October 26, 2011

State of Alabama
Press Release: Alabama Department of Commerce

Steel Firm Announces Expansion in Decatur

Company joins growing list of industries with local projects
By Eric Fleischauer- The Decatur Daily

Magic Steel Sales LLC took a step Wednesday toward the financing of a 40,000-square-foot expansion of its Decatur plant, joining numerous other industries in the area that are increasing production capacity.

The $4.5 million expansion — slated for completion in March — will add six to eight employees to the 28 already employed at the facility.

The project, coming despite news of a sluggish national economy, joins several other planned or ongoing industrial expansions in the Decatur area.

Specialty steel maker Carpenter Technology last week announced it would build a $500 million plant in southern Limestone County. Polyplex is in the midst of building a $187 million plant in Mallard-Fox Creek Industrial Park, where Independence Tube is in a $37 million rebuilding project.

Daikin is spending $60 million on an expansion, Hexcel is adding a $100 million line, and Ascend Materials is investing $29 million.

In all, $1 billion in industrial expansion is ongoing in the area.

Bill Wilkes, a professor of economics at Athens State University, said most of the bad economic news nationally is tied to low consumer spending.

“I think what you’re seeing in Decatur is that manufacturers are anticipating an uptick in consumer demand,” Wilkes said.

He pointed out that most of the projects are facilitating production of goods that will not end up in consumer hands for months or even years.

Starting with industry

Economic expansion has to start somewhere, and Wilkes said the Decatur-area renaissance is an indication it’s starting with industry.

“Consumers don’t want to start spending their money until they see the unemployment rate come down,” Wilkes said. “Businesses don’t want to start hiring until consumers start spending the money. At some point, that logjam has to be broken.

“Perhaps the manufacturers are breaking it.”

The Decatur Industrial Development Board on Wednesday approved a financing arrangement in which IDB will issue $1.5 million in bonds. GE Capital will purchase the bonds, with Magic Steel solely responsible for paying on the bonds.

The IDB approval permits GE Capital to obtain favorable federal tax treatment, which reduces the interest Magic Steel will pay.

Nucor connection

Grand Rapids, Mich.-based Magic Steel is a service center located in a 171-acre development park owned by Nucor Corp., Magic Steel’s main supplier.

The company purchases 25-ton coils of 60-inch-wide steel from Nucor and uses slitters to reduce the width of the steel to the specifications of Magic Steel customers.

“We’ll cut it down to narrow widths and supply it to stampers and other types of manufacturers in the area,” said Mike Welch, Magic Steel’s vice president of operations.

The expansion facilitated the installation of a third slitter that can handle steel a quarter-inch thick.

Decatur-based Fite Building Co. is building the expansion on what is now an 80,000-square-foot plant. President Jack Fite, who is also chairman of the IDB, recused himself from Wednesday’s vote.

Welch said the company hired one worker in connection with the expansion and expects to hire more in the next year.

The new slitter, which can handle steel almost twice as thick as Magic Steel’s other slitters, cost $2.5 million.

Construction of the expansion cost an additional $2 million.

Welch said the company’s Decatur location gives it access to customers throughout the Southeast.

“We’ll ship to Georgia, Mississippi, Kentucky, Tennessee and a little bit into the Carolinas,” Welch said. “We cover a pretty big footprint.”

Its location next to Nucor reduces shipping costs.

Welch said Magic Steel is benefiting from a gradual improvement in the economy.

End products for steel services by Magic Steel include office furniture; heating and air conditioning components, including registers; and industrial applications such as supports for shelving.

It also sells some serviced steel to companies that convert it into steel tube. The tube ends up in such products as exercise equipment, alternators and lawn equipment, such as the handles of push mowers.

“It’s very diverse,” Welch said. “We have a little bit of automotive, but one of our strengths is we’re so diversified.”

Nucor’s impact

Fite said the expansion is a reminder of the significance of Nucor to the community. Nucor bought the steel mill out of bankruptcy from Trico Steel.

“The impact of Nucor — and Trico before it — is incredible,” Fite said. “You count up everything that has come from it and it’s amazing. And it continues to grow.”

Joe Maggini — nicknamed “Magic” — founded Magic Steel in 1974. In addition to the Decatur plant, which opened in 2008, it has plants in Michigan and Indiana.

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