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[From Business Week, January 28, 1956]
CENTRAL CITY, KY., March 3.-Cost of the navigation improvements is nearly $8 million, the Rough River Reservoir about $6.5 million. In other words, both will cost less than $15 million.
It is doubtful, people here say, that optimism and a renewed lease on economic life for an entire area ever were brought so cheaply.
The lock and dam improvements will open the lower 103 miles of the Green to Ohio River-size barges. Work, started in early 1954, will be completed in midApril.
There are numerous examples of how the project already has had a stimulating effect on the coal industry and on business in general in these parts.
For instance, the Green River Valley Citizens League, which has spearheaded the river-development drive, reports 3 million tons of coal from mines near here has been contracted for on the strength of savings to be affected once the coal can be moved to market by barge.
That coal, the league emphasizes, was contracted for before the navigation improvements were completed. A much greater increase in mining should come later, it adds. And since it is estimated that a ton of coal is mined for $1 in wages, $3 million in fresh payroll money already has been created, or soon will be.
Since the canalization work began, there has been something of a rush to locate mines on the river or to build facilities on the stream whereby existing mines can use the waterway. Three examples stand out :
Gibraltar Coal Co.-This firm has located a new multimillion-dollar mine near the river 3 miles from Central City. The mine will be a strip operation. It will open in April. It will hire at least 200 persons, and will produce 12,000 tons of coal daily. A 1,300-foot-long canal has been dug from the river to near the tipple. A conveyor belt will move coal from the tipple to piers in the canal, where it will be dumped into barges.
Paradise Collieries.-Actually, this company's new mine between South Carrollton and Rockport opened 4 years ago. But even then, the location was decided upon in anticipation of the river's being improved. Moreover, the mine won't go into full production until canalization is completed. It will load coal directly into barges.
(By Joe Creason, Courier-Journal staff writer)
SMALL INVESTMENT, BIG RETURN?-GREEN RIVER DEVELOPMENT WORK SPURS OPTIMISM IN COAL REGION
OLIN DEAL FULFILLS THREE DREAMS
Aluminum expansion continued unabated this week-but with a striking new evolutionary twist. This time, it came as part of a deal that brought fulfillment for 3 major companies' dreams. And it opens new sources of supply for 5 commodities-coal, aluminum, power, chemicals, alumina.
That was the significance of Olin Mathieson Chemical Corp.'s announcement, weeks after the news leaked out, that it will erect a 60,000-ton aluminum plant on the Ohio River near Clarington, Ohio. The project is loaded with "firsts":
Pittsburgh Consolidation Coal Co., one of the participants, will build the country's first low-temperature coal carbonization plant. Designed to yield coal chemicals in volume and quality unavailable from the steel industry's coke plants, the plant also will yield a new, lower-cost boiler fuel.
American Gas & Electric Co. will operate a two-unit power plant on the opposite bank of the river. A. G. & E. will own one of the two 225,000-kilowatts turbine generators, apply it exclusively to its own system; Pittsburgh Consolidation and Olin Mathieson will own the other jointly and use its output for the aluminum plant. A. G. & E.'s president, Philip Sporn, has been working for at least 5 years to bring aluminum's big power loads to the coal-based utility generation of the upper Ohio Valley. The Olin plant will be the second aluminum load to respond. Kaiser Aluminum & Chemical Corp. recently contracted for a long-term 450,000-kilowatts supply from A. G. & E.
Olin realizes 3-year dream by getting into aluminum smelting, and building the Nation's first integrated aluminum plant.
Aid for area
Pittsburgh Consolidation expects to spend about $20 million for a new mine and its carbonization plant. Olin will spend $90 million for its aluminum plant, and a joint Pittsburgh Consolidation-Olin subsidiary will spend $30 million more on the powerplant. With A. G. & E.'s $30-million investment in the second turbine, a total of $170 million will go into an area that has suffered from coal's slow business.
New fields for coal
To feed its low-temperature carbonization plant, Pittsburgh Consolidation will open a new 2-million ton mine beside the river. At the plant, volatile elements will be driven off the coal by heat of about 900° F. (half or less of conventional coke-making heat ranges) and processed chemically for sale. The residueperhaps 66 percent of the input-will flow to the new power station for boiler fuel.
Pittsburgh Consolidation gets several advantages from the project: (1) The large-scale long-term coal sales let it mechanize its mining thoroughly and recover the costs over many years; and (2) it gets a new revenue source by extracting a maximum chemical yield from its coal.
