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Workers want incentives for Ludlum

| Tuesday, Oct. 18, 2005

The United Steelworkers of America want Pennsylvania to offer an incentive package that will inspire Allegheny Ludlum to invest $300 million in its Valley facilities rather than build a new plant out of state.

The steelworkers are lobbying the Valley's legislative contingent to offer tax breaks, utility incentives and other benefits to Ludlum as the company reportedly considers where to build a new mill.

Steelworkers fear the alternative may be Kentucky.

“They will put that mill where they get the most cooperation,” said Gary Bell, of West Leechburg, president of USWA Local 1138. “Pennsylvania has got to offer them some type of incentive.”

An expansion of the Valley's Ludlum facilities could be seen as an important indication of the future of the region's signature industry. Opening a new plant with more modern equipment in another state might signal the company's intention to invest its future elsewhere.

The company is considering several options for upgrading its plants, company spokesman Dan Greenfield said. The company hasn't decided how much to spend, what to build or buy, or where to make the improvements, he said.

“We are still in the evaluation process,” Greenfield said.

The steelworkers fear, however, the company is leaning toward buying a $300 million Steckel Mill, a reversing steel sheet reduction mill, which would modernize Ludlum's operation.

They believe Kentucky will get the new plant if Pennsylvania's government doesn't give Ludlum good reason to invest at home. Kentucky is home to one of Ludlum's main competitors, North American Stainless, which is owned by Acerinox, said Mark Parr, senior metal analyst for Key Banc Capital Markets in Cleveland.

Utility costs are significantly less in Kentucky, and workers aren't unionized, Bell said. Local steelworkers also fear the Kentucky state government is offering an incentive package to Ludlum, he said.

Parr said it's too early to comment on the situation, but said that at this stage, “it's appropriate for the company to explore its options and to make sure it's doing the right thing for all its constituents.”

Representatives of the Kentucky Cabinet for Economic Development did not return repeated phone calls for comment Monday. Calls to Gov. Ed Rendell's Action Team, an economic development agency that reports directly to Rendell, also went unanswered.

Greenfield would neither confirm nor deny that Ludlum is negotiating with Kentucky or Pennsylvania officials for an incentive package.

State Rep. John Pallone, D-Arnold, is one of the legislators who agreed to meet next month with union officials to discuss a Pennsylvania incentives package. Representatives from Allegheny County's economic development department also plan to attend, director Dennis Davin said.

Pallone said he was reluctant to speak about the proposal for fear of jeopardizing any potential deal with Ludlum.

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