenKrupp's business plan for the Mobile plant. Ongoing fluctuations in the price of steel and the falling value of the Brazilian currency relative to the dollar meant that the plant was never profitable, despite extra capital improvements and the tax abatements. ThyssenKrupp sold its stainless-steel processing facility to the Finnish company Outokumpu in 2012 and the remaining facilities in Calvert plant to the current joint-venture partnership in 2014 for $1.55 billion. The sale of the Calvert facility at a loss of billions of dollars illustrates the difficulty of long-term planning for both states and private corporations in the current global economy.
The current site encompasses a total of 2.8 million square feet of production facilities on 1,500 acres of land. It contains a hot-strip mill, a cold-rolling mill, and four separate lines for galvanizing and annealing steel. Total employment under ThyssenKrupp management peaked in 2012 at around 2,400 workers in all operations. Under current management, AM/NS Calvert employs about 1,550 workers. AM/NS Calvert's workforce has no official union representation, and its workers are therefore not covered by the national United Steel Workers' collective bargaining agreement with ArcelorMittal. Alabama's low level of union activity and legal status as a "right to work" state are frequently cited as important factors in the decision of large industrial firms to locate in Alabama.
Published:  August 1, 2016   |   Last updated:  August 1, 2016