Pipe mill considers $81.5M expansion

YOUNGSTOWN – Youngstown City Council today will consider passage of an enterprise zone agreement that could lead to an $81.5 million expansion to Youngstown’s growing pipe mill industry.

VAM USA LLC, subsidiary to French-based Vallourec Star, is considering the addition of an $81.5 million threading and finishing mill in a vacant building at 1053 Ohio Works Drive.

The company is asking for a 10-year, 75 percent abatement on real property taxes in exchange for the investment and creation of 84 new jobs in the first year, projected to generate $3 million to $3.5 million a year, Mayor John McNally said Tuesday.

If the new mill comes to fruition, it would generate about $80,000 a year in income tax revenue for the city of Youngstown, McNally said. Along with that would be a quarter of the would-be property tax and additional revenue for water usage and building permits.

The item appears as number 1 on council’s legislative agenda for today’s 5:30 p.m. meeting. McNally said he does not anticipate any problems with passage.

“I would expect on this particular piece of legislation that it would go pretty smoothly,” the mayor said. “I haven’t heard of any opposition. Their (council members’) general attitude has obviously been pretty supportive.”

The property is in the same swath of land just west of the Mahoning River where Vallourec Star operates its $1 billion pipe mill near the Youngstown-Girard border. It is the former site of Youngstown Sheet & Tube’s Briar Hill works. The area is surrounded by U.S. Route 422 to the east, Interstate 680 to the west, state Route 711 to the north and the Madison Avenue Expressway to the south.

The 10-acre property now being considered for the enterprise zone, previously was owned by Gensamer Family Partners Inc., and was sold Sept. 19 for $2.5 million to Vallourec, according to Mahoning County Auditor records.

A 76,000-square-foot structure on the property was built in 2004 by Gensamer Family Partners Inc. to house light manufacturing and assembly, auditor’s records indicate. Tom Humphries, head of the Youngstown-Warren Regional Chamber, said if successful, the company plans an addition to the building that would double the space approximately.

Humphries expressed optimism, but cautioned that the deal is not done yet.

On Tuesday local Vallourec spokesman Vince Bevacqua said the company was not issuing comment about the proposal at this time.

VAM USA, based in Houston, creates threading of joints and tubes, particularly for gas wells. Already operating near pipe producer Vallourec Star, VAM makes premium pipe connections specialized to prevent high-pressure gas leaks through the long string of casing as drillers punch holes a mile or more into the earth’s surface to tap gas and oil-bearing shale rock deposits.

Company officials have said the connections must be flexible, yet secure enough to withstand pressure as the drilling bends horizontally in different directions, a critical part of the process to extract as much gas and oil as possible from one drill site.

In 2011 the company had announced plans to add a threading and finishing mill near the plant which had been expected to add about 100 jobs.

The oil and natural gas drilling is driving demand for small-diameter seamless oil country tubular goods, or OCTG, line pipe, green pipe for drill pipe and coupling stock produced at the Youngstown plant.

Vallourec and VAM have located in Youngstown to be close to natural gas and oil drilling in the Marcellus and Utica Shale plays in eastern Ohio and Pennsylvania. During the dedication of Vallourec’s new pipe mill in June, company officials said proximity to the shale plays is key in beating the competition.

“Being domestic allows us to react fast to changes n the market. We know by experience we could not do what was required when we were exporting just from Europe,” Philippe Crouzet, chairman of the management board for Vallourec, said during the June event.

McNally praised the company’s success.

“It’s just further proof of the strength of Vallourec’s position in terms of being a player in the pipe market,” McNally said.

The company already employs a work force of about 800, with most of the workers coming from the tri-county area, company officials have said.

Still on the table is a new melt shop, where workers would melt steel to make pipe.

“They do have aspirations to do a melt shop,” Humphries said. “Will it materialize? We don’t know.”