Thyssen-Krupp — The Factors

There are many reasons Alabama succeeded over other states in persuading Thyssen-Krupp to open its new $3.7 billion steel plant there. Alabama offered a generous incentive plan, and given the many competitive disadvantages faced by manufacturers in the United States — a 31.7 percent structural disadvantage compared to our major trading partners — that kind of package should come as no surprise.

Thyssen had supply-chain requirements that pushed it to the southern United States — steel slabs from Brazil. The South is also winning many, if not most, major manufacturing siting competitions because states there are right-to-work states. Union caviling notwithstanding, it’s just a fact. Enlightened employers who pay competitively and treat their employees well do not want the additional costs and especially the workplace inflexibility that accompany outmoded labor rules. A great fear is an extended strike that disrupts worldwide operations.

And Thyssen-Krupp considered energy. How many other states have the available electricity capacity needed for steel manufacturing?

With an expected peak demand of 300 megawatts, the ThyssenKrupp plant would become, by far, Alabama Power Co.’s largest customer, said Charles McCrary, the utility’s president and chief executive officer.

At peak demand, the plant would use enough electricity to power about 250,000 homes, but McCrary said Alabama Power has the available capacity “and we can serve it at a pretty good price.”

Seriously, it’s hard to see a major manufacturer even considering the Northeast or California with those kind of energy demands, unless they ease their hostility toward new power generation.