It can process these chemicals itself, further raising the cash yield from its coal. And, if it chooses, it can apply some of the chemical proceeds against the price it charges the power plant for the residual "char"-letting it price its coal competitively for boiler-fuel use.
New tactics for power
Through the deal, A. G. & E. demonstrates new tactics for the power industry, too. For years, power men have yearned to serve the huge demands of electrometallurgy and electro-chemistry, but they've been somewhat afraid to tackle them, too. Such loads are so large and so continuous that they conflict directly with conventional utility practice.
So now, Sporn has demonstrated a third way, within 3 years, of accommodating such loads to utility systems:
He allied A. G. & E. with numerous other utilities to erect and operate a 2.2 million kilowatt system serving the Atomic Energy Commission at Portsmouth, Ohio. Here, utility credit, know-how, economies, and reserve capacity captured the business.
In his Kaiser contract, Sporn assumed a perilously large single-purpose load for a conventional utility system to take on. But the A. G. & E. system, with
4 million kilowatts operation and another 1.7 million kilowatts building, not only can supply it but can absorb it if Kaiser's demand slows.
In the Pittsburgh Consolidation-Olin deal, A. G. & E.'s integrated system offers Olin invaluable economies and protection.
KNOW SOUTHERN ILLINOIS INC.
The organization was incorporated June 17, 1940, as a nonprofit corporation under Illinois law. Its objectives as set out in the charter are: "To preserve present industry located in southern Illinois; to publicize and promote the industrial advantages of southern Illinois; to publicize and promote the recreational advantages of southern Illinois; and to promote the educational advantages of southern Illinois and particularly to promote the expansion and growth of Southern Illinois Normal University."
Know, too, that great progress has been possible during the last 15 years by the close cooperation of local chambers of commerce, our Southern Illinois University, our Illinois Public Aid Commission, our elected officials, our public utilities, our newspapers, radio and TV stations, our banks and other business and professional men and women, our friendly-labor unions, our railroads, truck lines, and civic, professional, and fraternal groups. All are working as a great and powerful team in an organization-Southern Illinois Inc.
Know, also, that the many good things that have come to southern Illinois during the last 15 years did not "just happen." Examples:
1. Crab Orchard, Little Grassy, and Devil's Kitchen Lakes.
2. Illinois ordnance plant.
3. Development of Southern Illinois University and Vocational Technical Institute.
4. Several new manufacturing industries, employing more than 10,000 people. 5. Much better labor-management relations.
6. Developing a sense of pride in our scenic and recreational assets.
7. Advertising nationally the good thingse of southern Illinois-good magazine stories and TV releases.
8. Further plans in the making for Rend Lake and other Big Muddy Basin improvements.
9. Immediate promise for further development for our timber resources. 10. Promotions of air service and better roads.
11. Definite plans for further utilization of our mineral resources.
12. Serving as a forum for discussion, evaluation, etc., of worthy projects for southern Illinois and as a powerful committee of action to get things done. The "area concept" of assuming that what is good for one community of this area is good for all of southern Illinois is becoming a widely accepted belief. Mr. HUGHES. Over on page 8 I will continue the statement: The generation of electricity by coal is a bright and encouraging picture. The export market changes with the fluctuations of the international crises. No chemical use of the byproducts of southern Illinois coal has had any noticeable effect on our markets.
Hardin County has the largest known reserves of fluorspar in the United States and leads the national production of that strategic and critical material, but importations from Mexico leave 300 unemployed and several hundred others with only part-time employment.
Our farm economy has the general reverses of the average national situation and, in addition, these adverse factors have added to our distress. Since our farm production is relatively low, when compared to the rest of Illinois, we have such reduced margins of profit
that during 1945 and 1954 our area suffered a loss of more than 6,000 farms.
There is a statement of statistics on that.
(The statement follows:)
Number of farms, 1945 and 1954, in 16 southernmost counties of Illinois
Sources: 1945 Census of Agriculture and 1954 Census of Agriculture-preliminary.
Mr. HUGHES. In 1954 these counties suffered a severe drought. In the latter part of 1955 the same area was further damaged by a prolonged dry period.
The counties of Union, Jackson, and Johnson produce fruit, apples, peaches, strawberries, and so forth, in great quantities. Only once before in recent times have they experienced low temperatures of such killing effect as in the early spring of 1955. The result was practically a 100 percent loss in peaches and a greatly reduced apple crop.
