Access to rail and proximity to a facility of its parent company were the deciding factors in Gonvarri Steel Services’ decision to locate its Gonvauto South Carolina facility in Union County.
Gonvauto, which will be located on a 24-acre site along SC 18 in the Bonham Community, will be Gonvarri’s first steel service center in America.The company will make an initial investment of $35 million in the facility which is projected to initially employ 40 workers. Gonvarri plans to invest another $15 million in and create another 25 jobs at Gonvauto following its initial investment. The facility, which is expected to begin operations by July 2013, will have a flat steel processing capacity of 100,000 tons.
In a statement announcing the company’s plans to locate the facility in Union County, the SC Department of Commerce described Gonvarri as “a leading company in steel service centers, with revenues of over $2.6 billion in 2011, and processing more than 3.2 million tons of steel. Its strategy in the steel processing business is based on the development of products and services with great added value, allowing the company to establish closer relationships with its main clients in its four business units: automotive, road safety, industry and household appliances. With this new facility, Gonvarri Steel Services will have a total of 24 steel service centers located in 13 different countries.”
One of Gonvarri’s clients in the automotive industry is its parent company, the Gestamp Corporation, described by the SC Department of Commerce as “a multinational leader in Europe in the steel sector, automotive components and renewable energy. It is currently present in 25 countries in Europe, America and Asia, with over 120 industrial plants and a global workforce of 30,000 employees. Gestamp Corporation ended 2011 with a turnover of over $9 billion.”
Among Gestamp’s industrial plants is the Gestamp Automocion South Carolina, LLC automotive parts manufacturing facility located at 1 LSP Road. The facility is currently undergoing a 150,000 square-foot expansion which is projected to be completed by the third quarter of 2012. The expansion, which is costing approximately $60 million, is designed to accommodate increased business which is projected to generate approximately 120 new jobs.
Union County Development Board Chairman Joe Nichols said the expansion of the Gestamp facility was a factor in Gonvarri’s decision to consider Union County as the location for its Gonvauto facility and led to a meeting between him and development board executive director Andrena Powell-Baker and a Gonvarri executive in Sept. 2011.
“Andrena and I first met with a Gonvarri executive in September at Gestamp,” Nichols said Thursday morning. “It was a visit to meet with some of the local economic developers. They were looking for a site for their first plant in the US.”
While nothing was decided at that first meeting, Nichols said the Gestamp expansion increased Gonvarri’s interest in finding a site in Union County. An even more important factor was the availability of the Norfolk & Southern Railroad line that runs along SC 18.
“The major deciding factor was rail,” Nichols said. “Their raw materials all come in on rail and that was why this site was chosen. It’s a good fit.”
Powell-Baker said Thursday that the presence of the railroad line just across SC 18 and the site’s close proximity to Gestamp is what led to Gonvarri’s decision to choose the Bonham location. She added that it was Gestamp’s existing relationship with the development board that led to the meeting between herself and Nichols and the Gonvarri executive in September.
“They are sister companies and they talk to each other all the time,” Powell-Baker said. “They came to South Carolina together looking for a site. This is one of those examples of where the lead came to our office through our relationship with contacts in an existing industry.”
Powell-Baker said it was Gonvarri who first expressed an interest in the Boham site, which she said was not an industrial site being marketed by the development board.
“They asked Joe and I about the site behind Gestamp,” Powell-Baker said. “We explained the land behind Gestamp was not an industrial site that we market. It was county property and was not available for industrial development.
“We did offer to show them the sites we did have available in proximity to Gestamp within Commerce Park,” she said. “We have 30 acres on the front along 176. They were interested, but as we looked at the feasibility of rail we realized we could not get rail extended there due to the topography.”
Powell-Baker said they next showed Gonvarri the Trakas site near Jonesville but while it could meet the company’s needs for rail, it lacked the proximity to Gestamp that it was seeking.
“At that point we asked them to look at Trakas which is accessible to rail,” Powell-Baker said. “Because it is eight miles away from Gestamp they didn’t see that as a good fit.”
This sent the development board back to Gonvarri’s original choice, the Bonham site, which required taking the matter to the county.
“We had to go back to the site they were interested in and see how it could be made to work,” Powell-Baker said. “We went to the county and explained the company’s interest in the site. We recommended that they look at taking action to make the site work if at all possible.”
The county did just that by, first, approving an incentive package for Gonvauto which includes a fee-in-lieu of taxes agreement which will enable Gonvarri to pay a reduced property tax rate; a special revenue source credit; a transfer of land from the county to the company; an option for the company to purchase more land; and other related matters between the county and Gonvarri.
Even as council was in the process of approving the incentive package, work was already underway to make the site work for the Gonvauto plant. Lockhart Power, which will provide electricity to the facility, is replacing it power line polls along that portion of SC 18 with taller ones to accommodate the truck and rail traffic that will be going in and out of the site. Construction crews are preparing the site for construction and are also clearing land further down SC 18 for the rail spur that will be ran across the road from the railroad line to the facility.
The City of Union Utility Department will also relocate its water, natural gas and power lines to accommodate the construction of the rail spur. Nichols, who is also director of the utility department, said the relocation of the city utility lines will cost an estimated $270,000 and will be paid for out of the city’s capital expenditures fund allocated in this year’s budget.
The city’s utility lines serve a number of county facilities including the Public Works Department, detention center, jail, animal shelter, and the recycling convenience center that serves the Bonham Community. Supervisor Tommy Sinclair said that the county will move the Public Works Department and the recycling convenience center back several hundred feet from their current locations to accommodate the construction of the rail spur.
The county facilities are served by Detention Road and Animal Shelter Road and both will also be effected by the Gonvauto project. Sinclair said Detention Road will be transferred to Gonvauto which will use it for truck traffic and other transport. Animal Shelter Road will be rebuilt to handle the heavier traffic that currently travels Detention Road. A new road will be built further down SC 18 to provide a second means of access to the county facilities which Sinclair said will remain in operation despite the changes.