Did you know stainless steel production is part of Kentucky’s growing and diverse portfolio of leadership in advanced commercial manufacturing? With little fanfare, the largest stainless steel mill in North America operates on the banks of the Ohio River between Cincinnati and Louisville, where it has access to inexpensive electricity and the U.S. manufacturing heartland.
Its product goes into vehicles, appliances, spacecraft, surgical instruments, plumbing and many architectural uses, including in the new One World Trade Center in New York City.
U.S. 42 between Carrollton and Ghent in the 1980s was largely underdeveloped in the 1980s, former Carroll County Judge Executive Harold “Shorty” Tomlinson remembers. Kentucky Utilities’ Ghent generating station, the electricity provider’s largest coal-fired plant, had opened in 1973 not far from a pair of chemical plants that opened in the 1950s and 1960s. However, many strongly suspected Interstate 71 a few miles east had probably siphoned away the area’s prospects for development, along with most of the Louisville-to-Cincinnati traffic when it opened in the late 1960s.
Things changed in 1990, though.
Acerinox, one of Europe’s leading stainless steel producers, announced plans to expand operations into North America in partnership with U.S.-based Armco Advanced Materials. A new subsidiary, North American Stainless (NAS), would build a production mill near the power plant, with plans to grow in stages.
Today, after 25 years and an estimated $2.6 billion investment, NAS is the largest fully integrated stainless steel manufacturing plant in North America, melting 1.2 million tons of product last year. Following plans laid in 1990, NAS built out in seven phases based on the business model Acerinox pioneered at its facility in El Campo de Gibraltar, Spain.
In May, North American Stainless celebrated the 25th anniversary of its Carroll County plant. The Kentucky organization welcomed the leadership of its parent, Acerinox Europa, customers from across the country, commonwealth political and economic leaders, and its entire workforce of 1,400 to 1,500.
They celebrated expectations of a shiny future, too. In January, NAS announced another $150 million expansion.
“Having just celebrated 25 years in the U.S. stainless steel market, North American Stainless continues to be one of Kentucky’s premiere corporate citizens The sheer size and importance of NAS to their industry illustrates quality, and from Kentucky’s point of view, there is no better company to be carrying our flag around the world,” said Erik Dunnigan, deputy secretary of the Kentucky Cabinet for Economic Development. “Not only have they proven to be invaluable to the manufacturing sector in Kentucky and the many existing Kentucky industries that currently rely on their products, but they also illustrate how Kentucky has truly become one of the leading global players in the world’s economy.
Total global stainless steel production for 2014 was an estimated all-time high of 41 million tons, according to the British steel market monitor MEPS Ltd., besting 2013’s record mark by 7.6 percent. MEPS predicts 2015 world output will increase another 4.9 percent to 43 million tons.
“I was a magistrate in 1989 when I first heard that a stainless steel company was considering Carrollton as a possible location. I kept up with developments when I took over the judge executive’s office in 1990,” Tomlinson said. “The company’s executives told us about how they planned to grow the facility. It seemed a little too good to be true at the time. But over these last two decades or so, NAS has been absolutely true to their word.”
And other companies have followed in their wake, he noted. According to the Kentucky Cabinet for Economic Development, since NAS established operations in Carroll County, four other manufacturers have located in the region.
In the meantime, NAS has demonstrated itself to be an active and community-minded corporate citizen locally and regionally. It helped fund the Kentucky Chamber of Commerce’s $3.2 million Frankfort building renovation in 2010, Tomlinson said, and it was among local industries that contributed to financing Carrollton’s branch of the Jefferson Community and Technical College system.
The impact extends well beyond Carroll County’s borders, said Lisa Cooper, executive director of the Northern Kentucky Area Development District in Florence, because NAS draws its professional workforce from a six- to 10-county area. A lot of the daily commuter traffic heading out of Northern Kentucky, she said, is bound for Carrollton.
“As the largest, fully integrated stainless steel producer in the United States, Northern Kentucky is honored to have North American Stainless. NAS not only contributes to the region and state as a top-quality manufacturer and employer, but it is a great corporate citizen as well,” Cooper said.
“We’ve come a long way from that day in 1993 when we sold our first coil of flat stainless,” said Mary Jean Riley, NAS vice president of finance and administration.
Big plans from the start
Riley came on board the year before and recalls vividly her first organizational meeting. An official from Acerinox had a flip chart outlining every planned phase of facility construction for the next decade with a timetable for achieving full integration of all manufacturing processes, she said.
Selecting Carroll County as its building site achieved phase one.
“There were a number of reasons Acerinox selected Kentucky, and more specifically Carroll County, as a base for its North American operations,” Riley said.
It is strategically located within a day’s delivery time to most of the largest North American markets for stainless steel, she said. Chicago is home to many customers, but it also ships to manufacturing centers in Wisconsin and Michigan as well as all along the East Coast.
The site provides access to the Ohio River, where barge freight delivery cuts the company’s costs for raw materials, Riley said. NAS ships in supplies of nickel and chromium, but she estimates about 80 percent of its finished flat and long products – solid bars, rebar and angled bars – are made from recycled stainless steel scrap.
However, the factor tipping the site-selection scales in Kentucky’s favor likely was the KU plant just a few miles up the road generating plentiful, cheap electricity.
“We knew we were going to be a fully integrated plant. That meant that we would be a hot-mill as well as a cold-mill producer. That kind of an operation would require a lot of electricity,” Riley said. “KU provides electricity at some of the lowest rates in the country, which presented a major costs savings to us.”
