YOUNGSTOWN - Youngstown City Council on Wednesday afternoon took a necessary step toward increasing full-time employees at VAM USA, LLC, from four to 84 when it voted unanimously to allow the city's Board of Control to enter an enterprise zone agreement with the company.
VAM USA, a subsidiary of Youngstown pipe manufacturer Vallourec Star, is considering construction of a 67,500-square-foot facility and improvements to an existing 76,000-square-foot structure at 1053 Ohio Works Drive to house two premium pipe threading lines on land it owns near Vallourec's plant. Plans call for the lines to be operated on three shifts.
If approved, the $81.5 million project would be complete by March 2015.
"Hopefully, we will sit back and wait to get some further additional good news from Vallourec and VAM LLC," Mayor McNally said following council's vote giving the go-ahead for a 75 percent, 10-year abatement on the real property taxes at the property.
VAM USA closed the deal Sept. 19 purchasing the property from Gensamer Family Partners Inc., Sept. 19 for $2.5 million, according to Mahoning County Auditor records.
If approved, recruitment of new employees would begin immediately with the hiring of 10 new salaried employees within the two months, and continue to ramp up over the next year and ultimately will include 18 new salaried employees and 66 hourly workers, according to documents the company filed with the city requesting the abatement agreement. Payroll is estimated at about $2.9 million a year.
McNally, who took office as mayor two weeks ago, credited prior administrations and councils with creating the climate to welcome Vallourec to Youngstown.
"I know there's a lot of hard work that has going on in the VAM project. It's the hard work of at least two previous mayors and two city council bodies," McNally said.
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.
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.
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, but after problems with the planned site arose, the project was put on hold while the company explored other locations, including those outside the Mahoning Valley, officials said.
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.
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.