Arkansas Democrat-Gazette // “From brawn to brain: A smarter approach to steel production in Mississippi County”

Original story: https://www.arkansasonline.com/news/2023/oct/29/from-brawn-to-brain/

by Rex Nelson | October 29, 2023 at 7:24 a.m.

The sign on the door of the Hog Pen, which sits along the famous Blues Highway in Mississippi County, gets right to the point. "Wipe your feet please," it reads.

Construction workers fill the small barbecue joint along what's officially U.S. 61 between Wilson and Osceola. U.S. 61 was once the road out of the Delta, the route taken north by thousands of sharecroppers and tenant farmers in the years after World War II.

The mechanization of agriculture had cost them their jobs. They headed to Illinois, Michigan, Ohio and Pennsylvania for work in the steel mills and automobile assembly plants.

Workers head south these days thanks to the transformation of Mississippi County from the leading cotton-growing county in the country to the top steel-producing county. The construction workers who crowd this restaurant are building U.S. Steel's new $3 billion facility. It's the largest private capital investment in Arkansas history.

I find a table for lunch so I can visit with Mississippi County Judge John Alan Nelson and Osceola Mayor Joe Harris about what's happening here.

"This is the most exciting place in Arkansas right now," says Harris, a man I've known since his days as a state legislator. "There are jobs with six-figure salaries for about everyone who wants one. And rather than driving several hours for those jobs, people are finally taking a closer look at us as the place they want to live."

Like most towns in the Arkansas Delta, Osceola has been losing population for decades. Its population fell from 8,930 in 1990 to 6,976 in 2020. But with more than 3,000 construction workers in the county, tax revenues are solid. In a city that saw no home construction for decades, there are now more than 100 homes planned or under construction in Osceola.

"Almost 30 of them have already been built," Harris says. "We have to take advantage of this opportunity. We don't want to be a town that's still struggling with all these steel mills surrounding it."

Harris convinced his city council to put a proposed one-cent sales tax on the ballot next month. He wants to use the revenues for a water park, walking trails, park improvements and the revitalization of downtown Osceola. Nelson, meanwhile, is working to build cycling trails atop the Mississippi River levee as part of the effort to increase the number of amenities.

"The amount of economic activity right now is hard to describe," Nelson says. "I sometimes sit at a stoplight in Osceola starting at 4:30 a.m. just to watch the traffic back up. It's worst at 5:30 a.m. as the steel mill employees and construction workers head out. It's not just construction workers for the steel mill. There are also folks building houses. We have more housing starts in this county than there have been in at least 40 years."

Olympus Construction of Jonesboro is building a $30 million housing development in Osceola known as Riverback Estates. The houses--with an average cost of $300,000--will include energy-efficient features and even electric vehicle charging stations. Ground was broken on the project in November 2022.

It's part of Mississippi County's Work Here Live Here initiative, which pays 10 percent of the purchase price of homes bought by those in the manufacturing sector. Buyers can receive up to a $50,000 credit on a $500,000 home. A worker must obtain a loan from a local bank to qualify. When a house is completed, a second mortgage with the 10 percent discount is implemented. If the worker remains employed in Mississippi County for at least four years, the second mortgage is paid off by the program.

"Living half your time in an RV is just not sustainable for those who want a family life," says Clif Chitwood, who heads the Great River Economic Development Foundation. "It's like life in an oil and gas field. Company executives are beginning to understand the benefit of having their workers live close to the mills.

"These mills are going to be here for decades to come. I have to believe more of the people who work in the mills will decide it makes sense to have homes here. We're not going to have to do this forever. What we're trying to do is provide an incentive to increase our housing stock and change the conversation inside the county."

The Nucor-Yamato and Nucor Arkansas steel mills have been operating in the north part of the county near Blytheville for decades. The steel boom reached the southern part of the county in 2017 when Big River Steel began operations at its $1.3 billion scrap metal recycling and flat-rolled steel production facility just down the road from the Hog Pen. A $716 million expansion soon followed.

U.S. Steel later purchased Big River Steel. The plant now being constructed is commonly known as BRS2. What once were cotton fields serve as dusty parking lots for thousands of construction workers. Trailers that serve as offices for hundreds of subcontractors line the roads just west of the Mississippi River. It's an amazing sight.

After lunch, we head north to the largely deserted Osceola square. The centerpiece of the square is the 1912 courthouse. With its copper dome, it's my favorite courthouse in the state.

"As Osceola experienced an economic boom due to railroad traffic, lumber and agriculture production around the beginning of the 20th century, county officials decided to build a modern courthouse," Jared Craig writes for the Central Arkansas Library System's Encyclopedia of Arkansas.

"At that time, the courthouse operated out of a wood-frame structure, and its demands outgrew the space. It stood on the edge of Osceola, and the county wanted to open a new courthouse near the central quarter.

