Brazil-based Gerdau will invest $50 million to upgrade its steel mill in St. Paul, the company announced Monday.
Gerdau plans to replace the mill's continuous caster-a piece of equipment in which molten steel is solidified-thereby increasing the mill's production capacity by about 100,000 short tons. Following the upgrade, the mill will have a capacity of 550,000 short tons; one short ton is equivalent to 2,000 pounds.
The company expects to break ground on the project in the second quarter of 2012 and complete it by early 2014.
Gerdau, which currently employs 370 at the mill, doesn't have plans to hire additional workers once the upgrade is completed. But in connection with the upgrade, Gerdau and its union workers have agreed to extend their current contract-which was scheduled to expire in July 2013-to July 2015.
"This investment demonstrates our company's commitment to the St. Paul area and helps us remain our customers' supplier of choice for years to come," Guilherme Gerdau Johannpeter, president of Gerdau Long Steel North America, said in a statement.
St. Paul Mayor Chris Coleman and Minnesota Governor Mark Dayton both praised Gerdau's decision to upgrade its St. Paul mill and underscored its significance in terms of job retention.
With the mill's current equipment being more than 40 years old, "it was fairly clear that if [Gerdau] wouldn't make the investment now, the plant would soon become obsolete," and its employees would have found themselves out of work, Bill Blazar, the Minnesota Chamber's senior vice president of public affairs and business development, told Twin Cities Business.
When Gerdau approached the chamber and asked for help with upgrading the mill, the chamber's economic development program-Grow Minnesota!-put together a team of city and state officials to propose incentives that could be offered to the company, the chamber said.
Gerdau received several local incentives for the upgrade, including a $500,000 forgivable loan from the St. Paul Port Authority. In addition, the City of St. Paul-on behalf of Gerdau-plans to apply for a $250,000 forgivable loan from the Minnesota Investment Fund, a Minnesota Department of Employment and Economic Development (DEED) program that helps companies add and retain jobs in industrial, manufacturing, and technology-related fields. DEED will also offer a training program to teach the mill's workers how to run the new caster.
"At a time when heavy manufacturing is at risk of moving off-shore, our collaborative efforts with our region's economic partners proved critical to Gerdau's investment decision, and the resulting retention of an important St. Paul employer," Coleman said in a statement.