LORAIN — Clouds of brown and gray smoke billowed 70 feet high from Republic Steel’s electric arc furnace during a simulated heat Monday.
The demonstration took place during a 20-minute tour of the plant by Lt. Gov. Mary Taylor. Taylor, who said it was her first visit to a steel mill, said she was impressed with the 150-ton furnace which began operating in February and is designed to create 450 jobs by the end of 2015.
De-industrialization over the last generation has hit states like Ohio particularly hard, but Taylor said the furnace demonstrates Ohio still provides good manufacturing jobs.
“You’re going to have a great opportunity to make a good living and support your family,” she said. “It’s a career. It’s not just a job.”
The furnace is part of a $110 million upgrade, originally estimated at $87 million, at the mill at 1827 E. 28th St. Lorain and state taxpayers also are contributing to the expansion.
In 2012, the Ohio Tax Credit Authority approved a 75 percent, 15-year tax credit worth $4.6 million and a $500,000 grant was approved later that year by the Ohio Controlling Board. The state tax breaks came shortly after City Council members approved $5.9 million in tax and water rate breaks for the expansion.
About 170 workers have been hired so far at the mill, which has about 700 hourly workers and 150 management employees, said Republic CEO and President Jaime Vigil. The jobs pay about $50,000 per year.
The new jobs must be filled by the end of 2015 and retained through 2018 to meet state requirements, said Elizabeth Evans, Republic vice president and general counsel. Republic, which has about $1.3 billion in annual revenue, must add $19.6 million to its annual payroll to meet the requirements.
Evans said Republic also received a six-year, $40 million “energy incentive” from the Public Utilities Commission of Ohio that may begin this summer. The incentive allows it to get up to $10 million annually in discounts from FirstEnergy Corp., which is supplying electricity for the furnace.
The furnace is at about 25 percent of capacity. The project, which Republic hoped would be completed in August, was delayed a few months by a Nov. 30 fire which Vigil said caused about $5 million in damage.
Vigil said Republic hopes to have the furnace at 100 percent by the end of the year, increasing the mill’s production to 1 million tons annually. The production would allow Republic to double annual sales to $2 billion, Vigil said.
Besides the rebound of the American auto industry, a major part of the expansion is to provide steel for natural gas fracking. However, there are environmental and safety concerns around fracking.
Nonetheless, Vigil said he’s confident that if fracking is reduced due to stronger regulation — new federal Environmental Protection Agency rules are scheduled to begin in 2015 — it won’t reduce jobs at Republic. “The energy market will remain strong,” Vigil said, noting Republic also produces steel for conventional, horizontal and offshore oil drilling as well as for agricultural machinery and windmills.
Vigil said Republic, which bought the plant in 2005, is grateful for the support of the city and state.
“This investment means a long-term commitment for us,” he said. “We look forward to maintaining growth and investment in our facilities in Ohio.”