NEW YORK Michigan Seamless Tube LLC (MST) is getting a $25-million investment from parent company Optima Specialty Steel Inc. to expand its product offerings and increase production capacity at its South Lyon, Mich., facility by between 700 and 1,300 tons per month.
"These investments are to expand our product range to make product that we never made before and offer (customers) better tolerances and better tubing characteristics than we ever did before," Les Whitver, MSTs vice president of operations, told AMM.
The majority of the investment, $19 million, will go toward the purchase of a new cold Pilger mill and a building to house related tools and processing equipment. The remaining $6 million will be used to purchase a 377-foot atmosphere control furnace, the company said.
The furnace is expected to start operating in April 2014, while the millwhich will allow the company to increase product lengthswill be fully operational in early 2015.
MSTs expansion is targeting the oil and gas market, for which "the horizon looks very, very good," as well as the power generation market, "whether its the guys that are burning coal or the natural gas plants," MST vice president of sales and marketing Ted Fairley said.
While not large in the context of recently announced projects in the pipe and tube sector, the expansion is sizeable for the smaller-diameter tubing market that the company serves. "If you put that into perspective of specialty tubing here, its quite a significant expansion," Fairley said, adding that it amounted to "approximately a 20- to 25-percent increase here overall" for MST.
The company makes carbon and alloy seamless cold-drawn pipe and tube, with a production capacity of more than 40,000 tons annually. After the expansion is complete, output will climb to more than 50,000 tons per year, "based on product mix," a company spokesman told AMM via e-mail.
"Our hot mill has been underutilized historically, and this Pilger mill will allow us now to maximize (the mill)," Fairley said. "Nobody else is using a Pilger mill to make carbon and alloy tubing."
MSTs track record and the success of the equipment in making other products should alleviate any start-up concerns, he said. "The technology is proven, MST as a supplier is proven."
The company is targeting inroads into the alloy tubing market following the expansion. "With this expansion, we really should be able to be a leader in the alloy pipe market," Fairley said.
Optima Specialty Steel previously invested $1.5 million to add oxygen fuel burners, $6 million for a fifth pickle house and $4.5 million for a new quench and temper line, according to MST.
"This is a big step, and what it really does is increase the efficiencies of MST," Mordechai Korf, chief executive officer of Miami-based Optima Specialty Steel, told AMM, adding that Optima also is considering further investments in some of its other subsidiaries, which include Kentucky Electric Steel LLC, Ashland, Ky., and Niagara LaSalle Corp., Hammond, Ind.