Ohio Star Forge CEO Announces $20M Expansion
CHAMPION, Ohio -- It's official. All of the pieces are in place, and despite consideration of other potential sites, Ohio Star Forge Inc. is adding production capacity, equipment and jobs with a $20 million expansion of its plant here.
"This is the right spot," declared Bill Orbach, president and CEO of Ohio Star Forge. "We have a dedicated work force, we have a very talented management team -- we have all the things that are necessary to improve our current business here."
Orbach met with reporters Monday evening after he officially announced the project during a meeting Champion Township’s board of trustees. The CEO said he wanted to make the announcement at the trustee's meeting because "this is where it all started for us. I wanted to come back to show that we care about Champion, and we are a committed business here."
Earlier this year, Ohio Star Forge received $107,483 in job creation tax credits from the state of Ohio, as well as tax abatements of 60% on new real property approved by Champion Township trustees and Trumbull County commissioners. Another $30,000 in state workforce training grants were included as part of state incentives to lure the project here.
Two last pieces of the project -- a land agreement and an energy supply deal -- were recently negotiated and allowed the project to move forward, Orbach said.
Construction should start soon. The project is about four weeks behind schedule, the CEO noted, but it should be finished by November. Ohio Star Forge has 96 employees; the expansion will bring that number to about 130.
"All the entities worked together to accomplish this," Orbach remarked. "It was great working with all the state and local officials."
The project was in competition with another site in Japan, but the company opted to build and produce in Ohio, Orbach said.
"We have experience of 25 years in the forging industry, you can't replace that," he said. "The manpower's here, the equipment is here and the business is here in the United States."
The expansion includes construction of a 33,000-square-foot addition at the south end of Ohio Star Forge's plant at 4000 Mahoning Avenue N.W. The building would house a new, larger Hatebur hot former, which will enable the company to double its steel capacity to 36,000 tons a year.
"From there, we'll enter into a larger automotive market," Orbach said.
Ohio Star Forge manufactures bearing components for the automotive, oil and gas, industrial and off highway markets. The company, in business since 1988, will make its one-billionth part "sometime this year," Orbach said.
The new horizontal Hatebur hot former will be able to produce two to three times as many products in the same time frame as vertical machines. The company operates a 225-ton, a 500-ton and an 800-ton Hatebur machine. The new former is a 1,500-ton Hatebur.
The forging industry underwent consolidation in the wake of the Great Recession, which left a need to produce larger parts with larger machines, Orbach continued. "We identified it early on, and the need could be filled by import or domestic supply. Thankfully, the chose domestic supply."
Ohio Star Forge is an independent subsidiary of Daido Steel, a specialty steel conglomerate with operations in the United States and Japan. The Warren plant produces 14,000 metric tons of forgings annually.
Carl Paglia, director of sales and business development at Ohio Star Forge, said despite the attention given to the oil and gas industry in the Utica shale, the overall rig count across the country is down, the result of depressed natural gas prices. "So, our sector of that business is also down," he said. "But, it's starting to show encouraging signs and we believe it's starting to come back."
About 75% of Ohio Star Forge's business is with the automotive industry, and the new equipment should have the same product mix, Paglia said.
Greater demand from the automotive was just one factor in the decision to expand here, Paglia continued. Another the desire for foreign companies to keep their supply chain close to their markets, Paglia said.
"Japanese and European companies are making more of their product here," he said. "So, it makes sense to use American steel and forge the product here in Ohio and Champion Township."
Copyright 2013 The Business Journal, Youngstown, Ohio.
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