Posts by: Economic Development HQ.com

EPA Holdup for $52M Alcoa Modernization Project in New York

A couple of days ago, Alcoa Inc (NYSE:AA) announced that it was ready to go ahead with the next modernization phase of its operations in Massena, New York.

Alcoa

Alcoa (photo – Alcoa Inc./wikipedia)

The company said it would be spending $42 million on the former Reynolds plant in Massena it purchased in 2000, and will be shelling out another $10 million for the North Country Economic Development Fund (NCEDF).

This $10 million will be spent for economic development in counties in the North Country, along with the Akwesasne Mohawk Reservation. The $10 million fund will be administered by the NYPA in partnership with another entity named by the state.

These investments are part of a 2008 agreement the company entered into with the New York Power Authority (NYPA) for low-cost hydropower, in return for which Alcoa committed to spending $600 million on modernization.

The only problem is that Alcoa cannot go ahead with the expansion unless the U.S. Environmental Protection Agency (EPA) gives Alcoa its approval of a cleanup plan of the Grasse River. Alcoa and officials in New York have been pushing the EPA for years to give its Record of Decision (ROD).

The issue dates back decades, when Alcoa and the Reynolds plant along the banks of the St. Lawrence and Grasse rivers were still using polychlorinated biphenyls (PCBs) in their aluminum production process. PCBs were banned in 1979, but the fish in the Grasse River still show high levels of PCBs.

Alcoa was the only one involved after they purchased the Reynolds plant, and the company has been working with the EPA for years trying to get one of a dozen possible cleanup plans approved.

The actual PRAP (Proposed Remedial Action Plan) was released in Oct 2012, and a tentative date for approval has been set for April 2013. EPA’s initial estimate for the plan’s cost was at about $245 million.

Alcoa needs to get the final ROD and know the exact cost, which is going to have a direct bearing on the rest of their investments, including the $600 million modernization they agreed to.

U.S. Senator Charles E. Schumer (D-NY), who was instrumental in getting the EPA to release the PRAP for public comment, urged the EPA to act fast and complete the process in April, since the lack of finality was undermining Alcoa’s ability to make expansion plans.

“The light is clearly visible at the end of the tunnel, and it will beckon a brighter future for the North Country’s economy and its environment,” added Schumer.

Alcoa, which has its headquarters in New York and in Pittsburgh, Pennsylvania, operates in 31 countries and is the world’s third largest producer of aluminum. Their operations in Massena provide employment for 1,100 people, and contribute $340 million in spending, payroll and taxes to the local economy.

Harim Group Plans $100M Expansion With 700 New Jobs in Delaware

South Korean poultry company Harim Group is planning to buy the former Pinnacle Foods facility in Millsboro, Delaware and turn it into a poultry processing plant.

DE Gov. Markell - Harim announcement

DE Gov. Markell with Secretary of Agriculture Ed Kee, U.S. Sen. Tom Carper and DEDO Director Alan Levin (photo – Delware Governor’s Office)

The project will require a $100 million investment by Harim, and will create 700 new jobs for poultry processing, cutting and cooking.

The Harim Group entered the U.S. by purchasing the bankrupt Allen’s in Sept 2011, and became Allen Harim. Their U.S. corporate headquarters is in Seaford, DE.

The company has about 1,400 employees spread across facilities in Seaford and Harbeson in Delaware, along with two more facilities in Cordova, Maryland and Liberty, North Carolina.

When they bought Allen’s back in 2011, Delaware Gov. Jack Markell said “We care about every job and work to create the conditions that will help make businesses successful.” He added that Harim had many choices ahead and they would make sure Delaware continued to be the right choice.

Also at that time, Hong Kuk Kim, chairman of the Harim Group, said that his first meeting with the Governor gave him a “very good first impression” of Delaware.

The Governor and Delaware Secretary of Agriculture Ed Kee subsequently undertook a trip to Korea in Dec 2012, and took the time to visit with the Harim Group. This trip further solidified the relationship. All this ground work ensured that when an opportunity arose, Delaware was able to take advantage of it.

This particular expansion project was initiated by Secretary Kee, who broached the subject of buying the Pinnacle Foods plant with Harim executives. The Pinnacle Vlasic plant was shut down last November, which resulted in 200 workers losing their jobs.

Allen Harim CEO Gary Gladys said the company’s expansion into Millsboro and the 700 new jobs would have a significant economic impact in Delaware. He added that it was a “symbol of our deep commitment to the United States market with an investment of an estimated $100 million.”

He added that their base on the Delmarva Peninsula offered a solid foundation to grow their operations, and this expansion into Millsboro was a part of that strategy.

