Kentucky's Aluminum, Metal & Steel Industry
The aluminum, metal and steel industry is massive in Kentucky – and for companies it is “the place to be”. All companies are attracted to Kentucky for several reasons, including:
• Ports along the Ohio and Mississippi Rivers: Access to these river ports provides low cost transportation of bauxite (mineral of which aluminum is made) and aluminum products to national and global markets.
• Low Cost of Electricity: Due largely to its abundant coal reserves, in 2005, Kentucky ranked as the lowest cost state for the provision of industrial electrical power.5 This is the sixth straight year in which Kentucky had the lowest industrial electrical power costs. Because the aluminum industry is so energy intensive, the cost of electricity is a significant cost factor.
• Central Location: Kentucky is centrally located within the Eastern United States, where aluminum consumption is centered. Two-thirds of the nation’s population, personal income, and manufacturing establishments are located within 600 miles of Kentucky’s borders.
• Auto Industry: Aluminum usage in automobiles has increased dramatically in recent years, and it is now only behind iron and steel in average vehicle content.6 In 2006, Kentucky ranked 3rd among the states in light vehicle production, and it is the location for almost 500 motor vehicle-related suppliers. As more motor vehicle-related firms move to Kentucky and automobile manufacturers increase their use of aluminum, Kentucky becomes a natural home for aluminum-related companies.
• Logistics: Kentucky has access to 6 interstates and several US highways and state parkways. This gives the state a distinct advantage over other states. A 2006 corporate survey conducted by Area Development Magazine had highway accessibility as the number two factor listed by most corporations as the primary reason for selecting a site, chosen by 90.9% of respondents.8
• Quality Workforce and Training: Kentucky has an abundant labor base with manufacturing experience. Expansion Management magazine’s June 2006 issue ranked Kentucky's Workforce Training Programs, which includes the Bluegrass State Skills Corporation (BSSC), 8th in the U.S. For the 4th consecutive year, Kentucky has ranked in the top ten, placing 3rd in 2005, 5th in 2004 and 8th in 2003. The ranking considered the programs’ efforts in facilitating customized business and industry training services for new, expanding and existing companies.
Aluminum Industry in Kentucky
Kentucky is one of the top aluminum producing states and has a strong presence in both the primary and fabricated aluminum sectors, ranking first before Indiana, Tennessee, New York and Ohio.
The ‘primary’ produce aluminum as their primary product, the later businesses fabricate aluminum into a finished or secondary product.
As measured by value of shipments, Kentucky ranks as the number one state in the Primary aluminum industry. In 2005, the value of shipments for the primary aluminum industry in Kentucky totaled over $4.3 billion.
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ome facts of the Kentucky aluminum industry: Kentucky is home to several industry-leading aluminum facilities, including European Norsk Hydro’s Hydro Aluminum Metal Products located in Henderson is a revolutionary, remelt plant. Hydro recycles aluminum scrap into primary aluminum extrusion billets, and it has a production capacity of around 90,000 metric tons a year. Because of its advanced technology, Hydro uses just 5 percent of the energy that a smelter uses, which translates into significant cost savings. Other large aluminum employers in Kentucky include Aleris International, Century Aluminum of Kentucky, Gibbs Die-Casting, Trace Die Cast, Inc., Alcoa Louisville Foil Division, Cardinal Aluminum Company, Logan Aluminium and Aisin Automotive Casting. Kentucky ranks as one of the top twenty metal exporting states in the primary metal manufacturing and fabricating industries for 2006, by the value of shipments. Steel has made some great advances over the last two decades. Over 50% of the steels made today were not in existence 15 years ago. Today’s “new steel” is stronger, thinner, easier to shape and corrosion-resistant. It makes safer, more fuel-efficient cars and longer-lasting products. Thanks to improvements in galvanizing and coating, steel is the world’s most resistant material to decay, corrosion, fire and floods. That is why today’s cars last longer and steel is beginning to be used more and more to frame houses. The industry has used computers and new technology to upgrade and streamline the steelmaking process. Steel is an environmentally responsible material. It is recyclable and steel mills have drastically reduced emissions. Lastly, steel is an economical choice for consumers. Highlights of the Kentucky steel industry include: • Kentucky exported over $1.04 billion primary and fabricated metals to foreign countries; the related U.S. exports in 2006 had a value of $70 billion (2006) • 52 steel-related facilities with 7,300 employees located in Kentucky (2007). • 20 of Kentucky’s steel facilities are considered automobile-related suppliers. • The average salary in for primary metals industry employees in Kentucky was $66,310/year (2005) • The automotive, appliance and construction