Grant Tennille, executive director of the Arkansas Economic Development Commission, says if Arkansas lawmakers are adverse to risk, then the Big River Steel superproject and future economic development projects could be futile pursuits.
“There is risk here. There is risk in any business endeavor. We feel as if we’ve spent a year understanding the risk and mitigating it as best we can,” Tennille said in an interview on Talk Business Arkansas.
Arkansas leaders announced in late January plans for a $1.1 billion steel mill superproject to be located in Osceola, Arkansas (Mississippi County), but the 525-job project is contingent on the state legislature approving a $125 million bond issue to fund incentives and loans.
If Arkansas lawmakers don’t move forward on the superproject, Tennille said it will kill the deal. He also was asked if turning the project down would diminish the ability of Arkansas to recruit similar projects in the future.
“It largely depends on the outcome of some of these hearings we have coming up,” he said. “It’s certainly understandable if, based on factual evidence and sound economic theory, that we take a pass. If we send the message to the world that we are intolerant of any risk at all, I don’t think we’ll get an opportunity to look at another project.”
A joint Agriculture/Economic Development committee of the legislature will meet Monday (March 25) at 2pm to discuss the Big River Steel project and two independent studies commissioned by the General Assembly to study the billion-dollar deal.
The studies – one conducted by IHS Global Insight and the other by REMI – suggested a somewhat favorable analysis of the Big River Steel project, but they did raise questions generally tied to requests for more details and warnings about potential risks.
“Overall, I think that the IHS report is fair and actually confirms our assessment of the project,” Tennille said. “Ultimately, what the IHS report says is that there is uncertainty in business. And I think we all knew that there was uncertainty in business when we started this project.”
One of the main concerns raised is that if other players enter the steel market in a manner that competes with Big River Steel, then it could result in a “zero sum environment.”
Tennille said because of the steep costs to enter the market, he doesn’t see a rush of competitors ramping up to build new factories.
“If Big River gets its plans announced and we approve them, the likelihood that somebody else is going to come right after them and announce a plan to go after the same market is somewhat slim,” Tennille said.
You can watch his full interview below.