LUFKIN, TX (KTRE) - GE announced its plans to invest $60 million to modernize and expand the foundry operations at its GE Oil and Gas Foundry, which was once Lufkin Industries Thursday morning.
According to a press release, GE plans to demolish 30,000 feet of its existing 515,000-square facility near downtown Lufkin and build 72,000 square feet of new buildings. In addition, GE plans to refurbish the remaining facilities at the foundry.
“We chose to invest in modernizing and improving our existing foundry because of the rich history and dedicated, skilled workforce associated with the Lufkin operation here in Texas,” said Jerome Luciat-Labry, president of Well Performance Services for GE Oil & Gas. “The goal is to make the facility as efficient as possible and help strengthen the competitive position of our business around the world. We are excited about continuing to support manufacturing jobs in the United States and especially here in Angelina County where Lufkin Industries began.”
GE's Oil and Gas Foundry division produces “industry-leading” iron castings used to make pumping units and power transmission equipment.
“The facility upgrades will create a simplified production process flow, improve employee working conditions and provide GE's customers with improved quality and delivery schedules,” the press release stated.
Lufkin Industries' foundry division has been a fixture in the community since 1902. The press release stated that the investment will “infuse the site with modern technology and practices to reduce emissions and boost production efficiency increasingly competitive global marketplace.”
“By having its own foundry, GE Oil & Gas has a strategically integrated supply chain that allows the company to more rapidly meet the needs of its customers, particularly in the fast-growing unconventional oil and gas sector,” Luciat-Labry said.
The press release said that GE will start design work for the project later this year. The facility upgrade, as it is currently proposed, would be carried out in four phases and should start in 2016, pending government approvals and permits. Construction is expected to be complete in three years.
“The foundry manufactures gray and ductile iron castings, producing an estimated 72,000 tons of products each year,” the press release stated. “About 87 percent of the foundry's products are used to supply GE's own Lufkin factories while the remainder is sold externally to other customers.”
The $60 million investment reflects GE's ongoing commitment to its foundry division and the community, the press release stated.
“These renovations will not only improve safety and efficiency, but also will allow the foundry to continue operating for the foreseeable future,” the press release stated.
"We can't shut down the plant," Luciat-Labry said. "We need the supply, we need the equipment so all the things will happen without stoppage or disruption in service."
GE purchased Lufkin Industries for approximately $3.3 billion in April 2013. Globally, the company has invested more than $85 million in the foundry since the acquisition.
Lufkin Economic Development Director Thad Chamber confirmed on Thursday that meetings classified as "Project Phoenix" involved the improvements GE is planning. Chambers said they were first approached by the company in July.
In the discussions with the city, GE was looking for a 100 percent tax abatement over the next 10 years on added taxable value. That value is believed to be around $36 million. The city will also be involved with a project that will cost up to $4.5 million dollars in rerouting storm sewer systems that flow under the facility. Chambers said they had to have a code name because they were not allowed to release the name until final approval was made.
Luciat-Labry said the tax abatement issue was a big part but not the only issue with the project going forward.
"I see the tax abatement as being one of the elements, but I can tell you we are looking at hundreds of additional elements that will make a project work and we need all of them to be okay," Luciat-Labry said. "I wouldn't say one single element makes it or doesn't make it work."
On Thursday, GE shares were selling for $26.25 each, which is up 1.67 percent.