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Steel Executive Offers Pros, Cons of Doing Business in WV

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HUNTINGTON, WV -

By JAMES E. CASTO

For The State Journal

West Virginia state government has made significant improvements in the treatment it accords business, Tim Duke, president and CEO of Steel of West Virginia told a Huntington Regional Chamber of Commerce breakfast meeting on March 9.

Unfortunately, Duke said, there's still much more that needs to be done.

Speaking as part of the Chamber's "Coffee and Conversation" series of programs, Duke offered a brief overview of his company's operations and then shared his personal list of the pros and cons of doing business in West Virginia.

Founded in 1909 as the West Virginia Rail Co., the steel plant occupies a 45-acre site between the Ohio River and the Marshall University campus east of Hal Greer Boulevard. Known in the industry as what's called a "mini-mill," the plant takes scrap metal, melts it and turns it into a wide variety of products, from cross-members for truck trailers and posts for highway guardrails to steel parts for manufactured homes and recreational vehicles.

With a workforce of approximately 500 employees and an annual payroll of $35 million, the plant has current sales "approaching $350 million a year," Duke said.

"Since 1982, we've invested a total of $200 million to upgrade and modernize our operations," he said.

In addition to its Huntington plant, Steel Dynamics Inc., the corporate parent of Duke's company, has three plants in Indiana and one in Virginia. The situation in West Virginia, Duke said, often compares unfavorably with that in the other two states where the company operates.

In offering his pros and cons Duke had three urgent suggestions for state government: "Lower our taxes; break down some of the barriers, such as (giving us) a fairer legal environment and becoming a right-to-work state; and establish better skill training programs for the state's work force."

The steel executive gave high marks to the state's economic development team and to its environmental officials but blasted the state's legal environment.

"It's not good compared with the other states. There are too many lawsuits and there is no intermediate appellate court."

Praising the dependability and quality of the electric service provided Steel of West Virginia by Appalachian Power Co., Duke nevertheless noted that the plant's electric bill has gone from $568,000 a month in 2006 to a current $1.2 million a month.

"We have the highest rate of our sister plants," he said.

Duke described the progress that West Virginia has made in reducing workers' compensation insurance costs as "unbelievable," noting that premium rates have declined more than 50 percent since West Virginia privatized its system in 2006.

"We would not be here today were it not for that change," he said.

West Virginia has been reducing its corporate income tax, but Virginia's rate is still significantly lower, he said.

"Nor do we do well when it comes to personal income taxes, especially when compared with Indiana."

Unemployment taxes in West Virginia are far too high, he said.

"West Virginia personal property taxes are higher than our sister plants because those states exempt more inventory items from the tax base," he said.

Pointing out that Indiana and Virginia are right-to-work states and West Virginia is not, Duke said West Virginia, despite its strong union heritage and tradition, "really needs to be a right-to-work state."

Duke said Steel of West Virginia has a "wonderful pool" of workers but has a continuing problem recruiting the skilled plant workers it needs. West Virginia needs to do a better job of training its work force, he said.

Steel of West Virginia has dramatically improved its safety record "from 116 lost-time injuries in 1996 to zero lost time injuries in 2012, with that record continuing so far in 2013," he said. Because of its outstanding safety performance in 2012, the company is slated to receive the Don Dailey Safety Award presented by the Steel Manufacturers Association.