A local steelmaker is getting a $730 million loan from a federal program aimed at making vehicles more fuel efficient.
The money will go to Severstal Dearborn, which now owns and operates the plant on the big Rouge complex. It will be used to convert the plant to building high strength steels, that will go into future cars.
“Today’s announcement will create jobs, strengthen our manufacturing industry and help our automakers compete in a global market,” said Energy Secretary Steven Chu, in a conference call with reporters.
The Energy Department says the loans will create 2500 construction jobs, and 250 permanent manufacturing jobs.
This is part of a $25 billion federal program that — prior to this announcement — had only granted $8.4 billion in loans. Chrysler has been waiting word on its loan application for more than two years. General Motors recently withdrew its request.
Chu would not comment on other loan applications. Previous loans under this program have been granted to Ford, Nissan and electric carmakers Fisker and Tesla.
This is the first time this program has been used to loan money to a company other than a carmaker. However, Chu said Severstal qualified as an auto supplier, since the high strength steel it will make, is going to be used for vehicles of the future.
“The advanced steel produced at the facilities will enable car manufacturers to reduce the total vehicle weight by ten per cent, while meeting increasingly stringent safety requirements,” he said.
Analysts say vehicles will have to be lighter in the future to meet increased fuel economy requirements.
Senator Carl Levin praised Severstal’s willingness to make a big investment to upgrade the aging Dearborn facility that was once a part of Ford, and used to be called Rouge Steel.
“They’ve shown confidence in Michigan, in America, in American manufacturing by their commitment of many, many dollars, about two billion dollars, in this plant,” he said.
Levin mentioned that he’s now driving a Chevy Volt, which has several steel parts provided by Severstal.
Other lawmakers with ties to Dearborn were happy to hear about the investment.
“It’s going to make my congressional district green, said Congressman John Dingell. “I want you to know I’m very pleased.”