We have been rather pleased to have the Federal Government take an interest in our timber down there. Our timber resources have had the interest, encouragement, and support of the Federal and State authorities for almost 20 years and results are heartening and hopeful. The men of the United States Forest Service, both in research and in charge of the Shawnee National Forest, give promising reports on their experiments and progress. With such continued help as the recently dedicated wood products pilot plant at Carbondale and the cooperation of the State government, we may yet become a great commercial wood-producing area.
If I may digress, there is a distressed area, where a bill such as we are proposing here today can do a great deal of good.
In that other mention of the fruit, we hope to have a freezing and processing plant on a large commercial basis, whereby we can sell those products when the market won't take them, the excess and the surplus, when the market drops off; we can put them into that cold. storage and freeze them and put them on the market. There is a ready market for that.
The chambers of commerce, the industrial development departments of our railways and utilities and our organization, Southern Illinois Inc., have been able to attract an average of 1,000 new manufacturing jobs to this area each year since 1946. However, our best efforts have not equalled our losses of employment in the closing of coal mines, farms, and other curtailments resulting from a depressed economy.
In the lower counties along the Ohio River a great many building tradesmen are stranded because of the completion of the Atomic Energy Commission's constructions at Joppa, Ill., and Shawnee and Kevil, Ky. Others have migrated, leaving the communities of Brookport, Metropolis, Cairo, Mounds, and Mound City with problems of surplus housing and diminishing tax receipts to support their local governmental units. See letters from business agents representing various building and construction crafts of southern Illinois.
(The letters referred to follow:)
(Letter dated December 30, 1955, to Mr. Goffrey Hughes, executive director, Southern Illinois, Inc., Carterville, Ill., from Mr. Joseph P. Williams, business representative, Carpenters Local Union, No. 803, United Brotherhood of Carpenters and Joiners of America, Metropolis, Ill. :)
In compliance with your request, please be advised that, the unemployment problem within the southern Illinois district, has reached the critical point. Within the carpenters, the craft whom I represent, the problem is beyond that point, if possible.
For the past 6 months, members of my organization have been forced to resort to public relief for their survival. Presently there is 5 of my members employed at the carpentry industry, out of 280 residents of this area who depend on carrenter work for their livelihood. Since I am very closely associated with other workmen's representatives, including construction and industrial, I can assure you that their problems are similar to mine. Generally speaking, one could only say that the employment condition has reached the point of being disastrous. I also wish to advise you that all labor groups, civic and management are very disturbed over this situation. And realizing that the labor-management relations in the past have been anything but cooperative, we have arrived at a meeting of minds, and come up with an arbitration plan, that we are sure will operate to the satisfaction of everyone concerned, thereby eliminating any future labor-management strife.
In general, Mr. Hughes, if there isn't some development in this area, in the very near future, my members and other laboring people will be forced into entering upon a pioneering adventure in other districts of our country.
Trusting this will provide you with the information desired, please allow me to remain.
(Letter dated December 30, 1955, to Mr. Goffrey Hughes, executive director, Southern Illinois, Inc., Carterville, Ill., from Mr. J. O. Jones, business manager, Local Union No. 702, International Brotherhood of Electrical Workers, West Frankfort, Ill.:)
With reference to your inquiry of December 29 regarding the unemployment situation in the Electrical Workers' Union which has jurisdiction in all the southern Illinois counties from Salem, Ill., south, it is with deep regret that I must report that the situation at this time is at the lowest and worse than it it has been in the last 15 years. At this time we have several of our members unemployed including skilled and semiskilled workmen and I can see nothing in the immediate future for them in this area.
I have checked with the power companies and also the Dodge reports and I can see nothing that will help the situation in the near future.
As a labor representative I am happy to be able to say that the actions of the laboring people in southern Illinois did not bring this situation about. It is true in the past that there has been much difficulty and strife but in the past 2 years we have been able to sit down with management, discuss our problems and in almost every instance come to an understanding or at least one which could be worked under.
We are also happy to say that the Joppa plant under new construction management was completed the last 2 years without any stoppage whatsoever and any other corporation or company desiring to locate in this area I am sure can get the same treatment and fair play that was given to the Bechtel Corp. and the E. E. 1. Corp. if they care to cooperate themselves.