Louisiana built an enviable environment for manufacturers in the 20th century. Now, the Gulf Coast state has harnessed a revolutionary natural gas trend, the logistical advantages of the Mississippi River and a business climate recognized as one of America’s best to advance manufacturing in a new century.

With competitive business costs, a skilled workforce and a mega site on the Mississippi River, Louisiana rose as a major competitor for Nucor Corp.’s new multiphase iron-and-steel project.

Nucor, which produces more U.S. steel than any other company, has always been committed to high-quality, productive and profitable steel products. As the company searched for a new location and an environmentally sound way to boost its raw material supply, Nucor needed a strong business environment with competitive costs and innovative logistics to maintain its market edge.

THE CHALLENGE

Nucor planned a five-phase site that would include two direct reduced iron (DRI) facilities, a pellet plant, a blast furnace, coke ovens and a steel mill. When it began evaluating U.S. and international sites for a new iron-making facility in 2006, Nucor identified several promising locations, including one in St. James Parish, La.

“Nucor would build one of the most modern iron-making facilities in the world to produce 3 million tons of pig iron, employing the latest technologies to reduce emissions. This facility would create hundreds of good jobs for American workers and demonstrate the effectiveness of new technology to protect the environment,” said Nucor Chairman and CEO Dan DiMicco. “At the same time, this project would help Nucor achieve our long-term goal of increasing control over our raw materials supply.”

The winning location would need access to a capable workforce and would need commitments from state and local officials to provide infrastructure for a facility making 2.5 million tons of iron per year.

THE SOLUTION

Louisiana had the answer. After meeting with DiMicco and other Nucor executives, Louisiana leaders traveled to South Carolina, toured a Nucor facility and met additional company leaders to gain a thorough understanding of the company’s needs.

Louisiana Economic Development used that knowledge to offer an incentive package customized for Nucor’s needs. Phase I, the first DRI facility, received a $30 million performance-based grant and a $30 million bond supported by lease payments from the company. When Nucor commits to Phase II, the bond will convert into a performance-based grant for Phase II.

Additional performance-based grants would be given during the final three phases. Phase III (pellet plant) would receive $15 million, Phase IV (pig iron) would receive $40 million and Phase V (steel mill) would receive $45 million. Total performance-based assistance equals $160 million over six years, provided that all five project phases are initiated as scheduled in the company’s cooperative endeavor agreement, or CEA. The CEA allows the company to select the order for developing additional phases.

Through local government, Nucor will receive an extended tax exemption of 20 years, and the company will make an annual payment in lieu of taxes to support the local school system, parish government and sheriff’s office. Nucor also will rely on a Gulf Opportunity Zone bond allocation of $600 million and the state’s Quality Jobs program.

LED FastStart™– ranked the No. 1 workforce program in the nation by Business Facilities magazine — stepped in to meet Nucor’s hiring and training needs. FastStart assisted with the development of a website for potential job candidates to learn about Nucor’s culture, employment opportunities, skills requirements and other required qualifications. In addition, Nucor will receive materials from FastStart to facilitate a successful job fair.

THE RESULTS

With business-friendly incentives, workforce solutions and infrastructure assistance, Louisiana left no doubt it offered all the necessary elements for success. In September 2010, Nucor officially announced the selection of St. James Parish for its project, and in March 2011, Nucor broke ground on the first phase of the facility. Construction is scheduled for completion by the end of the second quarter in 2013. Construction of all five phases will rank as one of the largest industrial projects in Louisiana history.

Once completed, the five-phase project will result in up to 1,250 new direct jobs averaging $75,000 a year, plus benefits, and a capital investment of $3.4 billion.

An economic impact analysis by Louisiana State University showed all phases of the project generating an estimated $563.5 million in new state tax revenue and $122.6 million in St. James Parish revenue through 2033. Another 4,800 indirect jobs would be created by 2019, the study estimated.

“This is a huge win for our state and will ultimately be one of the largest industrial projects in Louisiana history,” said Gov. Bobby Jindal. “Nucor’s decision to come to Louisiana instead of anywhere else in the nation or world is not just a tremendous victory for Louisianans, but it also sends a signal far and wide that Louisiana is the best place for businesses to locate, grow and succeed.”

Phase I of the project, the first DRI facility, will use direct reduction technology to convert natural gas and iron ore pellets into high-quality DRI used by Nucor’s steel mills. The iron produced combines with recycled scrap to make high-quality steel products, such as sheet, plate and special bar-quality steel. Nucor estimates the first phase will result in 500 jobs during peak construction, along with 150 new direct jobs and $750 million in capital investment.

Nucor selected DRI technology for the project, in place of a blast furnace and coke-making facility, because DRI offers a carbon footprint one-third less then the blast furnace approach at less than half the capital cost.

Nucor’s decision to locate its new multiphase iron-and-steel manufacturing facility in Louisiana continues a growing trend of impressive progress in business development and job creation. Recent business development projects won by Louisiana are resulting in significant job growth and billions of dollars in capital investment all across the state. These wins are fueling hundreds of millions of dollars in new sales for Louisiana small businesses and continuing the economic growth of the state. Visit the LED News webpage for updates about the new Louisiana.