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A major U.S. steel producer is strongly considering building a multimillion-dollar plant in the city that would employ almost 400 people.

Penninox America Corp. of Trenton, N.J., a leading producer of stainless steel bars, asked the Niagara County Industrial Development Agency on Friday for tax breaks in the construction of a factory on Buffalo Avenue.

The company declined to discuss the project, but a local economic development official called it almost a done deal.

At a special meeting Friday, the agency agreed to help finance the project with sales tax exemptions and other concessions. It will hold a mandatory public hearing at the end of October, with the date and location yet to be set.

The new jobs would be a huge windfall for a city that lost 340 jobs at Occidental Chemical Corp. last May and 57 at Niagara Falls Memorial Medical Center in July.

"This is a major announcement and will have a significant impact on the city," said John C. Drake, the director of the Department of Community Development.

Drake said he and his staff have been working for months to bring Penninox to the city.

"This will revitalize Niagara Falls," said Nancy Joseph, the deputy director of economic development. "These are good-paying jobs. I can't remember the last time a manufacturing company of this size came to Niagara Falls and built from the ground up."

Joseph said the steel mill plan is practically "a done deal," but Penninox America president Harry Moxley declined to discuss the proposed plant when contacted Friday at the company's head office in Trenton.

"We want to keep it out of the public eye," Moxley said.

Construction of the steel mill could begin early next year, city officials said.

The Penninox America jobs could generate an additional 600 jobs in the secondary market and service industry, said Stephen Kagann, Gov. George E. Pataki's chief economist in Albany. The factory workers would spend millions of dollars locally, he said.

"That multiplier effect is greatest in manufacturing jobs," said Kagann. "The impact of manufacturing on an economy is more powerful than any other industry."

The steel mill would be built on the site of the former Acheson Graphite plant on Buffalo and Portage avenues in the heart of what used to be the industrial center of Niagara Falls. The area became largely abandoned during the Rust Belt exodus of the 1960s and 1970s, and is now littered with dilapidated and half-demolished factories.

Penninox America has a patented process to produce cold-finished flat bar and stainless steel flat bar to true hot-rolled bar tolerances, according to company literature.

The Niagara Falls steel plant would be larger than one Penninox is currently building in Lithuania. That $35 million plant will employ 200 people and make $80 million a year within four years, according to the Baltic News Service, quoting the company's managing director in Vilnius.

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