NY: Alita USA Holdings to Invest $102M for 172-Job Buffalo Mfg. Facility

11 Sep, 2013

Governor Andrew M. Cuomo announced that the Western New York Power Proceeds Allocation Board has recommended $5.7 million in funding to eight Western New York enterprises, including $2 million to Alita USA Holdings Inc, a steel manufacturer planning to locate in the region.

Alita has proposed making a $102 million investment to construct a fully integrated manufacturing facility in Buffalo that will produce welded Oil Country Tubular Goods (OCTG) casing steel pipes. The project, which is slated to create 172 well-paid jobs, is contingent upon approvals from the Erie County Industrial Development Agency (ECIDA), final site acquisition and compliance with applicable legal requirements. 

“We are pleased to announce that the Buffalo Niagara region is expected to be home to Alita USA’s first U.S. OCTG manufacturing facility,” said Alita USA President & CEO Ali Hosseini. “Buffalo was once the heart of steel manufacturing in the U.S. and most of those factors, such as logistics, infrastructure and availability of a strong and talented workforce, that made the city ideal for manufacturing remain true today. We would like to thank the State of New York, Erie County and Buffalo Niagara Enterprise for the tremendous support to bring this project to New York. With their support we are confident that Alita USA will be the most successful and competitive manufacturing facility for the production of high grade OCTG in the U.S.”

The Alita project would create 172 jobs and its new facility would be one of the most technologically advanced, equipped with state-of-the-art heat treatment, process and testing units to produce high grade alloy OCTG. Most of the pipes will be used in the United States.

“Erie County’s economic resurgence is continuing and gaining momentum with the Alita project poised to bring 172 good jobs and an investment of over $100 million to our community” said Erie County Executive Mark Poloncarz. “My administration aggressively pursued Alita, educating them on the assets Erie County has to offer and the benefits of locating here, and it is good to see that our reputation as a hub for world-class and state-of-the-art manufacturing is growing. I would like to thank our partners in state government, the ECIDA and at the Buffalo Niagara Enterprise for their efforts to make this project a reality and their continued efforts to promote our region as one that is good for business.”

“The City of Buffalo has worked strategically to develop our assets and prepare the economic development tools necessary to attract new investment and create jobs in our city and region,” said Buffalo Mayor Byron Brown. “Today’s announcement that Alita USA Holdings Inc.’s plan to make a $102 million investment that will create 172 jobs adds great momentum to the progress that’s underway in our community. Buffalo is a city on the move, thanks to Governor Cuomo and other dedicated partners who are making the commitment to bring this project to upstate New York.”

Alita had considered locating in Houston, Texas but finally decided that Buffalo would be a better and more competitive location for its project. New York State offered the company performance-based incentives, including up to $6.4 million in Excelsior Jobs Program tax credits for the company’s investment in the State and creation of jobs. In addition, the NYPA Trustees are expected to consider a low cost power allocation to Alita in support of the pipe mill, and the Erie County IDA is offering a $2 million “forgivable loan” toward site development costs.

Alita first expressed interest in the region when it contacted Buffalo Niagara Enterprise (BNE) at this time last year. Since then, BNE has been working closely with Alita to assist the company with site selection, workforce, international due diligence and access to incentive programs.

“Today’s recommendation by the WNYPPAB underscores the importance of this valuable incentive in bringing new investment and job creation to our community,” said BNE President & CEO Thomas Kucharski. “The board’s recognition of the value and impact this project could have in Buffalo Niagara is one more positive development that I hope will ensure this project will become a win for our region.”

The latest recommendations for proceeds awards stem from legislation signed into law last year by Governor Cuomo, known as the Western New York Power Proceeds Allocation Act. The legislation authorizes “net earnings” from the sale of unused hydropower from the NYPA’s Niagara Hydroelectric Power Plant to be deposited into the Western New York Economic Development Fund (“Fund”) to support economic development in Western New York. The Fund has accrued $25.5 million to date. Nearly $7 million from that amount has been approved for awards by the NYPA Trustees on the basis of earlier recommendations by the proceeds Allocation Board.