industries are the largest markets for Kentucky steel establishments. From January, 2000 to June, 2007, nine new steel-related facilities have been established in Kentucky. This represents an investment of over $134 million and has created 817 jobs. Kentucky is home to several state-of-the-art steel facilities producing a variety of products. • North American Stainless (NAS) located in Ghent is the largest steel employer in Kentucky with 1,200 employees (2006). North American Stainless, part of the most competitive stainless steel manufacturing group in the world, Spanish Acerinox S.A.. NAS produces both long products (such as wire, cold bar, peeled bar, angle and rebar) and flat products (for use in commercial manufacturing for everything from appliances to automotive exhausts). It is the only North American single integrated site that takes a product from melt to finish for both flat and long products. • AK Steel in Ashland is the state’s second largest steel employer with 1,150 employees. AK Steel produces flat-rolled carbon, stainless and electrical steel products, as well as carbon and stainless tubular steel products, for automotive, appliance, construction and manufacturing markets. It was awarded the 2005 Max Eward Safety Award from the American Coke and Coal Chemicals Institute (ACCCI). The award recognizes the ACCCI-member coke plant with the best annual safety record. It was also named one of America’s Most Admired Companies by Fortune Magazine.6 • Louisville Forge and Gear Works, LLC is a custom manufacturer of highly engineered, impression die steel forgings for demanding applications. Its products are shipped throughout the world to serve a diverse industrial clientele including the following industries: 1) automotive/truck; 2) aerospace; 3) off-highway equipment; 4) farm machinery; 5) mining; and 6) oil fields markets. • Gallatin Steel Company, a state-of-the-art steel mill at Ghent in Gallatin County is a joint venture between Dofasco, Inc. and Gerdau Ameristeel. It began production in 1995 and is one of the most technologically advanced mills in the world. It currently produces over 1.4 million tons of hot steel bands on an annual basis and recycles over 4,000 tons of scrap metal daily. Other large steel employers in Kentucky include: German Mubea KG or Austrian Voest Alpine AG., Stephens Pipe & Supply, IPSCO Tubulars Kentucky, Inc., Gerdau Ameristeel and Sypris Technologies, Inc. Kentucky’s Recycling Industry The steel industry has made great strides over the last three decades to become more environmentally friendly. Nearly 76 million tons of steel were recycled in 2004. This represents a recycling rate of almost 71% for new steel. For 2005, the rate was nearly 76%. The recycling rate for automobiles for 2005 was 102% or two percent more steel was recycled from older vehicles than went into the production of newer ones. That equals more than 14 million tons of steel from end-of-life vehicles. The same year 90% of appliances were recycled compared to those produced. The most recycled product year-in and year-out is structural beams and plates, with a recycle rate of almost 98% (2005). Environment & Innovation From 1975 to 2002, the steel industry spent over $60 billion in new technologies in order to improve energy efficiency and productivity. During the same period, the greenhouse gas emissions from the production of one ton of steel dropped by 45%; air and water emissions produced were lowered by 90%. Today, nearly 95% of the water used for steel making is recycled. Virtually all hazardous waste produced in the process is recycled and put to a beneficial use. The U.S. steel industry reduced its energy intensity per ton of steel by 27% from 1990 to 2005. Every ton of steel recycled saves 2,500 pounds of iron ore, 1,400 pounds of coal, and 120 pounds of limestone – and the same time the productivity tripled to produce 1 ton of finished steel. You are interested in this Kentuckian industry sector, please click here for more information. • 117 aluminum-related facilities with 16,361 employees and 9,977 primary aluminum industry employees located in Kentucky, • labor cost for primary metal industry employees in Kentucky were $66,310 / year and $48,207 for the fabricated metal industry (2005) • The transportation and containers & packaging industries are the largest markets for Kentucky aluminum establishments. • 33 of Kentucky’s aluminum facilities are considered automobile-related suppliers. • Alcan Ingot (Henderson) and Century Aluminum of Kentucky (Hawesville) are 2 of only 14 active aluminum smelters in the U.S. represent combined over 16% of active smelter U.S. production capacity • The Owensboro Riverport is one of only two licensed warehouses approved by the New York Mercantile Exchange to serve as the delivery point of primary aluminum traded on its COMEX Division aluminum futures contract.
Steel Industry in Kentucky
As described above Kentucky offers several advantages to firms in the steel industry.
At the same time, there have been 63 expansions to steel-related facilities operating within the state. This represents an investment of over $1.22 billion and has created nearly 1,700 jobs.
It is also the largest investment by a Spanish corporation in the United States, employing 1,100 and a total investment of $1.4 billion.