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ArcelorMittal Sees its Future in an Old Detroit Plant

By: Paul Eisenstein

Driving through the old neighborhood on Detroit’s east side there’s a good chance you’d barely  notice the 92-year-old brick building, just one of many ancient factories left over from another era when Detroit was the indisputable center of the automotive universe. Slow down a bit and you might realize something dramatic is happening there – and at several other old plant sites nearby.

Originally opened in 1926 by the R.C. Mahon Co., a specialty steel producer, the 313,000 square-foot factory has come back to life to serve much the same purpose, albeit today producing state-of-the-art tailored blanks and other products for ArcelorMittal, the world’s largest steel manufacturer.

“In five years, you won’t know the area.It’s changing, and changing for the better,” says Mike Clark, the director of purchasing for the ArcelorMittal subsidiary, as he points to all the redevelopment efforts going on nearby, even the old party store across the street undergoing a renovation.

ArcelorMittal operates a similar factory in Ohio, but having experienced 30 percent growth for its specialty unit in the past two years, it recognized the need to add another plant. It looked at an assortment of sites in the Great Lakes region before settling on the Mt. Elliott factory.

Some of the advantages were obvious, including Detroit’s available and well-trained workforce, and “this is where our customers are,” ArcelorMittal supplying specialty metal products to all of the Detroit Big Three, as well as a Who’s-Who of imports.  Meanwhile, the Luxembourg-based steelmaker also had to deal with a compressed timetable, just 13 months to get a new factory into production.

Clark is quick to give much of the credit for making that possible to the Detroit Regional Chamber. “They aligned us with the right people to make it more favorable than any other location, among other things helping line up city and state incentives, including funding to improve the stretch of road between the plant and I-94.”

“They gave us the green-light,” he says, adding that the steelmaker was happy with what the Chamber pulled together.

In an era when many manufacturers prefer to move to the suburbs and build from the ground up, Clark said that it made much more sense for ArcelorMittal to move into the old factory. True, it took extensive renovation effort, but even after pumping in $40 million – the owner of the property kicking in another $10 million – the numbers made sense, especially with the short deadline for meeting new production contracts.

“Investments like ArcelorMittal’s in the Detroit region are what our organization strives for every day,” said Sandy Baruah, president and CEO of the Detroit Regional Chamber. “We are actively out recruiting companies with the best technology that can help drive our core industries forward. The Chamber’s business attraction efforts seek to communicate to companies the advantages of locating to our region and then we connect them with the real estate, incentives, services and partners they will need to bring their project to fruition in our community, ultimately putting more of our residents to work.”

Economic development is a team sport and this project relied on tremendous additional support from DTE Energy, the Michigan Economic Development Corp. and the City of Detroit to get it across the finish line.

ArcelorMittal is still ramping up operations at the Detroit plant – which includes not only the manufacturing shop, a metrology and metal research lab, and a variety of sales and executive management offices. The first-year target is to create 84 jobs – but that could be exceeded, Clark notes. Sales for the specialty unit hit $158 million in 2017 and the forecast is that they will reach $258 million by 2019.

The company is already looking to the future, its three-to-five-year North American plan calling for additional expansion. Though it did sign a 15-year lease, the company hasn’t locked down longer-term plans. That said, Clark said he is upbeat that, by working with the Chamber, the stars may again fall into alignment favoring further expansion in the city of Detroit.