NAS started operations, according to its 25-year commemoration recap, with a single cold-rolling stainless production line composed of a Sendzimer mill, two annealing and pickling lines, a grind and polish line, and a slitter.
Two years later, NAS launched phases two and three; it constructed a barge dock facility on the Ohio River, and it doubled its manufactured production output with the addition of a second cold-rolling mill.
Between 1996 and 2001, NAS executed its most ambitious run of building phases. It invested approximately $264 million into construction of a hot-rolling mill, including a reheat furnace that drives stainless steel slabs to temperatures of over 2,370 degrees Fahrenheit, according to the company’s Flat Product catalog.
Addition of a plate shop in 2001 enabled NAS to produce stainless steel plate annealed in a furnace at 2,000 degrees and cut to lengths and thicknesses within the specific tolerances their customers require. For slabs exceeding one-inch gauge, specialized workers operate a 600-amp plasma cutter to cut widths and lengths to exacting order.
Its first melt shop was completed in 2002, concluding the company’s journey to full integration in the manufacture of stainless steel. That addition paved the way for NAS to begin producing “long product” – a whole range of solid stainless steel bars including cold drawn bar, peeled bar, wire coils and angled products.
First North America, then the hemisphere
In less than a decade, NAS achieved its initial goal. It became the largest, fully integrated stainless steel plant in North America. The company is still in the process of executing its business plan to become the leading supplier of stainless steel in the Western Hemisphere, Riley said.
It was the only plant of its kind in the United States until recently, she said. A competitor in Alabama, formerly known as Thyssenkrupp USA, also became a fully integrated facility in the last few years, but it is still going through growth processes that NAS has completed.
Although it reached its primary business goal over a decade ago, NAS has remained ambitious and not settled into routine, satisfied operations. The company keeps investing and expanding operations as new markets open up Riley said. Keeping up with the times and remaining a state-of-the-art facility is extremely important in any industry, but especially in the world of stainless steel, Riley commented.
In its second decade of operation, NAS added a second hot-rolling mill line, including a second electric arc furnace and a metallurgy furnace, as well as an expansion of its laboratory facilities that oversee the quality and integrity of NAS’ output.
Earlier this year, NAS announced it would invest another $150 million to install a bright annealing line that can add a mirror-like finish to its stainless steel. Many appliance companies fabricate with BA stainless for the inside drums of high-end clothes dryers and dishwashing machines, Riley said. There also are applications for BA by auto manufacturers for the cosmetic enhancement of a new car’s trim.
“Though there are more similarities than differences between the (Acerinox Europa) plant in Spain and NAS in Kentucky,” Riley said, “the key differences are that the Spain plant has two BA lines. However, they don’t manufacture long product on site. Another Acerinox plant produces the long product in Europe.”
The BA line announced in January is expected to be completed in 2017.
Specialty product, specialty uses
NAS is a one-stop shop for its customers with the capacity to produce every grade of stainless steel: ferritic, austenitic, martensitic, precipitation hardening grades as well as the long product, Riley said.
It is sometimes difficult to separate the stainless steel manufacturer from the products that its customers use the steel to fabricate. Some of the more high-profile uses of stainless steel are in modern architecture. There is NAS-produced stainless steel in the One World Trade Center in New York City, Riley said. Customers with ties to the federal government have ordered NAS’ Precipitation Hardening Grades to be used for instruments and panels in airplanes and even in space travel.
But these high-profile applications are not the company’s bread and butter, she continued. The automotive industry is among its largest customers, along with appliance manufacturers and producers of commercial restaurant equipment. Surgical instruments, industrial grade fasteners, plumbing and specialized pipe fittings are manufactured from long-product stainless steel because of its relatively higher level of resistance to corrosion.
NAS sells some 70 percent of its production via distributors rather than directly to end users.
“The highest demand is for our ferritic and austenitic grades of stainless,” Riley said. “Martensitic grades of stainless steel are mostly used in our long product.”
NAS aims to maintain the most up-to-date and environmentally forward manufacturing standards, Riley said, and became one of the inaugural members of the state Department of Environmental Protection’s Kentucky EXCEL environmental leadership program. It upgraded to master-level membership in 2013, she said, both to demonstrate its commitment to environmental manufacturing and to enable it to sponsor educational programs.
The Carroll County site has grown from 161 employees when it began operations in 1992 to 1,382 in 2014, according to Acerinox’s annual report. That number is now more than 1,400, and the company is increasingly interested in Kentucky workforce development.
In education, NAS partnered with JCTCS several years ago to introduce an electrical technology associates degree program that is patterned on the Kentucky Federation for Advanced Manufacturing Education model (an article in June’s edition of The Lane Report detailed KY FAME) under which students divide their time between classroom work and working full time at NAS.
“With KU, Dow Corning, NAS and the other industries in Carroll County, skilled electrical technicians are in high demand for this area,” Riley said.
Its employees have been and will continue to be a vital component of the operational growth NAS has enjoyed in the past 25 years.
“People in this region have a great work ethic and they enjoy working here. When they come, the majority tend to stay,” Riley said. “That experience translates into a very knowledgeable workforce, from the people in the production end to the sales force around the country.”
Advanced new production equipment looks impressive, Riley said, but it will be the employees that enable NAS to celebrate its 50th anniversary and the century marks in Kentucky.
“Stainless steel is an extraordinary material that is still in its growing phase,” Acerinox CEO Bernardo Velázquez said in his 2014 annual report letter. “More and more applications can be found in our daily lives. Few materials can boast of a growth rate by 6 percent in the last 65 years.”
Josh Shepherd is a correspondent for The Lane Report. He can be reached at [email protected]