Steel Dynamics Inc. came away with a bargain when it struck a deal to buy shuttered joist-making plants in Fallon and two other locations.
The company headquartered in Fort Wayne, Ind., sees the acquisition as a way to accelerate its efforts to gain a larger foothold in non-residential construction markets in the West.
And the company's purchase is likely to pay big benefits for the economy of Churchill County, says the executive director of the Churchill County Economic Development Authority.
New Millennium Building Systems, a subsidiary of Steel Dynamics, said last week it agreed to buy the joist-manufacturing plant in Fallon that was closed by Commercial Metals Co. this spring.
The acquisition is part of a three-factory package New Millennium also will buy plants at Hope, Ark., and Juarez, Mexico, from CMC and New Millennium will pay $17 million total for the assets of the three facilities.
That's a bargain, given that a single new joist-making plant would cost $20 million to $25 million, Steel Dynamics executives said.
The plant was well-maintained, was carefully mothballed by CMC and won't require much work to resume operation, says Gary Heasley, president of New Millennium.
He says, however, that the company expects to bring in some new equipment to boost productivity at the facility.
The payoff for Churchill County will come through an immediate boost in employment.
Heasley says the plant will employ about 25 people when it begins production perhaps as early as November and the company expects to add jobs cautiously as the construction market recovers.
"We have to operate it at the level the market tells us to operate it," he says.
When the construction industry returns to its historically normal performance, the Fallon plant could employ as many as 120.
"We are very careful in our hiring, and we're going to put some time into training these people," Heasley says. A job fair last weekend in Fallon kicked off the hiring process.
The plant employed about 90 when it was operated by CMC.
About 1,450 people are jobless in Churchill County, where the unemployment rate is estimated at 10.9 percent, the Nevada Department of Employment, Training and Rehabilitation says.
The jobs are particularly important, says Eric Grimes, who heads the Churchill County Economic Development Authority, because they represent basic employment paychecks that bring fresh dollars into the Churchill County economy.
Those dollars, in turn, will bolster the retail and service sectors of the community's economy.
"This going to be the catalyst that will bring more growth," Grimes says. "This is huge, quite significant for the community."
He says the economic development authority worked with the company to identify state incentives for new employers, and the company plans to apply for them.
"The incentives that Nevada offers were a major factor in their decision to come here," Grimes says.
Heasley says New Millennium was looking to expand its presence in Western non-residential construction markets before the downturn.
"It's all about geography," he said, noting that freight costs are a critical cost for the business. Markets in the West have been difficult to serve from existing New Millennium plants in the Midwest and East Coast.
The company has operated a design group in Reno that employs about a half dozen workers for several years, and the existence of that group will help speed development of the Fallon facility, Heasley says.
The company also began a low-profile marketing effort within the past six weeks in an effort to build a backlog of business before the Fallon plant comes into operation.
Steel Dynamics reported in a filing with the Securities and Exchange Commission that demand for steel joists and decking fell by 50 percent during the recession, and the company idled facilities in Ohio and South Carolina. It's still operating three steel fabrication plants in Indiana, Florida and Virginia.
The location and size of the CMC facilities made them an attractive acquisition even though New Millennium has two mothballed plants of its own, Heasley says.
With the acquisition of the three plants, New Millennium now is the second-largest provider of steel joists and decking in the United States.
The acquisition is expected to close early this month.
