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The Trouble with Harry
In their zeal to cut a deal for a steel plant, how much were state and city officials
willing to overlook about Williams Specialty Steel's CEO and his past?
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Business New Haven
7/14/97
By: Laura Patrie
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When Gov. John G. Rowland announced in late May that a New York businessman wanted to build a steel mill in New Haven, the local media chanted jobs, jobs, jobs. A closer look at the deal and the principal investor may yield a mantra of a different sort: caution, caution, caution.
The deal set forth at the governor's news conference included the creation of a 250,000-square-foot steel mill using 3,000 construction workers, 350 permanent jobs, an estimated $272 million boon for Connecticut's economy and the return of manufacturing to New Haven. The local media had every reason to highlight the jobs.
Although the deal has been struck and the city and state are ready to go forward with the financing, site planning is still in the engineering stages and it is likely to be months before such plans are finalized. There are environmental regulations and permitting considerations at the site that need to be addressed as well by state and local agencies.
The company that plans to build the mill is Williams Specialty Steel of Buffalo, N.Y., one of many holdings of the Williams family, prominent business fixtures in New York state and elsewhere. The principal in the company, as well as the steel mill negotiations, is 65-year-old James (Harry) Williams.
Williams is an entrepreneur and businessman in and around the Niagara Falls/Buffalo area. He has bought, sold and run dozens of companies, many successfully. His interests and holdings include real estate, plastics, metals, rubber, electronics, demolition and waste disposal. He currently owns a number of properties in western New York and has, among other things, negotiated lease deals to bring Native American gaming into Buffalo.
He has also announced plans, according to the May 24 Buffalo News, to build a steel mill in Niagara Falls. According to that, Williams has been working with New York state and local officials on a $225 million to $250 million project to build a stainless steel plant on land he already owns.
Williams said that the mill would likely produce flat-rolled stainless steel, while the New Haven plant would produce stainless steel “billets” or square chunks, to be used in the manufacture of rods and mufflers. The New Haven plant would cost $140 million to $160 million, “a much cheaper project than the one we're putting together in New York state,” Williams told the paper.
According to Rowland's office, the deal, at the time it was announced, was the culmination of a competition between New York and Connecticut for a single mill. Williams, however, has characterized the Niagara Falls plant as a different project entirely and said the western New York site was chosen as a location because New Haven unsuitable for a “slab” plant. As Williams told the News: “[Connecticut] pursued us to do a project there; this is what we came up with...They made it hard to refuse to do something.”
It's easy to see why. Connecticut's incentive package includes $55 million in city tax-increment financing, a $9.75 million low-interest loan from the Connecticut Development Authority (CDA), $5 million from the United Illuminating Co. (UI) and $1 million in grants from the Department of Labor to train workers.
The proposed site is a 25-plus-acre property owned by Conrail in the northern limits of the city proper. A. Anastasio & Sons Trucking of New Haven holds the lease and has agreed to give the mill a long-term lease on the site.
For its part, UI agreed to build an electrical substation, a set of transformers to meet the mill's electrical needs, and offered a proposed long-term contract for electrical service at a cost of approximately $5 million.
UI Vice President of Client Services Anthony Vallillo says the deal his company helped to craft is a boon to UI and the region. “It will be a tremendous boost to the economy,” he says. “I got the sense that the Williams group are serious business people, and I was impressed with them.”
Vallillo says UI officials, particularly Anthony Uzzo, became involved in the negotiations early after they were contacted by the state. “We sort of served as the ambassadors for this,” Vallillo says. “We helped along with others to locate sites and keep the talks going.”
CDA's Don Reed says negotiations with Williams began in earnest last summer and it was clear there was intense competition between Connecticut and New York, New Jersey, Ohio, Pennsylvania and Indiana. “In the end Connecticut won,” he says. “It was a horse race, and we're proud they're here.” Asked about plans for the proposed Niagara Falls mill, Reed says, “There will not be two plants, and there is not going to be a plant in Buffalo.”
That's not what Harry Williams said.
That's not what John Melia, director of public affairs for the Empire State Development Corp., New York state's economic development arm, says, either. Melia says negotiations between local and state officials and Williams Specialty Steel to build a mill in Niagara Falls are progressing. “The talks are ongoing,” Melia says. “Nothing has been shut down.”
Melia declines to offer details about the talks between Williams and New York, except to say, “It was news to New York about the Connecticut project.” Melia also says the New York and the New Haven proposals represent two different projects and two different types of mills. “There was no competition between New York and Connecticut,” he says. “[Connecticut] didn't win anything, and New York did not lose.”
Melia adds that the fate of New Haven's mill has no implications for Niagara Falls. “It will not affect our negotiations with Williams Specialty Steel at all,” he says.
However, Mark A. Sabers, Williams Specialty Steel's vice president and point person for the Connecticut negotiations, has less to say than his boss did about the New York plant. “I won't say yes or no,” he avers. “It isn't anything. It's talk.”
Sabers says the many business interests of the Williams family have engendered talk of any number of projects, including the possibility of a Niagara Falls mill. Pressed for specifics, however, he will say only, “We are building a mill in New Haven and that is what's important.”
But even the New Haven project elicits few details from Sabers, who reveals only that it will produce “semi-finished products” and will cost about $200 million to build. He further declines to say how much money Williams is investing in the New Haven project.
He will say that Williams is in the process of assembling a steel-management team to operate the plant, as well as design and engineering consultants to finalize plans for the mill's operations. Sabers says that an engineering site report is due at the month's end, and that he can be more specific then.
Of the Connecticut negotiations, the CDA's Reed says these intensified in the 60 to 90 days leading up to the governor's announcement. During that time, Williams officials visited New Haven on a number of occasions for meetings, and state officials visited Buffalo. Principal participants across the table from Williams were officials of CDA, UI and New Haven business development director Salvatore J. Brancati Jr. Multiple attempts to reach Brancati were unsuccessful.