"The courthouse was built across the street from John Patterson's general store. ... County Judge William Driver tasked architect John Gainsford with designing the courthouse. Gainsford envisioned the classical design to be the manifestation of Osceola's civic pride. Falls Construction Co. built the courthouse. The most striking feature is the stately and ornate copper dome, which is surrounded by terra-cotta decorations."

Across the street from the courthouse is the 1915 Coston Building. The ground floor once housed a barbershop and later a hardware store. J.T. Coston, a Vanderbilt-educated lawyer who represented cotton magnate R.E.L. Wilson, had his office upstairs. That office is being used these days for Hybar LLC, a startup company building a steel rebar mill at Osceola that will cost $700 million and employ about 200 people.

I drop in to visit with David Stickler, the man Forbes once described as the "Steve Jobs of steel." Stickler was still running Big River Steel when Jonathan Ponciano wrote about him for Forbes in September 2019.

"Welcome to Osceola, onetime home of legendary blues guitarist Albert King and headquarters to Big River Steel, the future of steel production on the planet," Ponciano wrote. "The mini-mill, which is producing 4,500 tons of hot-rolled steel each day or about 1.65 million per year, began operating thanks to almost $1 billion in high-yield debt financing, a slug of equity from Koch Industries, Arkansas' teachers' pension fund, private equity firm TPG Capital and the sheer operating zeal of a little-known investment banker named David Stickler."

"We view ourselves as a technology company that just happens to make steel," Stickler told the magazine.

Forbes called Big River "hands down the most technologically advanced and fastest-growing steel producer in North America" and noted that the average Big River production worker earned $129,000.

"Stickler's transformation from banker to steel company CEO wasn't planned," Ponciano wrote. "A Cleveland native and former accountant, he spent 15 years as an investment banker, mostly working on financing big steel, including the $385 million Bain & Co. used to launch Indiana's Steel Dynamics. In the mid-1990s, he met his future wife, Rebecca Li, a vivacious Chinese wellness consultant who was showing a friend Hawaiian real estate. Li helped him make connections in Asia, and in 1998 he raised $650 million to build a mill in Thailand.

"Stickler also courted Nucor's CEO, John Correnti, who tapped him in 1999 to finance a restructuring of Birmingham Steel. In 2003, Correnti, Stickler and Li formed Global Principal Partners, a steel-focused merchant bank. Over the next decade, the firm raised $6 billion for numerous projects ranging from modernizing a mill for Tangshan Steel in China to SeverCorr, a Mississippi mill it sold to a Russian steel giant in 2008. Correnti handled plant operations, and Stickler and Li, the dealmakers, traveled the world and maintained homes in New York, Los Angeles, Beijing and Thailand."

Correnti and Stickler chose Mississippi County for Big River Steel. Scrap metal can be shipped down the Mississippi River to here. The mill is close to Interstate 55 and along the BNSF rail line. The state offered generous incentives, and Entergy Corp. made a deal on power rates. About 13 months into construction of the mill in August 2015, Correnti died in his sleep.

"My plan was not to be CEO," Stickler told Fortune. "John passed away on a Tuesday. By Friday of that week, we had completely reorganized."

Stickler has become Arkansas' biggest fan. He's heavily involved not only in building a rebar mill but also in pushing the Osceola School District to get better.

"There's an opportunity to change the trajectory of this place," he tells me. "It's not going to happen overnight. I know that. But we also don't need to have patience. We need to go, go, go while the momentum is here. We must convince the young people in this area that once they land one of these steel jobs, they will have an employer for life. We're working closely with the school district to make sure we have the proper kind of mentoring programs."

He says the steel industry has gone from "80 percent brawn and 20 percent brain to 90 percent brain and only 10 percent brawn." He calls the mills operated by Nucor and U.S. Steel in Mississippi County "the finest steel mills in the world. These mills will continue to be an economic engine for decades to come."

Hybar purchased 1,300 acres and will have its own port on the Mississippi River. Financing on the mill closed July 31, and Stickler broke ground at daylight Aug. 1. It will take 22 months to build the rebar mill.

"I would have broken ground at midnight if we had had any lights out there," Stickler says. "We'll produce 630,000 tons of rebar a year. We've already pre-sold 24 percent of our production for the next 10 years."

Stickler says he was on the verge of taking Big River public when "the knock on the door" came from U.S. Steel.

"They bought 49.9 percent of the company and had four years to buy the rest of it," he says. "They exercised that option in less than two years and then announced that they were going to build another mill. We've seen $8 billion in investments in Mississippi County in just the past decade. You just can't beat the work ethic here. We can train people how to make steel. What we can't train people to do is have a work ethic.

"The other thing that can't be beat is the kind of support we get from every level of government. This is now the heart of the U.S. steel industry. It's not Pittsburgh. It's not Detroit. It's Mississippi County in Arkansas. South Mississippi County soon will be home to the three cleanest steel-making facilities in the world."

Stickler says Hybar eventually will operate three to four mills. He's not promising the additional mills will be in Arkansas. He's not ruling it out, either.