Fort Wayne’s Steel Dynamics Builds Strong Foundation in Pittsboro

Here’s an encouraging piece from the Indianapolis Star about how Steel Dynamics is turning a near-bankrupt steel mill in Hendricks County into a thriving source of production and jobs. Through heavy investment, the company ultimately hopes to enhance its production by over 50% and produce nearly one million tons of steel annually at the plant.

Designed and built in the late 1990s by Qualitech Steel Corp., the mill barely had come online, melting test batches of high-quality bar steel intended for automotive and appliance manufacturing, when the world steel market was flooded by cheap Chinese exports and the price of steel fell through the floor. Nearly a dozen "mini-mills" like Pittsboro’s were left in bankruptcy court.

Indiana’s investment of $40 million in incentives and Hendricks County’s $20 million bond issue were at risk if the mill didn’t reopen.

After a legally disputed auction, the Steel Dynamics offer of $45 million won the court-run bidding against North Carolina’s Nucor in 2002.

Steel Dynamics also invested nearly $100 million to redesign, remodel and reequip the plant to reopen in 2004. The trends have been up ever since.

Employment at the mill has increased steadily over the years from 400 to 500 workers. Steel Dynamics has not announced whether new jobs will be created in the next two years.

It will expand the facilities and add a second line for rolling out long bars of high-quality steel, the type suitable for machining into parts of cars, engines and other manufacturing. Companies such as Caterpillar are among the steelmaker’s bigger customers.

The mill occasionally has turned out other types and qualities of steel, including rebar used as concrete reinforcement in the $1 billion terminal building and other improvements opened in 2008 at Indianapolis International Airport.

Steel Dynamics said that with the latest addition, its engineered bar products division will be among the largest making specialty-bar-quality steel in North America.

It also will expand the mill’s bar-finishing capability, potentially doubling the amount of finished products that can be inspected.

The current production line rolls out long steel bars in diameters from 1 inch to 9 inches. The new line will focus on 1- to 3-inch-diameter bars favored for use in transportation, energy and automotive applications.

The Coming Food Crisis — and What It Has to do with Canada

In writing a bit about food production for BizVoice, it seems there is one daunting, unavoidable fact: With China and other Asian countries expanding their palettes to include dairy products, the pressure will be on Western food producers to raise the output in the coming years. While my talks with Hoosier producers indicated their eagerness to step up, Dan Gardner, a columnist for the Ottawa Citizen, argues Canada will have a much tougher time doing so:

With rare exceptions, discussions of food policy in Canada are limited to the joys of eating organic and how hard-pressed farmers need more help from the government.

What you never hear is this: As a result of rising population and wealth, global demand for food is soaring and the world faces a food crisis unlike anything seen since the 1970s if food production does not grow rapidly. Canada is among the very few nations with the capacity to dramatically boost production. But we’re not. In fact, Canadian agriculture is stagnant. And politicians will not even discuss how we can change that.

“There is a disconnect,” says Larry Martin, an agricultural economist at the George Morris Centre, an independent think tank devoted to agricultural policy.

“Canada has the third-largest endowment of arable land per capita in the world, after Australia and Kazakhstan,” notes Martin. “We have, depending on the set of numbers you look at, nine per cent of the renewable fresh water supply in the world.” Put those two facts together, add one of the greatest commodity booms in history, and money should be pouring into Canadian food production.

But Martin found something startling when he compared the ratio of investment in agriculture with the depreciation of existing assets. Over the last decade, as China boomed and food prices soared, there was no rush to invest. “The ratio in Canada in eight of the last 10 years is less than one. So there’s less new investment coming into the food industry than there is depreciation.”

In the United States, by comparison, the worst year in the last 10 saw 40 per cent more investment than depreciation.

“It’s just astonishing when you see these numbers. We think of ourselves as a great wheat exporter but our share of the wheat market is declining. During the ’90s and early 2000s, we had between 20 and 25 per cent market share and it’s gone down steadily to 15 in the last few years.”

The causes of the stagnation are many, Martin says. A big one is a regulatory system that stifles innovation. Martin recalls testifying at a parliamentary committee alongside a wheat breeder from the University of Saskatchewan. “He went through a whole list of wheat varieties that he came up with that are much higher yielding than the wheat varieties in Canada. He couldn’t get them registered in Canada but they got registered in Montana and we now have to compete with them.”

Then there’s “supply management,” the 1970s-era policy which effectively turned dairy and poultry production into an industry-controlled cartel protected by import tariffs. It’s good for existing dairy and poultry producers because it keeps prices high and stable. And it has made the lucky people with production quotas a lot of money: the quota for a single dairy cow can go for $30,000 and estimates of the total value of production quotas range between $30 billion and $50 billion.