Steel and fuel plants are driving industrial expansion along the
South's Tennessee-Tombigbee.
by RON STARNER
The vast reach of the Tenn-Tom Waterway is shown on the map on
above. In all, the channel connects 18 states and 14 river systems,
totaling some 4,500 miles (7,242 km.) of navigable waterways.
Connecting the Port of Mobile to the Mississippi, Tennessee and
Ohio rivers, the Tennessee-Tombigbee Waterway is more than a modern
engineering wonder. It is a lifeline of economic opportunity for
the South, as companies that make their living off the region's
natural resources invest at a record pace along this man-made
marvel.
Completed in 1984, just one month after President Ronald
Reagan's re-election, the US$2-billion waterway project included 10
locks and dams, a 175-foot-deep (53.1-meter-deep) canal connecting
the Tennessee River with the Tombigbee River watershed, and 234
miles (377 km.) of navigation channels.
Today, the waterway is considered one of the most
energy-efficient trade routes in North America. It connects 18
states and 14 river systems totaling some 4,500 miles (7,242 km.)
of navigable waterways serving a large swath of southern and middle
America.
The payback for this massive public works project that was 12
years in the making is now coming in droves, says Mike Tagert,
administrator for the Tennessee-Tombigbee Waterway Development
Authority in Columbus, Miss.
"The past five years have seen probably as much direct total
investment along the Tenn-Tom as in all the years previously," says
Tagert, noting that steel industry investment along the Tenn-Tom
has totaled more than $5 billion since 2003. "Severstal Columbus
alone has invested a total of $1.3 billion in its steel plant,
bringing 450 jobs, the majority paying over $70,000 per year.
That's a tremendous impact in a region like this."
The Columbus mini-mill opened in 2007 on 1,400 acres (567
hectares). The company's phase-two expansion, now underway, will
upgrade the Mississippi plant from 1.7 million tons (1.6 million
metric tons) to 3.4 million tons (3.1 million metric tons) per
year. Severstal can ship products directly from the plant by rail,
road or barge.
Multi-modal access to multiple trade and supply routes is the
primary selling point of the waterway to industrial end-users, says
Tagert. "It is a critical link. Without the Tenn-Tom, you would not
have the link between the Gulf of Mexico ports and the inland
waterways of the Ohio, Mississippi and Tennessee rivers," he says.
"We are directly linked to the Port of Mobile. As the Port of
Mobile goes, so goes the Tenn-Tom Waterway."
Growth Follows Water's Path
Tagert has a favorite saying for explaining the pattern of
industrial development in his region: "Where the waterways go is
where the communities grow." (For further proof of this maxim, see
Site Selection's past coverage of project activity along the Ohio
River Corridor and Mississippi River Corridor.)
The numbers bear him out. Almost every major plant investment in
the region's steel and fuel industries over the past five years has
taken place along the Tenn-Tom.
Mississippi Gov. Haley Barbour joins a group of corporate and
government officials at the groundbreaking late last year for Steel
Development Co.'s $175-million rebar manufacturing plant at a site
in Amory, Miss.
The latest was Steel Development Co. in Amory, Miss. The firm
announced in late October that it would build a $175-million rebar
manufacturing plant on an 80-acre (32-hectare) site along the
Tenn-Tom in the Amory Port Industrial Park.
The 80,000-sq.-ft. (7,432-sq.-m.) factory will create 200 jobs
that pay an average annual wage of between $60,000 and $70,000. The
plant will process, on average, about 500 to 800 automobiles' worth
of scrap metal per day.
Waterway access was a primary factor behind the site selection,
says Tagert. "Waterway transportation is now being factored into
companies' logistics models," he adds. "Waterborne transportation
is a highly efficient system. It is the safest mode of
transportation and the most environmentally friendly."
Other steel manufacturers are following suit. In April of 2008,
U.S. Steel announced plans for an initial $150-million investment
to build a carbon-alloy plant in the Port of Epes in Sumter County,
Ala., about 50 miles (81 km.) from Tuscaloosa. Total investment
could reach $450 million at the site, the company said.
Though put on temporary hiatus in December 2008 because of the
weakened U.S. economy, the 450,000-sq.-ft. (41,805-sq.-m.) factory
will create at least 75 full-time jobs plus another 250 during the
construction phase. Upon full production, as many as 235 people
could be working at the plant.
