BUSINESS REPORT: Fracking Boom Spurs Growth Of Supply Chain In Upstate NY
By Ed Felton
From the September/October 2013 issue
A Dubai-based startup company plans to build a $102-million plant in Buffalo, NY to make steel pipes for the oil and natural gas industry, The Buffalo News reports. The new pipe-making facility is expected to employ up to 172 workers.
Alita USA Holdings is planning to install capacity at the new plant to make up to 150,000 tons per year of high-grade alloy pipes used for well casings in oil and natural gas wells. The plant will service drilling operations in the U.S.
Buffalo landed the project over a competing site in Houston, according to the newspaper report, although shipping costs from Houston would be lower. Buffalo was able to offset this advantage by offering more than $10 million in incentives, as well as property tax breaks and low-cost electricity that will save the company millions of dollars more in the years to come.
Ali Hosseini, president and CEO of Alita USA, told The Buffalo News that the upstate region’s proximity to the company’s suppliers of raw materials will help hold its costs down, while the Buffalo area’s longtime ties to the steel industry ensure the availability of a skilled workforce.
The development of a new supply chain for drilling components is being fueled by the boom in hydraulic fracturing drilling (fracking) for natural gas in the Marcellus Shale Formation (which stretches from West Virginia, through Ohio and Pennsylvania, and into parts of New York). Alita is the second major manufacturer that gets the majority of its sales from the oil and natural gas drilling industry to pick the Buffalo-Niagara region as a factory site.
Welded Tube, which makes steel tubing that for well casings, has opened a new $50 million plant on the former Bethlehem Steel site in Lackawanna. The plant is expected to employ up to 120 workers, The Buffalo News reports.
Alita expects to open the Buffalo plant during the summer of 2015. Plans call for Alita to build a 340,000-square-foot pipe mill on a brownfield site. The site also will include a separate 16,000-square-foot building for a laboratory, office space and for storage.
Alita was awarded $2 million in funding from the Western New York Power Proceeds Allocation Board. The state has offered Alita an incentive package that includes up to $6.4 million in tax credits through the Excelsior Jobs Program. The Erie County Industrial Development Agency reportedly will offer a $2-million loan that will help pay for site development costs.
YANCEY’S FANCY GETS BIGGER
Cheese maker Yancey’s Fancy Inc. has enlarged its expansion plans, reportedly targeting a Genesee County location and planning to install more production equipment to meet growing demand.
Earlier this year, the food company announced it would expand its in Genesee County plant in Corfu from 30,000-square-feet to 102,200-square-feet, an $8.7 million development price tag.
Now, Yancey’s Fancy reportedly has reached an agreement to build a 112,000-square-foot, $18.2 million plant in the Buffalo East Technology Park located across the county line in Pembroke. Yancey’s Fancy is said to have 12 acres in the park under contract.
Yancey’s Fancy is not expected to close its facility on Main Road in Corfu. As part of the same project, the company will be investing $2.5 million there and adding new equipment, including a reverse-osmosis system needed for cheese production. The system allows for faster and more efficient drying of whey.
According to documents filed with the Genesee County Economic Development Center, Yancey’s Fancy will increase its current employment of 108 workers by more than 50 people in the next few years. Incentives for the projects are still to be announced.