Ohio Star Forges Plant Expansion Plans
WARREN, Ohio – Consolidation in the steel industry forced by the Great Recession and the automobile industry’s resurgence in recent years are combining to drive plans by Ohio Star Forge Co. to expand its Champion Township operation.
Those plans, which involve a potential $26 million investment at the plant and an additional 26 to 30 workers over a three-year period, cleared one more hurdle Wednesday, with Trumbull County Commissioners’ approval of a 10-year, 60% abatement of taxes on new real property investments.
Earlier in the week Champion Township trustees agreed to the abatement for Ohio Star Forge.
“This is the third abatement received by these guys,” said Mark Zigmont of the Trumbull County Planning Commission, who spoke at a hearing before the commissioners’ meeting during which they voted on the abatement. “They’ve always done what they said they were going to do.”
“It’s great to see them investing in Trumbull County again,” said Commissioner Dan Polivka, who noted he was at the ribbon cutting for the company’s expansion in 2006.
Marking its 25th anniversary in 2013, Ohio Star Forge, a subsidiary of Japan’s Daido Steel, was founded as a joint venture with the former Copperweld Steel Co. The company processes steel bar into automotive components primarily, said William J. Orbach, president and CEO. About 70% of the company’s business is automotive, with the remainder in the oil and gas industry, which saw about a 5% improvement over the past year, and light industrial applications.
“Business has been good,” Orbach remarked. “We came though the recession and we’re back to hiring at a level we’ve never been before.” The plant now has 98 employees.
“The reason we are here today is because of the hard work of the employees of Ohio Star Forge,” he added.
The recession in 2009 resulted in the consolidation of forging operations, he said. “Now that the automotive recovery is under way, that consolidation’s left a pretty large gap between supply and demand. We see a niche that we can fill with this equipment,” he said.
Ohio Star Forge competes with competitors across the globe -- anything it makes can be made somewhere else in the world, Orbach pointed out. The company lost a lot of small component to competitors in China and other counties, so it invested in larger capacity equipment. “The heavier the part, the more expensive it is to ship. We can make it locally and not have to worry about shipping it around the world,” he explained.
Orbach noted that in recent years demand for higher wages in Korea and China has reduced the labor advantage in those countries. An average hourly wage that was $1.50 per hour in 2001 is now nearly $7. That wage plus shipping costs levels the playing field, he said. “Right now we are poised to be very important in the growth of America, particularly the automotive industry,” he remarked.
Ohio Star Forge is producing about 30,000 metric tons of components per year, about 6% above last year and up 30% to 35% in total tonnage from 2007, Orbach said. Next year the plant will produce its one billionth part, he said.
With the abatement secured, the company is negotiating a deal on energy rates. Land also has to be acquired for the 30,000-square-foot expansion. “We still have key items to get through to reach that level where the economics will support the viability of this project,” Orbach said. Once the final components are in place, plant management will present a proposal to Daido’s management team in Japan. Orbach expects a final decision in “a reasonable time,” a couple of weeks, he said.
During the meeting, commissioners also approved a road use maintenance agreement with Halcon Resources of Houston, which has a permit to install a horizontal well in Hartford Township off Hayes-Orangeville Road.
Halcon has provided a certificate of liability insurance in the amount of up to $2 million with Trumbull County named as an additional insured; a $100,000 road bond; spans and specifications for the road upgrades, to be made at Halcon’s expense, representing the designated ingress and egress routes to the well site; a $25 permit fee; and an addendum including prevailing wage requirements per an opinion by the Ohio Attorney General.
"It's great to see that someones actually going to get started with the drilling," Commissioner Frank Fuda said.
Copyright 2012 The Business Journal, Youngstown, Ohio.
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