Steel Country Threaders receives conditional tax abatement
by PHILLIP WILLIAMS
May 04, 2014 | 1179 views | 0 0 comments | 24 24 recommendations | email to a friend | print
Upshur County Commissioners Court granted a conditional tax abatement Wednesday to Steel Country Threaders of Upshur County, Inc., an Ore City area firm which County Judge Dean Fowler said is expected to eventually provide 140 jobs.

The court exempted the firm from paying 100 percent of Upshur County property taxes for two years, 50 percent the third year, and 25 percent the fourth year on condition it provide at least 100 jobs by May 2015, and maintain that number. The action does not exempt the firm from paying school property taxes as Texas schools cannot legally grant such abatements.

The business is constructing a new pipe heat treatment facility, Fowler said.

Pct. 2 Commissioner Cole Hefner said that if the firm improves the property by $10.5 million as planned, its county tax bill without an abatement would be about $54,000 annually. Ron Bedard, SCT’s President and Chief Executive Officer, said he “petitioned for abatement on behalf of SCT’s customers as well as SCT. However, the commission was unable to abate the county portion on behalf of SCT’s customers.”

Specifically, Bedard requested a 2-year abatement on his customers’ pipe, but Pct. 4 Comm. Mike Spencer and Fowler replied the court couldn’t grant that. The abatement is for capital improvements. Nonetheless, Bedard said after the meeting he was pleased with the abatement the court granted.

Lee Simpson, SCT’s Chief Financial Officer, told The Mirror the county would receive additional tax from his firm’s investment as well as from the inventory of pipe which SCT’s customers would maintain on site. He had told the court his firm would like a 100 percent abatement for 5-10 years.

Bedard contends he needs the abatement in order to help his firm compete with Houston-area businesses which treat pipe that comes into the Port of Houston. His prospective customers would be sending the pipe 235 miles to the Ore City area instead of five miles to a Houston treatment firm, thus incurring $30 per ton in additional freight costs, he said.

Simpson told the court that Wednesday was the first anniversary of his firm buying Steel Country Threaders, which had threaded pipe near Ore City, and that the new ownership has been laying out a new plant which will include a heat treatment facility.

In the year since the current ownership purchased SCT, its work force has grown from eight part-time workers to 26 full-time ones, and “every single one of our hourly workers is a local worker,” Bedard told the court. Many of those hired had been laid off elsewhere, he noted.

Pct. 1 Comm. Paula Gentry told Bedard and Simpson, “I would like to see as many people hired from Upshur County as we can.” Bedard, a Houston resident who said he is spending time here every week, replied that all current workers are “from the area” and that SCT would focus on hiring Upshur residents.

Simpson said yard workers would be paid $10-$18 hourly.

Besides purchasing the threading operation, Steel Country Threaders bought 20 more acres nearby. It has “sourced local labor where we could” and plans to be operational within two months, eventually providing 140-150 jobs in direct employment with an estimated annual employment expense of about $6.7 million, Simpson said..

All the heat-treating equipment is on site and being installed, he added.

A separate company will be on site to inspect pipe, he said. SCT will operate 24 hours daily seven days a week, Simpson said.

In a move related to granting the abatement, the court held a short public hearing before voting to establish a permanent “Ore City North Reinvestment Zone” on the firm’s 42-acre site on U.S. 259 north of that city.

Fowler said establishing the zone, which is near the intersection with Hwy. 155, was a necessary legal step in creating the tax abatement.

During the 4-minute hearing, Upshur County Democratic Party Chariman Dan Miles Jr. asked if granting the abatement was the only way to get the business to locate in the county. Fowler replied that SCT is providing a “pretty significant number of jobs” and that granting the reinvestment zone “sends a message. . .Upshur County might be a good place to come.”

Fowler noted that Gilmer-based Upshur-Rural Electric Cooperative is building a substation in the area for the firm because “that’s how much electricity they need.”

After the meeting, Hefner said the county is “thrilled to have” the newly-expanding industry, and that its ownership consists of “good, solid folks.” Of the abatement, he said Upshur wants to be known as a “business-friendly county.”

Hefner said that the tax burden in Harris County, where Houston is located, is 40 or 50 cents more per $100 valuation than in Upshur County.
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