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Home > About BNE > Press Room > 2012 Archive > July > Canadian firm to build facility in Lackawanna

Canadian firm to build facility in Lackawanna

ECIDA grants breaks to Welded Tube USA

By David Robinson
News Business Reporter

Published:July 17, 2012

The rebirth of the vacant Bethlehem Steel site in Lackawanna continued Monday with tax incentives awarded to a Canadian steel pipe company to build a factory.

Welded Tube USA is getting nearly $7.7 million in tax breaks through the Erie County Industrial Development Agency.

Toronto-area company is planning a $50.2 million project that would build a 109,000-square-foot facility on 45 acres of the long-dormant Bethlehem Steel site to make steel tubing that would be used for a variety of customers, including oil and natural gas drillers.

The project could eventually employ 121 people.

The long-vacant site, once home to the giant steel plant, now hosts several businesses and a grove of electric generating windmills.

The steel tube maker, which is based in the northern Toronto suburb of Concord, picked the Lackawanna site for its U.S. expansion because of its proximity to Canada -and the marketing advantages that come with having a "Made in
the USA" label on its products, said John Cappellino, the IDA's executive vice president.

"This is the type of project this community needs," said Erie County Executive Mark C. Poloncarz. "We're basically reclaiming a portion of the Bethlehem Steel site for steel tubing and manufacturing."

Welded Tube plans to split the project into three phases, with the first being the construction of its main factory by August 2013. A second phase would add a 34,000-square-foot building that would house a hydrotester to test the pipe made at the site for defects. A third phase would add a 30,000-square-foot building for pipe threading and coupling.

The company initially will make the tubing here and then ship it to a sister plant in Welland for testing. The construction of the testing facility at the Bethlehem site eventually will eliminate the need to send the tubing to Welland, said Robert Pike, Welded Tube vice president.

"It's a strategic location for us," he said.

Welded Tube takes flat steel and forms it into round tubing 4½ to 9 inches in diameter, in custom lengths. Some of its customers use the tubing as well casings and for other purposes at natural gas drilling sites, a potentially growing market as drilling activity has grown rapidly in shale formations in Ohio and Pennsylvania, with the potential for similar expansion in New York if regulators approve the controversial techniques used to access the natural gas.

The company initially plans to employ about 25 workers, although employment could grow to around 121, Cappellino said.

Even with the tax breaks, IDA officials noted that the project will generate almost $1 million in additional revenues for local schools and governments over the 10-year period covered by the tax abatements. The site currently generates about $170 a year in taxes, Cappellino said. The company also is seeking incentives through Empire State Development.

"This is exactly what the Erie County IDA should be doing," Poloncarz said. "This is a perfect example of a company that could go anywhere in Canada or the United States, but they're expanding here."

Local economic development officials said they have been working with Welded Tube since January 2011, after Empire State Development officials from the agency's now-closed
Toronto office referred the company to the Buffalo Niagara Enterprise business development and marketing group.

Welded Tube was close to a deal to move into an existing site that BNE officials declined to identify, but that effort unraveled last November. "They could have easily thrown up their hands and moved on to another site," said Thomas Kucharski, the BNE's president.

The focus then shifted to the Bethlehem Steel site, which posed further challenges as a brownfield that required additional improvements in electric, water and sewer services.

"A tremendous amount of work has gone into this project," said Christopher Johnson, the president of the World Trade Center Buffalo Niagara and an IDA board member. "This is a sweet spot for our area."

The building would be about 40 feet tall and located 1,500 feet from Route 5. About 10 acres of the site would be used for outdoor storage of steel tube.

"I hope this will become a significant step forward in the renovation of the Bethlehem site," said John J. LaFalce, the IDA's chairman.