News
In the News: Renaissance in Russellville: MS Industries ‘all in’ with $15 million local investment
Posted on October 5, 2016
Originally published in the Franklin Free Press.
Steven D. Smith says he’s ‘all in’ when it comes to Russellville, and he’s putting his money where his mouth is—to the tune of a $15 million investment in his company’s high-grade silica preparation facility in the former Vulcan Materials location on Walnut Gate Road.
Smith, CEO and founder of MS Industries II, LLC, chose Russellville as the location for MS Industries’ new plant, and he said the decision was easy.
“The city of Russellville was the only area that embraced us and what we are currently doing,” Smith said. “Not only will we have a $15 million investment in our Russellville facility, we also purchased the Bank Independent building on North Jackson Avenue in downtown Russellville to be our corporate headquarters.
“This is a windfall for the city of Russellville, because we’re going to hire a lot of local people. We’re building a six-story structure on our Walnut Gate Road site. It’s not a mining site but will be used as a preparation and shipping facility,” Smith said.
The facility, owned by the Russellville Industrial Development Board, was part of a land trade between Vulcan and the Russellville IDB last year after Vulcan officials wanted property that would allow for more direct travel to the company’s asphalt plant, according to Russellville IDB chairman Larry Archer. If MS Industries II complies with benchmarks stipulated in its contract, the company may purchase the property from the board in three years for $10.
MS Industries’ relationship with northwest Alabama began in 2010 when Smith and his company began doing research on the Hartselle Sandstone Formation and the feasibility of extracting bitumen, or tar sands, from the ground.
Smith’s ultimate conclusion, after more than a $7-8 million study, was that the process was not feasible for a variety of reasons. MS Industries faced a firestorm of environmental concerns about its activities, though much of the objection was based on erroneous information and speculation about what the company might be doing rather than its actual activity.
MS Industries owns and operates a silica mine at its Wolf Springs location in Lawrence County. Plans call for the sand to go through a wet processing at that site and then be transported to the Russellville plant, Smith said.
The sand will be further processed at MS Industries’ Russellville location, through a proprietary process. The company will ship more than one million tons of material, primarily by rail, from its Russellville plant each year.
According to MS Industries’ application for a synthetic minor operating permit with the Alabama Department of Environmental Management, or ADEM, the permit would authorize the construction and operation of “a sand drying, grinding/milling, screening and loading facility to be located at 430 Walnut Gate Road in Russellville.”
A 15-day comment period for those wishing to comment on the application expired last week. MS Industries II previously received a general permit from ADEM authorizing discharges associated with construction activities that result in total land disturbance of one acre or greater. That permit authorized “clearing, grubbing, grading and general site preparation for processing plant and rail loading facility at former Vulcan Materials site,” according to the ADEM Form 24 completed by MS Industries earlier this year.
“The products we’re making will have no negative impact on the environment,” said John Christmas, MS Industries II’s chief operations officer. “These products will have many industrial uses and will be shipped to our proprietary customers.”
If Smith’s projection that one million tons of silica will be processed annually is correct, that means Norfolk-Southern rail cars will haul 2,000,000,000 (that’s two billion) pounds of material each year from Russellville.
That explains the commitment MS Industries has to build a rail spur, currently in progress, from its facility to Norfolk-Southern’s main track. While Norfolk-Southern will help with the cost of the switch, MS Industries is paying to construct the rail spur to its 60-acre facility.
That’s part of what Smith says is a $15 million investment in Russellville.
In addition to the rail spur, there’s the six-story plant with an expected 10 six-story silos, as well as the complete renovation of the downtown corporate headquarters, already underway.
Smith hopes to be operational in Russellville by the first quarter of 2017, with a minimum of 20 new jobs in place. MS Industries’ hiring process has already begun, and the company has invested more than $3 million into the local site, and an additional $1 million in outside labor, Smith said.
