Cementos Lima will benefit from a $51.7 million shipping terminal on Staten Island using tax-free bonds made possible by stimulus support. When completed, the terminal is expected to import up to 30 shiploads of South American cement each year, or the annual production of one Lehigh Valley cement plant. That's drawing complaints from Valley cement companies already pinched by the bad economy.
Despite a symbolic groundbreaking held in February 2009, the project was stalled until April 2010, when New York City's economic development corporation approved $28 million in tax-exempt stimulus bonds for the project.
Private investors will buy the bonds, which haven't been issued yet. The federal, state and local governments are giving up future revenue because the bonds will be tax-free. How much it will cost federal taxpayers was not immediately available Tuesday. New York state and New York City will lose $2.3 million in future tax revenues.
Kyle Sklerov, a spokesman for the New York City Economic Development Corp., said the federal cost will be "much, much less than $28 million."
At a news conference Tuesday, U.S. Rep. Charlie Dent joined employees from Valley cement plants in drawing attention to the use of stimulus dollars.
Dent on Sept. 30 sent a letter to President Barack Obama telling him the jobs created by the Staten Island project are not worth the hundreds of jobs that could be lost in the Lehigh Valley. About 1,500 people work in the five cement plants.
"People are justifiably outraged by this," Dent said. "People here are paying taxes, and they did not expect their tax dollars to be used to subsidize foreign cement manufacturers."
Staten Island Borough President Jim Molinaro said the project will create good-paying local jobs for his constituents, who have been hurt, like workers everywhere, by the sluggish economy. He said the pier is just one round in the ongoing competition among states for jobs.
The New York City Economic Development Corp. estimates the terminal will create 200 construction jobs and 125 permanent jobs once it opens.
"There are many businesses that have relocated from New York state to Pennsylvania," Molinaro said. "What's the difference where they get the money from?"
It's likely that once the terminal opens, it will cost Lehigh Valley producers some business, especially if shipping costs remain low, said Robert Madeira, founder and managing director of the CW Group, which operates CemWeek.com, a leading source of information about the global cement industry.
"Clearly, that is 800,000 tons [that] could have been produced" domestically, he said.
The U.S. has always imported some of its cement to keep up with domestic demand, and the Staten Island pier would be one of many in existence up and down the U.S. coasts, he said.
Cement is expensive to transport, so producers located near their end users have always enjoyed a competitive advantage, he said. But many foreign producers have lower production costs because they face fewer government regulations. Shipping costs at near all-time lows have made imported cement cheaper.
"Clearly, that has enabled companies abroad to ship cement at much more competitive rates," Madeira said.
In the end, most consumers of cement make their buying decisions almost exclusively on price, he said.
Silvio Panseri, president and chief operating officer of Essroc in Nazareth, said American companies are at a disadvantage because "we are asked to compete with people who do not obey the same rules."
The cement industry is hurting and did not reap promised benefits of the stimulus law, senior officials of local cement companies said. Common complaints are that infrastructure money paid for quick fixes like repaving roads or filling potholes, rather than new structures that would use cement.
Standing outside the Keystone Cement Co. in East Allen Township, Stephen Hayden, the plant's manager, said output already is less than 50 percent of capacity. For weeks at a time, cement workers are laid off to later be brought back when business picks up.
Hayden guided Dent, who represents the Valley-based 15th Congressional District, across the plant's campus as they talked about the impact the Staten Island project could have on the local economy.
Independent candidate Jake Towne, who is hoping to unseat Dent on Nov. 2, said the congressman can't pick and choose when he supports government interference, noting he has supported other government programs like the Wall Street bailout.
Justin Schall, campaign manager for Dent's Democratic challenger, John Callahan, questioned the timing of Dent's news conference, pointing out in a statement that project funding was approved in April.
"The reality is Charlie Dent did nothing to save these jobs, instead he waited until three weeks before an election to use these poor people and their jobs as a political football," Schall said.
Dent's spokesman, Collin Long, said the local cement companies only alerted him to the issue last month.
"Nobody is really aware of what is going on here," Dent said. "I intend to kick up some dust about this."
