Valmont sees boost from Tennessee Valley deal BY JOHN TAYLOR WORLD-HERALD STAFF WRITER The Tennessee Valley Authority, the massive federal project fathered by U.S. Sen. George W. Norris of Nebraska that revitalized a large part of the southeastern United States, is also playing a crucial role in the success of a company in the late lawmaker's home state. Valmont Industries Inc., based in Omaha, has been a major supplier of steel transmission poles to the TVA for more than 10 years. That relationship, which gained strength this week with the announcement of another $100 million contract, has contributed to Valmont's becoming the world leader in the manufacture of utility poles. Under the latest contract, which was awarded on a negotiated rather than bid basis, Valmont will supply about 5,000 steel poles a year, many of them 120 feet high, to the TVA through 2011. For the Omaha-based company, it's a landmark deal. "We've had individual orders that would be larger than TVA's order in any given year," said Richard Sampson, vice president and general manager of the company's utility market. "But for a long-term contract, this is certainly the biggest one we've had." News of the contract gave a boost to Valmont shares, which closed up 43 cents Wednesday at $16.13, a three-month closing high. A number of the polls are replacements, and others are pegged for new construction. All will be used to serve the seven-state TVA region, which includes Alabama, Georgia, Kentucky, Mississippi, North Carolina, Tennessee and Virginia. The agency was created in 1933 as a Franklin Roosevelt New Deal program. It grew out of an idea championed in the 1920s by Sen. Norris, a liberal Republican who was a strong advocate of government power development. The TVA went beyond even Norris' dreams. It not only brought cheap electricity into homes formerly lighted by kerosene lamps, but it also tamed the flood-prone Tennessee River and made navigation possible. And for Valmont, the TVA and its 17,000 miles of transmission lines have proved to be a boon for the company's utility pole business. The poles division has been a major contributor to Valmont's revenues for more than a decade. That continued to be the case for 2001. Of the company's overall sales of $872.4 million, Valmont had $354 million in revenue from poles. That was a 14.2 percent rise over sales of $310.1 million in 2000. Excluding the latest contract, the company has sold poles to TVA at various times over the last 10 years that are worth another $100 million. Poles destined for the TVA will continue to be made at Valmont's Tulsa, Okla., plant, one of 15 company plants throughout the world. That plant also will produce poles for an Oklahoma utility that was hard hit earlier this year by an ice storm. The Oklahoma contract is worth another $8 million to $10 million, about the same amount as the company's Alaska project. The poles in Alaska are for an 85-mile-long electric transmission line that runs from Fairbanks to Nenana to Healey. And closer to home, Valmont recently was awarded a $1.3 million contract by the Omaha Public Power District for a new transmission line near Plattsmouth. Of Valmont's 5,400 employees, 1,500 work in the pole-manufacturing business. About 590 employees at the company's Valley, Neb., plant work in the pole sector, or slightly more than half the overall work force in Valley. Mark Richards, president of Valmont's global poles division, noted that Valmont has operated - since January 2001 - a plant near Jasper, Tenn., in the heart of the TVA region. Although the plant doesn't provide the TVA with any products, it increases overall capacity, which frees up service to the TVA from Valmont's other plants. Locating a plant there also doesn't hurt Valmont's relationship with the TVA. "Their mission is also economic development," Sampson said of the TVA. "So it's important for them to be able to bring into their area people who can help develop the (region.)" He said that Valmont's utility pole business protects the company somewhat when it experiences sluggishness in its other manufacturing operations - communications towers and mechanized irrigation equipment - as is now happening. Sampson said that even after the irrigation and communications markets improve, the utilities pole business is expected to grow, especially elsewhere in the world. Valmont has said that in the next 10 years it expects $500 billion in new electricity generation capacity to come on line, with Asia, Europe and South America ranking as the fastest-growing markets. Countries can't develop their economies until their infrastructure is in place, Sampson said, "and the most basic part of that infrastructure is electric power. "That was (Sen.) Norris' dream. He realized that you couldn't bring prosperity to rural Nebraska or rural Tennessee until you had cheap power. If you can bring the cost of power down, you bring jobs. It was true in Tennessee 50 years ago, and it's equally true today, whether you are in China or Chile or Peru or Morocco."
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