Sunday, February 20, 2005
Turning profit big hurdle for proposed SteelCorr mill
The Clarion-Ledger
On paper, the idea of a steel mill coming to Mississippi looks financially appealing.
SteelCorr Inc. would invest $650 million for construction on 1,400 acres of a 1,500-acre megasite in Columbus. Some 450 people would earn a $70,000 average annual salary plus benefits, and direct and indirect jobs could equal as many as 1,000.
But SteelCorr does face hurdles, according to some analysts. Its biggest one is turning a profit in an industry with high production costs.
Factoring equipment needed and investment to build such a facility, costs could be $900 million to $1.2 billion, said Peter Morici, an economist at the University of Maryland, who wrote a study about SteelCorr's prospect.
"How will (SteelCorr) build a $1 billon facility for $650 million?" asked Morici, a former director of economics for the U.S. International Trade Commission.
On paper, the idea of a steel mill coming to Mississippi looks financially appealing.
SteelCorr Inc. would invest $650 million for construction on 1,400 acres of a 1,500-acre megasite in Columbus. Some 450 people would earn a $70,000 average annual salary plus benefits, and direct and indirect jobs could equal as many as 1,000.
But SteelCorr does face hurdles, according to some analysts. Its biggest one is turning a profit in an industry with high production costs.
Factoring equipment needed and investment to build such a facility, costs could be $900 million to $1.2 billion, said Peter Morici, an economist at the University of Maryland, who wrote a study about SteelCorr's prospect.
"How will (SteelCorr) build a $1 billon facility for $650 million?" asked Morici, a former director of economics for the U.S. International Trade Commission.
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It baffles me to think that they can pay all 450 of their employees an annual wage of $70,000 and still be competitive. But that is what the media is reporting. I wonder if the $70,000 is for their "salary payroll" and not for their wage payroll.
# posted by 
: February 26, 2005 12:09 PM
: February 26, 2005 12:09 PM
I too wondered about that. It struck me as an enormous number when I posted it. But here's the exact quote:
Some 450 people would earn a $70,000 average annual salary plus benefitsI'll try to follow up over the next few days and see if I can find some better reporting on this wages issue.
Some 450 people would earn a $70,000 average annual salary plus benefitsI'll try to follow up over the next few days and see if I can find some better reporting on this wages issue.
If you think about it 70,000 is not a large sum of money for a steel mill.
# posted by : April 26, 2005 4:13 PM
: April 26, 2005 4:13 PM
That's $70,000 average salary for a steel mill worker. That's $35/hour assuming 2000 work hours per year.
In another article, about Nucor, several years old, I found:
[Nucor]"will hire as many as 250 workers and pay an average annual wage of $54,000."
http://www.nwlaborpress.org/1997/nucor.html
That's $27/hour average.
Another article, about Decatur, Alabama, also Nucor, expected steel workers to earn $55,000 a year in 2002.
http://www.careerjournal.com/salaryhiring/regional/20021118-davis.html
Another article, 2003, rural North Carolina, $60,000
http://www.sb-d.com/issues/winter2003/ruralamericansouth/NorthCarolina.asp
The problem is the comparison with other countries ...
Wages and benefits cost South Korean steel makers about $13 an hour, compared with $38 an hour for integrated steel companies in the United States, reports World Steel Dynamics, a steel-consulting and research firm in Englewood Cliffs, N.J.
The average annual wage in the South Korean steel industry is about $20,200. That seems low by U.S. standards, but the wage is nearly double the $10,200 "minimal living cost" that the South Korean government has set for a family of four. (Families whose incomes are less than that receive government assistance.)
http://www.cleveland.com/indepth/steel/index.ssf?/indepth/steel/more/100548330034350.html
In another article, about Nucor, several years old, I found:
[Nucor]"will hire as many as 250 workers and pay an average annual wage of $54,000."
http://www.nwlaborpress.org/1997/nucor.html
That's $27/hour average.
Another article, about Decatur, Alabama, also Nucor, expected steel workers to earn $55,000 a year in 2002.
http://www.careerjournal.com/salaryhiring/regional/20021118-davis.html
Another article, 2003, rural North Carolina, $60,000
http://www.sb-d.com/issues/winter2003/ruralamericansouth/NorthCarolina.asp
The problem is the comparison with other countries ...
Wages and benefits cost South Korean steel makers about $13 an hour, compared with $38 an hour for integrated steel companies in the United States, reports World Steel Dynamics, a steel-consulting and research firm in Englewood Cliffs, N.J.
The average annual wage in the South Korean steel industry is about $20,200. That seems low by U.S. standards, but the wage is nearly double the $10,200 "minimal living cost" that the South Korean government has set for a family of four. (Families whose incomes are less than that receive government assistance.)
http://www.cleveland.com/indepth/steel/index.ssf?/indepth/steel/more/100548330034350.html
Well $70,000 per wage worker is about right. I know this because I work at the Decatur site and will only say that I am a wage worker and I make a bit more than this but I will not elaborate on the number. There are reasons that a wage worker at a steel mill, especially a mini mill, makes this type of money. Mainly because most mini mills pay is split and consist of a base and bonus system. High bonuses from making high production rates are one of the main reasons for this number being this high.
# posted by : June 18, 2005 1:26 AM
: June 18, 2005 1:26 AM
Well, that's good to know. One wishes the media would report incentive or performance bonuses separately.
Check out this posting, especially the last paragraph. Some mills without these legacy costs have a $40/ton advantage. That's quite a bit of advantage.
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