What was planned to be a great boom to many construction companies has now turned into a financial nightmare for over 40 subcontractors who claim they are owed over $68 million by Walbridge Aldinger Company –the general contractor for the Benteler Steel/Tube Manufacturing Corporation and its new plant at the Shreveport Bossier Port. This group has filed collectively over 60 liens against Benteler, Walbridge, and the surety bonding companies-Liberty Mutual Insurance Company and Travelers Casualty and Surety Company of America.
In June 2013 Benteler broke ground on the first phase of the $975 million steel manufacturing project. The first phase—a hot-rolling seamless steel tube facility—has now been completed; the liens are for unpaid bills dealing with this facility. A second phase of construction is to include a steel mill with an electric arc furnace; it is scheduled for completion in 2020. To train workers for this facility Benteler opened a training facility at Bossier Parish Community College.
When both phases of the Benteler plant are complete, it is anticipated that 675 new direct jobs will be added to the local economy, with an average salary of $50,000 plus benefits. An LSU economic impact analysis has estimated an additional 1500 plus indirect jobs will also be created. All together, the project should result in $2.7 billion in total new earnings and a cumulative economic impact of $16.2 billion for the Northwest Louisiana region over the next 2 decades. However all these “pie in the sky” projections do little for those subcontractors who have not been paid.
Walbridge Aldinger, the general contractor, is one of the 50 largest construction companies in the United States; it is headquartered in Detroit. This company had a long standing relationship with the automobile industry constructing facilities in the U.S and all over the world. Additionally, the company handled major construction projects at the Detroit airport and in other areas of the nation. The Benteler plant is reportedly the first construction plant in Louisiana.
Currently litigation to collect unpaid bills has been filed by Thermo-Technics Air Conditioning Heating and Refrigeration, Trio Fabricators, F.J. Burnell, Henderson Construction, Fire Tech Systems, Southern Industrial Mechanical Maintenance Company, Quality Sitework Materials, and Rimmer Electric. Other local companies owed moneys that have liens filed include Electric Supply Company, Landpoint LLC, Avallone Door Company, Hamm Mechanical, B & J Floor Service, Modello Scaffolding, Quality Acoustics and Drywall, and Ruston Glass. It is anticipated that additional suits will be filed by most of not all the lienholders.
In-house counsel for Benteler did not respond to requests for information on these unpaid construction liens. Reportedly Benteler has refused to pay because Walbridge Aldinger “exceeded the scope of the contract.” Many observers question this explanation since reportedly representatives of Benteler were on location during the plant construction and quite aware of the construction completed on the job site. To say the least a claimed “overage” of $68 million seemingly defies logic.
How all this plays out is a story that will not be resolved for quite some time—and it will take a year or longer for the pending litigation to be resolved. In the meantime local businesses who provided services and materials to these local subcontractors can expect tough economic times. This is certainly not welcome news coming on the heels of the downturn in the oil and gas sector and its severe impact on the local economy. Additionally, these disputes certainly take the bloom off the rose on a much needed (and much heralded) economic boom that the Benteler facility represents to this area.