rachel edmonds

In May 2007, the town of Convent, Louisiana received bad news.  After months of making plans, drafting agreements, and putting together incentive packages, it found out it would not be the chosen home for a new ThyssenKrupp steel manufacturing plant. Instead, the German metals conglomerate chose a site in Calvert, Alabama, 225 miles to the northeast.  For the short term, it seemed Convent’s landscape would remain limited to the familiar vocabulary of sugar cane fields, petrochemical plants, refineries, and grain elevators.

The scraped landscape along Alabama's Tombigbee River - new home to ThyssenKrupp steel.

SketchUp rendering of Alabama steel mill. Photo credits: http://www.thyssenkruppnewusplant.com/careers.aspx

Convent and the Parish of St. James were hard struck by the announcement.  So much effort, consensus building, money, and man hours had gone into making the case that Convent was an ideal place for this kind of industrial investment.  Now, not only were officials and citizens out time and money it took to make their ill-fated application, they had nothing to show for it – the most important being jobs – ThyssenKrupp pledged the creation of 2,700 high paying jobs once the facility was operational, and thousands upon thousands of construction-related jobs.

For St. James Parish, population 20,000 in the 2000 U.S. Census, ThyssenKrupp’s presence promised big change.  The plant would have made Convent a regional job center for Louisiana, bringing a bigger tax base, improved services, and expanded economic opportunity to a struggling area of the state.  It suggested new thinking about St. James’ economic landscape – an exchange of agricultural jobs for higher-paying manufacturing jobs serving ever-expanding global markets.  Each new ThyssenKrupp job was expected to pay $50-60K per year, an astounding jump from the $35,277 median household income for St. James Parish.

In the three years since the rejection, Convent and St. James Parish have stayed focused on marketing the area’s potential to other investors.  News announced this week by Republican Governor Jindal and Nucor Steel, an American steel manufacturer, describes plans for another steel manufacturing facility, with jobs paying on average $75K per year plus benefits.  Nucor’s plant hits additional efficiency targets using production techniques that create less greenhouse emissions than the proposed ThyssenKrupp complex.  The phased project could ultimately bring 1,250 jobs to St. James Parish (500 jobs in the first phase).

Proposed site for Nucor's newest American steel plant in St. James Parish.

What kind of incentives did Louisiana have to offer to ultimately get Nucor’s bid?  The state approved $600 million in tax exempt bonds that will cover the capital costs of building the first phase of the project.  Additional payments and incentives depend on the company’s ability to meet state-mandated minimum targets for payroll and investment.  The website steelguru.com states: “one of the surprising aspects of the deal is that Nucor, rather than the state, will pay for a river port terminal upgrade. Also, the state is not guaranteeing major infrastructure improvements for roads and site preparation.”

Reader do note the significance of these remarks about incentive packages.  From previous experiences courting investment, states have learned it makes little fiscal sense to sell the state out in the short term for a project whose promise depends on decades of sustained growth.  Although the desire to create jobs cannot be overstated, states should know better than to get in over their heads in these tenuous times.  Sustainable economic development – the kind of growth that does not compromise the potential of future generations — requires a proportionate balance of risks, benefits, and costs among and between participants.