[Vision2020] Idaho Town Strugles

[Darrell Keim]

I like how the Bakken Oil Field is a booming area "within driving
distance."  Helluva commute there...


On Tue, Nov 5, 2013 at 3:10 PM, Ron Force <rforce2003 at yahoo.com> wrote:

> From the NY Times. A moral for Moscow & economic development?
>
>
>    -
>
> 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<http://topics.nytimes.com/top/reference/timestopics/people/j/kirk_johnson/index.html>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.
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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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