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By Jaclyn Diaz
Heavy industry or hospitality jobs? Town leaders, a local union, and two companies are at odds over the planned reopening of a steel mill in a small South Carolina harbor town, where some would prefer to see shops and restaurants.
The 48-year-old Georgetown mill has kept residents and workers on a roller coaster for years, and some city leaders are ready to get off, sources told Bloomberg BNA in recent interviews.
Plagued by bankruptcies, layoffs, and repeated shutdowns over the past 12 years, the 600,000-square-foot mill closed in 2015 for what was thought to be the last time, Mayor Jack Scoville told Bloomberg BNA. As the facility lay dormant, the city began looking at redevelopment options.
But a tentative deal between two major steel companies may reopen the mill. That news has divided city residents. Those in favor of redevelopment think Georgetown should move away from its reliance on manufacturing. Others think Georgetown was built on heavy industry and should stay that way.
Liberty House Group, a London-based steel producer, reached a tentative agreement in April to purchase the facility from ArcelorMittal. The two sides are still negotiating, spokesmen for both companies told Bloomberg BNA.
The deal is expected to create more than 300 jobs, and former steelworkers are ready to get back to work, James Sanderson, the president of United Steelworkers Local 7898, told Bloomberg BNA. The local negotiated a tentative deal with Liberty House in the event it opens the mill.
Local 7898 represented the ArcelorMittal workers, some of whom went to work at a nearby paper mill while others moved to the company’s plants in Cleveland and Burns Harbor, Ind., Sanderson said.
Some people in Georgetown aren’t optimistic that Liberty House can succeed where others have failed. They’re in favor of rezoning the area to bring retail and restaurant businesses to the waterfront property.
“People are looking for 1950s jobs, but we have to look to the future,” Scoville said.
Georgetown’s population is 9,024, according to U.S. Census Bureau data. The city, more than an hour north of Charleston, has the second-largest seaport in South Carolina. It also has a big historical footprint that goes back to the pre-Revolution era. That history should be what brings people into the small town, Scoville said.
“The mill sits right on the edge of a historical district. Rezoning would be more beneficial. The hope would be for a developer to come in and make a multiuse facility,” he said.
The Georgetown City Council is now looking into rezoning the area.
The city’s redevelopment proposal would rezone the mill property for mixed use, preventing heavy industrial use. But it contains a grandfather clause that would allow Liberty House to operate the site as a steel mill indefinitely. If Liberty House can’t make a go of it, the industrial zoning won’t be available for any other company.
The mill sits on the Georgetown harbor at the Sampit River. The mayor envisions seafood restaurants or retail shops on the spot.
Nonindustrial businesses could bring hundreds more jobs than the steel mill could, Scoville said.
“If they want to spend $20 million investing in the mill and bring in 300 jobs, then I fully support that,” he said.
But based on past experiences, he isn’t confident the mill will last more than five years, if that. By rezoning the space, Georgetown would open the door for retail businesses if the mill fails.
ArcelorMittal threatened legal action against the city if the ordinance interferes with a potential sale.
There have been issues with the mill’s property in the past, Scoville said. Barges can’t easily access it to transport material in and out of the facility. From what he’s seen, that has contributed to past owners leaving.
Korf Industrie, a German company, first opened the plant in 1969, and it has changed hands at least four times since then. In the 1970s, the plant employed an estimated 1,500 workers. As mill ownership changed hands over the years, hundreds of workers were laid off.
Kuwait Investment Authority bought the mill in 1985 when Korf filed for bankruptcy. Bain Capital stepped in in 1993 and merged it with GS Technologies to form GS Industries. GS declared bankruptcy in 2001, and Mid-Coast Industries took over. When Mid-Coast filed for bankruptcy in 2003, International Steel Group came in. Mittal purchased International Steel in 2005 and merged it into what became ArcelorMittal.
The mill has shut down three times since 2002: once in 2003, again in 2009, and most recently in 2015. About 200 workers were laid off when ArcelorMittal pulled out.
ArcelorMittal had to refocus on its “core strategic markets” in the U.S., its carbon products, the company said of the decision to close down.
Liberty House is aware of the mill’s history and is ready to dive into the troubled property anyway. If successful, the mill would be the company’s first major U.S. investment, Eoghan Mortell, a company spokesman, told Bloomberg BNA.
“Regarding matters related to Georgetown port, we’re confident there are solutions available and we are discussing these at present,” he said.
The company couldn’t go into specifics of the plans for the mill, but Mortell said company leaders will apply a turnaround model that has been successful at other fledgling facilities they’ve taken over.
“I think it’s fair to say that Liberty has a good track record of acquiring metals businesses that are struggling and restoring them to profitability by optimizing the use of the equipment and integrating these businesses with downstream engineering and manufacturing operations,” he said.
The Steelworkers local has already negotiated a contract with Liberty House to bring roughly 300 jobs into the mill, Sanderson, the local’s president, said. The negotiations were completed Aug. 7 but aren’t finalized.
It’s been two years since the plant closed, but nearly 60 percent of former workers say they would go back to the mill, Sanderson said.
“They’re looking to go back to a job they truly enjoy. They’re experts on steel,” he said.
Those “experts” could see salaries of close to $90,000 if the mill opens, Sheldon Butts, a Georgetown City Council member, said. He’s familiar with the USW negotiations and confirmed that number to Bloomberg BNA. A number of his family members and friends lost jobs at the mill when it closed.
The last ArcelorMittal and USW contract ran from September 2012 to September 2015. The top hourly salary was $27.52 by the end of the contract, according to Bloomberg BNA labor data.
That rate is close to the area’s average nonunion wages. The closest comparison for average wages in private manufacturing near Georgetown is in Charleston and North Charleston, S.C. Those workers receive $36.49 an hour, Bloomberg BNA data show.
Georgetown has always been a heavy industrial town and should remain so, Butts said. “To think the tourism or hospitality industry could provide the same number of well-paying jobs as the mill would be naïve.”
In South Carolina, the average hourly wage for retail workers is $15.78, according to the Bureau of Labor Statistics. Waiters usually receive $9.68 an hour.
Redevelopment could take 25 to 30 years to finish. The city needs to take advantage of an opportunity for hundreds of jobs now, rather than decades from now, he said.
“We just don’t have that opportunity that often in the city of Georgetown,” Butts said.
Clarence Smalls, another city council member who supports the mill, believes the town should give Liberty House a try.
“I feel that we should wait a while and see what happens,” he said. The possibility for good jobs sooner rather than later is too good to pass up.
Keith Nagel, ArcelorMittal’s director of environmental affairs and real estate, implored the city’s planning commission to reject rezoning, in a letter read during an April meeting. He called the proposed ordinance a “death sentence” for the deal and for steel jobs.
The original rezoning plan would have allowed industrial use to continue for five years. “Liberty House has the resources to make the capital investment necessary to re-open the mill. It is unreasonable to expect Liberty to buy the mill and make investments to secure its future, if they will only be able to operate it for a short time,” Nagel said in a letter to the commission.
The commission moved to disapprove the rezoning. Its decision is just a recommendation, however, and the city council can ignore it.
Much like the rest of the city, the council is split on the issue, Butts said.
But Smalls said if Liberty House closes the mill down the road, Georgetown should forget about it.
“If it doesn’t work out, I’d say no more mill,” Smalls said.
To contact the reporter on this story: Jaclyn Diaz at in Washington jDiaz@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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