The granddaddy of them all, however, is ThyssenKrupp, whose
$2.74-billion steel plant is set to open in Mobile, Ala., in 2010.
The plant is one of the largest industrial projects in the South
since World War II.
About 2,700 workers will be employed at the plant, which
received about $400 million in state incentives. In addition,
ThyssenKrupp could access as much as $900 million in Gulf
Opportunity Zone bonds for low-cost financing.
Forestry and Fuels Add Up
Iron ore isn't the only hot commodity in the region, Tagert
notes. Access to more than 34 million acres (13.77 million
hectares) of commercial forests makes the Tenn-Tom an attractive
location for bio-fuel companies.
A case in point is TEPPCO, which recently opened a new
500,000-barrel terminal on the Tenn-Tom in Boligee, Ala. The
company is leasing an 80-acre (32-hectare) site from the Greene
County Industrial Development Board under a 60-year agreement.
The terminal is about two miles (3.2 km.) from the Colonial
Pipeline and will be used for transporting both diesel fuel and
ethanol.
"[TEPPCO] actually acquired their own barge company for $87
million," Tagert says. "The Tenn-Tom was a leading factor in their
choosing the Boligee site because it provides access for their
customers. The intersection of Interstate 20 and the waterway was a
key factor, along with the presence of a major pipeline."
"I've been trying to tell the oil industry what the Tombigbee
was," said Dan Ownby, director of business development for TEPPCO
Partners, at the Tenn-Tom Waterway Development Authority's annual
conference in Mobile, Ala., in August 2008. TEPPCO, a $5-billion
enterprise, stores and transports 27 million barrels of oil a
year.
Ownby described the area as a nexus of the fuel supply chain,
incorporating supply from Canada, the Gulf Coast and the East
Coast. The new terminal in Boligee, he said, can supply terminals
in Aberdeen, Miss., and Sheffield, Ala.
"The Colonial Oil pipeline is full," he said of one of the
eastern United States' major fuel supply lines. "We found where it
crossed the Tenn-Tom, and put a terminal right there."
Ownby said Boligee also "gives us some hurricane relief. We can
put barges on the water and pull product from Corpus Christi to
Pascagoula, and put those on the water." (One full barge, he
explained, equals 134 trucks.) He also said the firm's terminal
strategy is well positioned to handle the supply chain challenges
of an ethanol mandate.
"We have purchased land to build two more terminals in Clifton,
Tenn., and Clarksville, Tenn.," he said, "and we're looking for at
least one more site to build a terminal."
Biofuels Could Stir Up New Growth Surge
Meanwhile, Dixie Green LLC is building a plant along the
Tenn-Tom in Jackson, Ala., to make wood pellet fuel using a
gasification process. The plant, which was announced in February of
2008, is expected to open by fall 2009.
"River transportation gives us the best bang for the buck," said
Alex Farris, vice president of special projects for New Gas
Concepts, parent firm of Dixie Green.
Liam Leightley, dean and director of Mississippi State
University's Forest and Wildlife Research Center
The emerging biofuels industry could set off a surge in
additional demand for barge transportation, Mississippi State
University's Dr. Liam Leightley pointed out at last year's Tenn-Tom
conference in Mobile. The region could be a particularly hot spot
for operations that produce alternative fuels from wood pellets,
said Leightley, a former global manager in the specialty chemical
industry who's now dean and director of MSU's Forest and Wildlife
Research Center. With the closure of pulp and paper mills, he
explained, "woody biomass has great potential" as a biofuel, and
the Southeast has great potential as a source for both that
feedstock and for ethanol.
"There is 576 million gallons (2,183 liters) per-capita
consumption in Mississippi," Leightley said of the state's fuel
appetite. "If anywhere, it's the South that could benefit from
producing and transporting biofuels.
" The new Dixie Green plant will employ 80 to 100 workers and
produce about 680,000 tons (618,000 metric tons) of product per
year.
Tagert says these projects are only the beginning of a new wave
of development along the Tenn-Tom.
"There are 35 industrial sites available for development on the
Tenn-Tom, and they have minimal restrictions," he says. "They have
already gone through the basic screening process and are ready for
development."
Tagert adds that he expects to see "a few more announcements in
the spring of 2009, particularly in the steel and alternative fuels
industries. Around here, optimism is higher than it's ever
been."
Adam Bruns contributed to this report.