Due to the hike in natural gas prices and the amount of fuel needed to run the facility, Nucor Corporation’s state-of-the-art iron plant in Convent, Louisiana no longer made economic sense by the late 1990s.
The price of natural gas, a key input in Nucor’s iron and steel-making plants in the U.S., remained fairly stable throughout the 1980s and 1990s at around US$5 per thousand cubic feet. Then, between 2000 and 2005, natural gas prices in the United States rocketed to around US$15 (see U.S. Energy Information Administration data).
When that happened, Nucor started to look around for suitable sites to relocate the plant, which had been mothballed since 1999. The company needed a location where it could access abundant supplies of natural gas at competitive prices, as well as a site that made logistical sense and where it could operate in a secure environment with a skilled workforce.
“Other sites, both within the United States and outside the United States, were considered,” explains Jay Henderson, General Manager of Nu-Iron Trinidad and Tobago, a wholly owned subsidiary of Nucor. “Trinidad was far and above our choice because of the government and the education system.”
A Positive Government Attitude was Crucial to Securing the Investment
Nucor’s positive dialogue with the Trinidad government was crucial to secure the project, not the least of which was the ability of the authorities to arrange a supply of competitively priced natural gas over an extended period.
“We have a very good relationship with the government, different ministries, and different government agencies,” Henderson says. “They have been very helpful to us and that has helped to keep us here to continue to add capital to this facility.”
Henderson adds that Trinidad’s economic and political stability was essential to give Nucor the confidence to make the investment. “There are several attractive things for Nu-Iron in Trinidad. Number one, there has been a very stable government here for the past 50 years. That’s very important to us.”
In 2004, Nucor arranged for the Louisiana plant to be dismantled and for much of the equipment to be shipped by barge to Trinidad. The new US$300 million facility started to take shape at Point Lisas on the mid-west coast of Trinidad in the spring of 2005.
Trinidad’s Location between the Americas Gives it the Logistical Edge
Nucor says the relocation benefits from favourable logistics for receiving iron ore and shipping direct reduced iron (DRI) to the U.S. Iron-rich ore pellets are shipped from Brazil and Canada by boat to the Point Lisas port facility, which lies below the Caribbean hurricane belt. The iron ore is processed at Nu-Iron’s mills and DRI is shipped to five Nucor divisions in the U.S. where it is melted and processed into steel.
Trinidad has two fully developed industrial ports that serve as major transhipment hubs between the Americas. They are located in Port of Spain and Point Lisas, handling dry and general cargo, industrial bulk and containers.
An Educated Workforce: Final Piece of Persuasion Needed to Complete the Relocation Puzzle
The Nu-Iron plant uses advanced industrial technologies to produce DRI so the company needed access to a skilled and flexible workforce. “We are very impressed with the education system in Trinidad and we have an extremely well-educated workforce,” says Henderson. “All of our divisions are very highly technical positions so we look for people with technical ability to perform.”
Nu-Iron makes training a priority. The company hires 8-10 university interns each year and some of these placements have led to permanent jobs for the trainees. The company is also thinking long-term about giving the population the opportunity to gain skills. “Every Nucor team member, their spouse and their children are eligible for a scholarship that helps pay for their education,” explains Henderson. He adds that the company is also keen to work more closely with the University of Trinidad & Tobago to help raise the profile of manufacturing and industry as a career choice.
Henderson confides that his managerial peers in other foreign companies operating in Trinidad share his views on educational standards here: “There is a group of CEOs and general managers that meet on a quarterly basis and I can tell you that they all feel the same way I do, that the education system is a big plus for attracting foreign investment to Trinidad.”
He adds that the workforce has proved stable and flexible with little staff turnover, despite having to run the operation 24 hours a day, 365 days a year. “We have 125 team members here and over 80 percent of the team has been here since we started in 2006. They are very well educated and very well rounded, and they have adapted to the Nucor culture.”
Nu-Iron Trinidad only employs three expats: Henderson, the maintenance engineering manager, and the operations manager. “The other two are both training their replacements and they will be people from Trinidad,” says Henderson. That is confidence in the workforce in action.