Tax Changes Set Stage for Ellwood Steels Expansion

NEW CASTLE, Pa. – New tax policies put in place by Congress last year have allowed Ellwood Group to flex its muscle and expand this year, evidenced by the corporation’s new $60 million remelt shop now under construction at its Ellwood Quality Steels division, executives said Monday.

“We’re able now, for the first time, to write off that investment dollar-for-dollar against our taxes on a current basis,” said David Barensfeld, CEO of Ellwood Group. “We would never have been able to make this big investment if we did not have that new tax provision.”

Barensfeld said before the Tax Reform Act of 2017, it would take between seven and 10 years to write off investments such as new equipment. “This is a powerful shot in the arm for investment,” he said. “It’s only through new equipment, new technology that our people are more productive. And because they’re more productive, we can pay them more.”

U.S. Rep. Mike Kelly, R-3 Pa., joined Barensfeld on a tour of Ellwood Quality Steels’ steelmaking operations and its new remelt building Monday afternoon. Kelly faces a challenge from Democrat Ron DiNicola for the seat in this year’s midterm election Nov. 6.

“This is a heck of a decision for all of you to make,” Kelly said as he stood outside the new complex, now braced with structural steel and an exterior skin. “This is an incredible commitment.”

The 100,000-square-foot facility will house the most sophisticated equipment used in the remelting process, said Mike Morgus, president of Ellwood Quality Steels. The new plant will be placed into commission by the end of first quarter of 2019.

“It’s going to be heavily automated,” he said, noting the expansion will add 25 jobs through the first half of next year. As more equipment is activated, more jobs will be needed for the new operations.

“We’re not starting all the furnaces up at once,” he said. “The first furnace will be brought on during the first quarter and as additional furnaces start up, we’ll be bringing additional people on.”

Five electric remelt furnaces will operate out of the new building, Morgus said. “It’ll be the highest-quality facility anywhere in America,” he said. “It’ll be a fine addition to our capabilities.”

Barensfeld said the expansion at Ellwood Quality Steels is tied to business the company has secured in the aerospace industry, which requires specialty steels for certain components and products. “The biggest single end-market is aircraft,” he said.

Kelly also toured portions of Ellwood’s melt shop, where he observed the company’s electric arc furnace in operation. In another part of the plant, a 10,000-ton forge press – the largest of its kind in the western hemisphere – was forming a massive steel shaft that will be installed on an aircraft carrier.

Kelly emphasized such investments help ensure that the United States continues to have a domestic source for its steel and products. “You’ve invested in America’s security,” he told Barensfeld. “If we don’t have this type of facility, how do we protect ourselves?”

Moreover, he said the Trump economy has led to benefits across the board for everyone. “For every 1% of economic growth is $1 trillion in revenue,” he said. With economic growth hovering around 3%, the congressman noted that strong revenue growth means better days for all workers. “It’s not just good for Democrats or Republicans, it’s good for Americans,” he said.

Initially, Kelly was supposed to be accompanied by U.S. Sen. Pat Toomey, R-Pa., during the Ellwood visit. However, Toomey cancelled his appearance and opted to remain in Pittsburgh to help with the aftermath of the mass shooting at the Tree of Life synagogue there.

“That’s the neighborhood my mother grew up in,” Kelly said. “I know that synagogue and I have friends that go there.”

On Saturday, a gunman charged into the synagogue and killed 11 Jewish worshipers in what is the worst anti-Semitic attack in U.S. history.

“I don’t know what’s happened to us as a culture,” the congressman said, noting that no one should have to fear practicing their faith.

“There’s something amiss,” Kelly said. “We ask, how could this happen on our watch? Since it did happen on our watch, we have to do something to fix it.”

Pictured: Ellwood Quality Steels President Mike Morgus talks to U.S. Rep. Mike Kelly and Ellwood Group CEO David Barensfeld Monday during a tour of the company’s new site in New Castle, Pa.

Copyright 2022 The Business Journal, Youngstown, Ohio.