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BethWorks Says Beam Me Up: Project Officials Scurrying to Get Steel to Bethlehem Steel Site in Time.

June 22, 2007

By Matt Assad, The Morning Call, Allentown, Pa.

Jun. 22–Used to be that if a developer was erecting a tall building, the innovative rolling mill in Bethlehem was the only place to get steel beams strong enough.

So it comes with a sobering dose of irony that the biggest hurdle facing Sands BethWorks is getting steel beams to the site that was once the worldwide epicenter of structural steel.

A global steel shortage and pressure to build Pennsylvania’s tax-generating casinos quickly have Sands officials racing to meet a July 15 deadline to order most of the 16,000 tons of steel they need to begin building their $600 million casino complex early next year.

No time for competitive bids or price-shopping. No time to experiment with designs or plans, or make major revisions. The architect designs the plan, steel detailers begin planning the fabrication even before the design is complete, and the steel is ordered while the ink on the plans is still wet.

At least that’s what Sands BethWorks is planning in this era of accelerated casino building in Pennsylvania.

“This isn’t how we would usually do things, but these are unusual circumstances,” said Frank Devlin, Sands BethWorks director of construction. “We either make a July 15 deadline, or we don’t get another bite at the apple until at least [September]. Being late is not an option.”

Not when developers have committed to opening a casino with 3,000 slot machines by the end of 2008, a 300-room hotel a few months later and a 200,000-square-foot shopping mall by the middle of 2009.

The Pennsylvania Gaming Control Board in December 2006 awarded Sands BethWorks a license to run one of 14 casinos to be built statewide, and officials have pressured developers to build the casinos soon, so the state can begin collecting what is expected to be $1 billion in casino taxes per year.

Because demand is so high, steel rolling mills cut off orders in mid-July for steel they probably won’t deliver until November. That allows 10 weeks to fabricate the steel and begin erecting the casino early next year. Missing the deadline could push the casino opening well into 2009.

Normally, architects and engineers draft final designs for the buildings, then pass the baton to steel detailers who interpret the designs, create a model and determine exactly what steel is needed to build it. The detailers then pass the baton to fabricators, who cut the steel into the sizes and shapes needed.

For Sands BethWorks, detailers such as Don Engler and fabricators are at the table with the designers, interpreting plans even before they are finished, Devlin said.

The irony of rushing to get steel to Bethlehem is not lost on Engler, vice president of BDS Steel Detailers in Tempe, Ariz. Engler is an Easton native and steel historian whose father worked for Bethlehem Steel.

“The legacy of Bethlehem Steel is very meaningful to me,” Engler said. “I had goose bumps last month as I walked the property for this project. I understand how unthinkable it once was to imagine a day when getting steel to that property would be a problem.”

Jay Allen, an executive vice president for Schuff Steel of Phoenix, put it another way.

“[Bethlehem] is the birthplace of structural steel,” said Allen, whose company has the task of managing the construction and keeping it on schedule. “It’s like going to Jerusalem and not being able to find religion.”

For decades, the future casino site was the only place in the world where developers could get beams strong enough for buildings much taller than 10 stories.

Bethlehem Steel developed what became known as the wide-flange beam in 1907. The company held a monopoly on the patent for two decades and helped build much of Manhattan and many of the nation’s tallest and most recognizable structures — from the Time-Life Building in New York to the 40-story Cadillac Tower in Detroit to the Golden Gate Bridge in San Francisco.

Back then, Bethlehem Steel designed, rolled and fabricated everything on-site. If a job was fast-tracked, steel could be ready for fabrication in three or four weeks.

Today, Sands BethWorks is racing to order steel from companies such as Nucor of Charlotte, N.C., and Chaparral Steel of Midlothian, Texas. And because global demand for steel is so high, it has to get in line with everyone else to do it.

The irony doesn’t stop there. Most of the casino steel will come from Nucor, the same company that revolutionized the use of electric furnaces to make steel from scrap in 1966, the same company that Bethlehem Steel didn’t take seriously and the same company that ultimately stole much of Bethlehem’s business.

Sands officials say they will buy virtually all domestic steel, and they are trying to make designs that avoid using “jumbo shapes,” or large beams that can only be found overseas. If they ultimately do need such large beams, there is but one place to get them: Mittal Steel, the Dutch steelmaker that bought Bethlehem Steel’s remnants and still runs two of its former plants.

And that worldwide spike in steel demand? Sands BethWorks owner Las Vegas Sands has done more than its share to help create it.

The steel shortage is largely caused by explosive development in China, where Sands is spending billions of dollars to build nine casinos in Macao, and India. As a result, Sands routinely calls itself the largest real estate developer in the world.

Developers nationwide have blamed the steel shortage for delays in projects that include a children’s museum in Ogden, Utah, and a freeway in San Francisco.

John Cross, vice president of the American Institute of Structural Steel Construction, says reports of a steel shortage are overblown. However, he acknowledged that heavy demand forces developers to order steel well in advance.

Sands officials could turn to a steel warehouse to get the product sooner, but that option is at least 20 percent more expensive, and there is a question whether a warehouse would have everything needed. For that reason, steel for large projects rarely comes from warehouses.

Exploding demand has certainly driven up the price of steel, and ultimately of construction. A ton of steel that was $380 at the start of 2004 is now $755.

Stephen Donches, a former Bethlehem Steel vice president who is now president of the National Museum of Industrial History, which is slated to be part of the casino project, thinks Bethlehem Steel might be alive today if it had just hung on for another year. The bankrupt company was sold in 2003, just before demand and prices were poised to skyrocket.

“I’ve talked to people who think that with a little better timing, [Bethlehem Steel] would still be around in some form,” Donches said. “But we’ll never know.”

That leaves Sands BethWorks with a task of filling the void — and fast. Sands officials are convinced their timing is right.

matthew.assad@mcall.com

610-861-3617

THE DILEMMA

Getting 16,000 tons of steel to the former Bethlehem Steel site in time to begin building the casino early next year.

THE SOLUTION

Put designers, engineers, detailers and fabricators at the same table so they can trim months from the project by doing their tasks concurrently, rather than consecutively.

THE PROJECT

Phase 1 calls for a casino with 3,000 slot machines, a 300-room hotel, a 50,000-square-foot events center and a 200,000- square-foot shopping mall; scheduled to begin opening by the end of 2008.

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