STEEL GROUP URGES CHANGE IN STATE FINANCING PROGRAM, CITES BENEFITS TO STEEL INDUSTRY AND PUBLIC

COLUMBUS, Ohio (July 2, 1998) –  The Ohio Steel Council is urging state officials to expand the steel industry's allocation of tax-exempt financing for qualified capital improvement projects, contending the current system places the industry at a competitive disadvantage.

The Council, comprised of steel producers, steelworkers and state and education officials, has sent a letter to the Joint Select Committee on Volume Cap asking Ohio legislators to allocate more tax-exempt bonds under the volume cap program to steel-related projects.

Under the volume cap program, each state is permitted by the federal government to issue a set amount of tax-exempt bonds for qualified construction projects in the private sector. Ohio's volume cap for 1998 amounted to approximately $550 million. In the steel industry, new construction projects that improve air quality or result in other environmental benefits can generally qualify for this type of financing.

"The competitiveness of the Ohio steel industry is tied in large part to our ability to modernize and reinvest in our facilities," said Harold V. Kelly, co-chairman of the Council and executive vice president at Republic Engineered Steels, Inc. in Massillon.

"The public ultimately benefits from this investment in the form of well-paying jobs and higher personal and property taxes paid by steel producers. Failure to set aside an adequate amount of the volume cap for the steel industry could hinder further investment in Ohio while encouraging investment in those states that are providing significant amounts of these bonds for steel projects."

In past years, the state has provided a portion of its volume cap for steel projects. A proposal now under consideration by the state would provide only 7 percent of the volume cap for steel projects beginning in 1999 and establish a maximum of $25 million for any one project.

The Steel Council contends the proposal is inadequate because it would make only about $38.5 million available to the entire industry, and the $25 million limit would be insufficient for most steel projects.

Ohio steel producers have invested more than $3 billion on upgrades and expansions in the past five years and have projected they will spend in excess of $530 million this year. On average, each dollar of tax-exempt financing is matched by more than a dollar of capital investment from steel companies.

In previous years, Republic Engineered Steels used $73.9 million in tax-exempt bonds to help finance more than $200 million in upgrades at its Canton plant, and The Timken Company received $24 million in bonds for the $55 million improvement at the Harrison Steel Plant in Canton.

"A substantial allocation of such bonds for steel-related projects would further our modernization efforts and bode well for the economic health of Ohio," Kelly said.

The Ohio Steel Council, appointed in 1991 by Gov. George V. Voinovich, is a public-private partnership designed to strengthen ties among the steel industry, the state of Ohio and its citizens. The Council's member organizations are AK Steel Corp., Armco Inc. (associate member), CSC Ltd., LTV Steel Co., Lukens Steel (associate member), North Star Steel Ohio, Republic Engineered Steels, Inc., The Timken Company, USS/KOBE Steel Co., WCI Steel, Inc., Wheeling-Pittsburgh Steel Corp., the United Steelworkers of America, the Ohio Legislature, Ohio Department of Development, The Ohio State University and Youngstown State University.