The 20 jobs will be the first phase of a minimum of 50 jobs that must remain in place after three years, according to the agreement between MS and the IDB. And these will be premium jobs, with a starting pay rate of $20/hour, according to Archer.
“We did tie them to some strict guidelines,” Archer said. “Not only will they invest at least $10 million in capital over the three-year period, they’ve committed to 50 jobs with the stipulation that the lowest pay for anyone would be $20/hour.”
Smith said his company will be filling several executive positions as well, with salaries ranging from $65,000 to $150,000 per year.
Another contract stipulation calls for the steady stream of MS dump trucks hauling sand from Wolf Springs to use state highways whenever possible.
“They will travel Highway 24 to 243, then turn onto Walnut Gate, or 24 to 43 and then onto Walnut Gate,” Archer said. “The idea was to minimize what the county has to pay to keep the roads maintained with such a volume of dump trucks loaded with sand.”
Russellville mayor David Grissom, who Smith said was instrumental in his company’s decision to locate in the former Vulcan facility, said he expects MS Industries II to have a dramatic impact on the local community.
“This is a major partnership between MS and the City of Russellville that includes a capital investment that will be $10-15 million and a minimum of 50 good jobs right away,” Grissom said. “We appreciate the investment they’ve made in our city and county and look forward to their success in the years to come. They’re bringing good-paying jobs, and we’re excited to have them here.”
MS Industries received the standard tax abatements, sales and use exemptions, as a condition of their package with Russellville.
The company’s partnership with Russellville also means a homecoming for Russellville native Chuck Kelley, MS Industries’ general counsel and a 1981 Russellville High School graduate, who will maintain an office in MS’ downtown location.
“I’ve been gone a long time, but life is coming full circle for me,” Kelley said. “Russellville has changed a lot in the 30 years I’ve been gone, but I see the same core of good, hard-working people, and we’re excited about that.”
Smith also has plans to develop a restaurant downtown, possibly a franchise of Doe’s Eat Place, a highly-successful Mississippi-based chain that Food Network describes as serving “one of the best steaks in America.”
“We are excited about being involved in a true renaissance,” Christmas said. “The jobs created here and the money spent here are real. The industrial sector is the lifeblood of the United States. What the Russellville Industrial Development Board has done is a wonderful story. MS Industries is committed to spend millions of dollars right here in Russellville, and that’s happening now.”
And it’s happening because of the positive working relationship formed among MS Industries, the Russellville IDB, former Franklin County Development Authority executive director Mitch Mays, Grissom and the Russellville City Council.
“Nobody outside of Russellville and Franklin County embraced us. We’ve spent more than $50 million dollars across northwest Alabama in land purchases, equipment, supplies, materials, and that’s a major economic impact,” Smith said. “This was the right fit for us. We received no cooperation from Lawrence County outside of one commissioner, Norman Poole.
“The Russellville Industrial Board did a phenomenal job for this community. It’s one of the greatest assets you have,” Smith added. “And when you have rail available, that’s a huge asset. We’ve spent millions on site preparations alone because of the importance of rail access.”
In addition to Archer, the Russellville IDB consists of Lowell Moore, Paul Bingham, Sharon Hester, Allen Rhudy and Greg Trapp.
After his board traded for the former Vulcan property, Archer knew it had a major asset with rail access and unlimited utilities and water.
“If someone needs rail and is a heavy utility user, it quickly comes down to a very short list in Alabama,” Archer said. “That’s why we wanted this property so bad. We did a lot of research on MS Industries and looked at the number of jobs being created in order to justify trading them that property. We tied them to some strict guidelines and they agreed to that. We also tied them to a time frame where they’ve got to spend that $10 million in phases over the three years to show their significant commitment to the project.”
One look at the improvements made at the Walnut Gate Road location shows MS officials are absolutely on board with that commitment.
“The Industrial Development Board got it. They communicated to us what they had and why a partnership would be beneficial,” Christmas said. “The key is to have people on your board who understand industry, and you do in Russellville.”