"Today's recommendation by the Western New York Power Proceeds Allocation Board will support the investment of millions of dollars in the region's economy and help create and retain nearly 500 jobs," Governor Cuomo said. "Western New York is a strong region for manufacturing with a highly educated workforce and proximity to market, and we are proud that companies like Alita USA are looking to Buffalo and the entire region to grow their businesses. Last year we put in place legislation to allow the sale of unused hydropower to enable investments in these kinds of job creating projects, and today we are seeing another example of how this funding is helping to put New Yorkers to work and revitalize the Western New York economy."

In total, the latest projects recommended for funding awards are expected to create and/or retain 457 jobs and result in investments by project applicants exceeds $155 million. The recommendations will be considered by the New York Power Authority (NYPA) Board of Trustees at a later date.

“The projects recommended today for funding from the power proceeds Fund represent smart investments that attract business, create jobs and generate economic activity in Western New York,” said Allocation Board Chairman Anthony J. Colucci III. “We welcome additional applications for funding awards, including those for clean energy-related initiatives, building on our region’s reputation for spurring the growth of ‘green power’ initiatives.”

 Beyond Alita, some of the latest projects recommended by the Allocation Board include:

Food Processing – Both the Finger Lakes Regional Economic Development Council and Western New York Regional Economic Development Council has identified production of food and agricultural as a key industry for the regions. However, the full potential remains unrealized and concern about local food systems provides a new opportunity.

D&W Cheese/Yancey’s Fancy 
Recommended Award Amount: $500,000 
Yancey’s Fancy’s $20 million project will allow a fast-growing New York manufacturer of specially and artisan cheeses to invest substantially in expanded facilities and capacity at its plant in Pembroke. The project will add 112,000 square feet of production space for distribution, offices and employee facilities to the existing 29,000- square-foot plant. The company will retain 65 jobs and create 50 new jobs in a rural area.

Field & Fork Network  
Recommended Award Amount: $166,912 
Field & Fork Network’s $174,912 project will fund a market analysis, feasibility study and business planning for a food hub in Western New York. Food hubs in other regions have led to enormous industry and job growth and this project will ultimately increase the profile of the Western New York agricultural industry. This study will provide the foundation for a structure that will help local agricultural businesses capitalize on local market sales opportunities. According to the USDA, regions with food hubs create 13 jobs for every three jobs created in regions without food hubs.

Advanced Manufacturing – Advanced manufacturing is crucial to the future of the Western New York economy. No U.S. region in decline has ever reversed its fortunes without growth in the advanced manufacturing sector. Western New York has significant strength on which to build in medical devices, precision instruments, advanced materials and energy storage, and other arenas.

OSC Manufacturing & Equipment Services, Inc.

Recommended Award Amount: $750,000

OSC, an affiliate of Ontario Specialty Contracting and advanced manufacturing, logistics and energy company, will move to the site of the former American Axle facility in Buffalo. The $17.5 million project will include the build-out of manufacturing space to produce its mini excavator and other equipment, along with heavy equipment rental and service, metal manufacturing and attachment fabrication. The OSC all electric mini excavators are run by a robust lithium ion battery that reduces fossil fuels and greenhouse emissions. The project will retain 20 employees and create 26 jobs.

Niagara Label Company, Inc. 
Recommended Award Amount: $150,000 
Niagara Label, a family-owned, industry leader in the label printing business, will complete its $938,880 second phase of a two-phase project totaling $1.56 million. It will increase production to meet demand, thereby increasing employment with the creation of 17 new jobs in the rural Village of Akron.

The Western New York Power Proceeds Allocation Board reviewed these and other applications for Fund proceeds in accordance with requirements of the Act. For example, eligible projects must be located within a 30-mile radius of NYPA’s Niagara Power Plant and projects must support the growth of business and lead to the creation or protection of jobs. The Allocation Board also considers the extent to which an award would be consistent with the strategies and priorities of the area New York regional economic development councils.

Contracts with awardees will include provisions for periodic audits to ensure that the funds are utilized for agreed-upon purposes. Some projects are subject to legal requirements that must be satisfied before an award of Fund proceeds can be made.

The Allocation Board is comprised of the following members, appointed by Governor Cuomo: Chairman Anthony Colucci, managing attorney of the law firm of Colucci & Gallaher, in Buffalo; Deanna Alterio Brennan, president of the Niagara USA Chamber of Commerce; Brenda Williams McDuffie, president of the Buffalo Urban League; Dennis W. Elsenbeck, regional executive, National Grid Western Division; and Henry F. Wojtaszek, an attorney with the law firm of Harris Beach, in Buffalo.