“Williams Specialty Steel came to us through a mutual friend of the Williams who lived in Connecticut,” Reed says, but declines to identify the friend.
What is plain, though, is that the negotiations were kept very quiet and confined to the smallest possible circle of individuals. Even the Greater New Haven Chamber of Commerce, according to chamber senior vice president Fabio Sampoli, was only marginally involved in the deal near the end.
“Very, very few people knew about the steel plant,” Sampoli says. “In reality, the whole thing was kept a secret.” Sampoli emphasizes, however, that the chamber is ready and willing to help the Williams plant come to fruition in any way it can.
“I think it is an absolutely fantastic opportunity for the region,” he says. “It proves again and again that with the right combination of cooperation and coordination as a team, we can be effective and efficient.”
Who is Harry Williams, anyway? At the press conference announcing the New Haven plant, state economic czar Arthur H. Diedrick allowed that, “Harry doesn't like to talk about himself,” presumably to explain Williams' reticence in front of the microphones.
But there's plenty to talk about. In addition to his many current holdings, Williams was chairman and CEO of Integrated Waste Service Inc. from 1989 to 1996. The Wall Street Journal reported that he retired from Integrated Waste in April 1996.
Integrated Waste held municipal contracts for recycling as well as trash and garbage disposal for the city of Buffalo and other municipalities. It was cited in a 1991 Business Week article as a “hot growth” company. Indeed, the company had a remarkable track record of growth in the period after Williams took the reins. Indeed, profits and growth are what Williams is all about.
In addition to hot growth, though, Integrated Waste has seen its share of hot water. In 1994, the company was cited for overbilling the city of Buffalo for bringing newspapers placed on curbsides for recycling to be incinerated - and charging the city twice. Integrated Waste reimbursed the city more than $100,000 for the overcharges. At the time, Williams said of the citation, “There's nothing to it.”
Integrated Waste was also cited by Ohio environmental officials for dumping contaminated soil and other materials at one of its landfills, according to Bob Somrak, director of environmental health for Ohio's Stark County. Somrak says that a routine spring 1991 inspection of a construction and demolition landfill revealed that Integrated Waste had dumped soil contaminated with jet fuel on one occasion and unshredded garbage with a large amount of solid waste at the same landfill.
In a letter to Ohio environmental officials, Integrated Waste said the soil was generated as a result of work at a New Jersey airport, and that the company was unaware it was contaminated. A second violation concerning soils waste was explained by the company in similarly.
For Somrak, though, the explanations rang hollow, since the materials were tested by Ohio EPA officials and were found to contain contamination levels more than 400 percent in excess of health standards. “Basically, they were running a scam on us and trying to beat the system since tipping rates are higher in the northeast than in Ohio,” he says. “And they were making a lot of money doing it.”
The situation was resolved when Integrated Waste agreed to remove the materials to a sanitary landfill. The Ohio company that accepted the materials was warned, but not prosecuted or fined. “As far as Integrated Waste of New York,” Somrak says, “it was decided that we would not be in favor of issuing them any permits in the future.”
Williams bought Integrated Waste in 1989 shortly after the expiration of a non-competition agreement with Browning Ferris Inc. (BRI), the waste-management giant. In 1983, Williams and his brother Francis had sold their waste operation to BFI for $84 million and entered into the five-year non-compete.
However, a congressional investigation into a waste-disposal company called Envirosure in 1988 states that Williams was a secret investor in the company, which would have violated his non-compete agreement with BFI. In August 1988 the House of Representative's subcommittee on environment, energy and natural resources held a hearing on the dumping of PCBs in Missouri by a company then called Envirosure, and later, Martha Rose Chemicals. The company was eventually indicted for filing false disposal records.
The hearings identified Williams as an investor in the company, along with a business partner Lawrence Reger. According to a transcript of the hearings, Williams and Reger were principals in a New York-based conglomerate called Mader Capital Inc., which had a number of waste disposal subsidiaries. Soon after the subsidiaries were sold to BFI, Williams allegedly violated his non-compete agreement by lending Envirosure the money to start the company - an allegation Williams denied to investigators.
During the hearings it was alleged that Williams made the loan through a trust for his daughter through his brother-in-law, Roger Bennett, who served as Envirosure's vice president from 1984-87 and was president of Integrated Waste after that until his retirement in 1996. In any case, by the time Envirosure went public in 1985, the stock's value had increased by more than $800,000, according to the investigators.
The investigation also found that Williams, Reger and Williams' brother owned the property where Envirosure's Buffalo headquarters were located, as well as a Niagara Falls property where a company subsidiary was based. The investigation further noted that Envirosure used the services of at least two companies owned by Reger and Williams.
The trust for Williams' daughter apparently played a part in his acquisition of Integrated Waste. The trust lent the company about $3 million which was converted in 1989 to equity - after which Williams was named chairman and CEO.
The environmental record of companies applying for permits to build manufacturing facilities in Connecticut may or may not play a part in the permit process, according to Robert Kaliszewski, ombudsman for the state's Department of Environmental Protection. “It is difficult to comment because we have little information to work with,” Kaliszewski says. “But we have offered to meet with them.”
Kaliszewski says DEP has seen no formal permit applications from Williams Specialty Steel for the mill and was not contacted prior to the May announcement. That, he says, is not unusual, since the site engineering and preparation work has yet to be completed.
Kaliszewski said it is likely that local, state and federal regulations and permits will be needed for things such as local land-use permits, air quality and emission standards and water regulations. The permit process, he says, varies and can take from 30 days to six months depending on the project and the agencies involved.
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