[Vision2020] Idaho Town Strugles

[Ron Force]

>From the NY Times. A moral for Moscow & economic development?

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Idaho Town Struggles After Pinning Hopes on Failed Factory
Bill Schaefer for The New York Times
The administration building of the Hoku Materials plant sits vacant in Pocatello, Idaho.By KIRK JOHNSON
Published: November 5, 2013
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POCATELLO, Idaho — With great fanfare, a Chinese polysilicon factory broke ground on 67 acres here starting in 2007. Then, as the rest of the nation tumbled into recession, the plant rose up in shimmering promise, leaving this tough-edged railroad town – blue collar and union in a sea of southeast Idaho potato farms – feeling pretty good about the future.Connect With Us on Twitter
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Bill Schaefer for The New York Times
Tom Stevens of Phoenix, Ariz., inspects equipment in the Hoku Materials' warehouse that is set to be auctioned.
So what if the company wanted breaks and concessions? The decision by the city to buy the land and lease it back almost free seemed like a bargain at $1.4 million, given the potential payoff.
Subcontractors and suppliers from around the nation and world were also arriving to build the $700 million plant, and discovering – so residents and business leaders hoped — Pocatello’s small-city charm. And the hundreds of production jobs in the end would be a big step toward the dream of a high-technology future, picking up where railroad and manufacturing jobs had faded.
Now, 18 months after shutting completely, the factory, which was to produce materials used in solar panels, stands ghostly and silent. It never went into full operation, and in the global collapse of silica prices, it probably never will, solar industry experts said.
Wooden crates of equipment, some never opened, sit stacked where they were left, like time capsules from a lost world. And instead of being discovered by entrepreneurs and venture capitalists, Pocatello’s name – linked to a bankrupt company accused by its biggest American creditor of fraud and racketeering in a federal lawsuit — has now rippled out in all the wrong ways, residents said.
“It makes me sick thinking about the waste,” said Brian C. Blad, the mayor of this city of 54,000 people.
At the downtown federal courthouse where the bankruptcy of the Hoku Corporation is unfolding, lawyers for unpaid creditors – looking to collect, not spend — have descended in force. Hoku collapsed with about $1 billion in debts, and a list of unpaid creditors in more than a half-dozen states and countries. They include big names like Oracle and KPMG, the accounting firm, and small contractors like Industrial Piping Inc., of Pineville, N.C., which has about 300 employees, and a $13.6 million unpaid Hoku invoice.
“The debacle in Pocatello was a very large hit,” said T. J. Bucholz, a spokesman for Industrial Piping, which is majority-owned by an equity capital company in Grand Rapids, Mich. “We’re not General Motors.”
Pocatello’s road was tough before Hoku ever came to call. It lost many of its good railroad jobs when Union Pacific consolidated operations in Utah. A potato processing factory in a neighboring town – about 10 percent of the work force commutes there from Pocatello – has said it will close next year. And like Idaho as a whole, it has suffered from a downward spiral in wages.
From 37th place in per capita income in the mid-1990s, the state is now 49th, kept from the bottom only by Mississippi, according to federal figures. Part-time jobs have been among the fastest-growing employment categories in recent years, with almost one in four jobs statewide offering less than full-time hours – the fifth-highest rate in the nation. Many downtown businesses are vacant and up for lease, and the struggling local shopping mall is scheduled to go up for auction this month.
Booming areas within driving distance, such as the energy drilling areas in North Dakota and the strong economy of Salt Lake City, two hours to the south, have kept the local unemployment rate below the national average. But that only masks the trouble, residents said.
“It’s one of Idaho’s greatest failures,” said Roger Chase, Pocatello’s former mayor, talking about jobs and low pay scales. Mr. Chase struck the deal with Hoku and is running again on Tuesday for his old job against Mr. Blad. But in a mostly civil campaign, neither man is blaming the other for how things turned out.
In addition to the local land deal, Hoku also got $2.2 million in federal grants for solar development, according to federal officials, and a promise of job training money from the state.
And another economic rescue with Hoku’s glamour and promise is not on the horizon. Mr. Blad, in an interview in his office, said a big employer had recently expressed interest in coming here, bringing perhaps 1,000 jobs. But the company, which he declined to name — a warehouse distributor that does most of its sales over the Internet — has said it will offer $10 an hour, only a few dollars above the minimum wage.
The company even had the audacity to ask for financial incentives, which the city has politely declined. “We would welcome them, and we would value them,” Mr. Blad said. “But I can’t justify taxpayer dollars for a $10-an-hour job.”
The Hoku pain is not over yet, either. In August, the former general contractor at the plant, JH Kelly, based in Longview, Wash., and owed $24 million, sued Hoku’s majority owner in China, Tianwei New Energy Holdings. The federal suit accuses the company of fraud and racketeering in promising that bills would be paid.
Lawyers representing Tianwei did not respond to email and phone requests for comment. Meanwhile, a public auction of the plant, held last month, only rubbed salt in the wound: the top bid for the vast works and all they contain was $3.7 million. A bankruptcy court judge will decide this month what bid or combination of bids is best for the creditors.
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