U.S. Sen. Tom Carper (D-Delaware) said he was happy to have been part of the effort to replace the jobs lost at the Vlasic plant, and grateful to Allen Harim for taking over the plant and restoring hundreds of needed jobs in Sussex County.

Pennsylvania Hoping to Avoid US Airways-AA Merger Fallout

Back in 2007, local and state officials in Pennsylvania laid out the red carpet to land the $32 million US Airways Moon operations control center (OCC) near Pittsburgh International Airport that created and retained 600 jobs.

Pittsburgh International Airport

Photo – flypittsburgh.com

At that time, the US Airways OCC which coordinates 3,000 regional fights was moved to Pittsburgh from Phoenix, AZ due to the US Airways merger with America West.

Now the shoe is on the other foot, with Pittsburgh facing possible closure of the OCC as US Airways merges its operations with American Airlines, which has a much bigger OCC located near the company’s Dallas/Fort Worth headquarters in Texas.

As per this transcript (scroll down to pg. 5) filed with the SEC, US Airways CEO Doug Parker told the company’s employees that “if I was talking to people in the OCC what I’d tell them is that if we were betting right now it’s only fair to tell people that, you know, Dallas has a bigger center and is more likely than not that you’d move there.”

He also mentioned the process was a couple of years down the line, and even after that the transition would be phased. All unionized employees at the Pittsburgh OCC would be offered jobs in Dallas.

Half of the employees at the Moon center are not union members, and have been notified that they could be eligible for a severance package. These 300 are part of a total of 4,970 non-contract U.S. Airways workers, which has a total of 32, 213 employees.

But Allegheny County and its airport authority are already on the case, looking at agreements the company has signed to find some way to keep the jobs from being relocated or terminated.

US Airways was offered a $16.25 million incentives package in 2007, with the company committing to create retain and create 600 jobs at the Moon center for at least three years. However, they actually received only $3.25 million in grants and another $750,000 worth of performance-based tax credits.

Apart from the ripple impact of losing the Moon OCC and spending by the 600 employees on the local economy, Pittsburgh Airport also has to worry about further eliminations, such as the US Airways jet maintenance facility located at the airport.

The Pittsburgh Airport Area Chamber of Commerce, Allegheny County Airport Authority, Pennsylvania Governor’s Office, and the state’s elected representatives in the U.S. Congress are gearing up to launch a coordinated two-year campaign to preserve the Moon center, jet maintenance facility and other US Airways jobs.

More incentives may be offered to convince the new merged American Airlines to close its OCC in Dallas and consolidate operations control in Pittsburgh.

Site Selection Worries in Colorado Over Abattis Plant

Vancouver, British Columbia -based Abattis Bioceuticals Corp. announced last week that it plans to set up a plant in Boulder, Colorado to manufacture heath drinks. Specifically, the company will be producing a fermented tea called kombucha laced with cannabidiol (CBD), which is a cannabis product.

Abattis Bioceuticals

Abattis Bioceuticals (photo – abattis.com)

Abattis chose the Boulder location for its plant because of supportive laws and the potential market in Colorado and Washington, both states which have legalized medical marijuana.

The company will not require any construction, and will simply be spending $500,000 to install equipment and 10 employees for fermenting and bottling in a ready-to-use 3,000-4,000 sq ft space.

The capital investment and jobs created by the project would seem to bolster the arguments of Amendment 64 proponents who said legalizing marijuana would provide a boost to Colorado’s economy.

A study had estimated that direct annual marijuana sales would add up to $342 million, resulting in $32 million in additional state tax revenues and another $14 million in local taxes.

However, there’s another side to this debate, and it’s not just about the economic benefits vs. the social perils of legalizing marijuana. Colorado is facing uncertainty in terms of site selection, as regards the impact of legalized marijuana on its workforce.

Amendment 64 offers protection to employers by providing them with discretion to prohibit marijuana usage by employees while at work. But they can legally use it when they are not on the clock.

Brandon Coats, a telephone operator for Dish Network, was fired after he tested positive, even though he was a registered medical marijuana patient who posited he had used it only during off-duty hours. Coats filed a lawsuit against the company, and the case is now making its way through the appeals process.

Until the case is resolved, site selectors will have to consider whether corporate drug testing and enforcement policies have the potential for conflict with the state’s new laws.

Meanwhile, Abattis says kombucha is growing in the Canadian market at 40 percent, and they have similar plans in the U.S., starting with the friendly markets in Colorado and Washington. In states where federal laws get in the way of a cannabis-laced health drink, the company may offer a plain kombucha drink minus the cannabidiol.

If the product takes off in the U.S. market as expected, the company says it may add another 20 jobs in addition to the initial 10 positions being created for the new plant in Colorado.

Koch Foods Plans $49M Expansion with 750 Jobs in Georgia

Koch Foods announced that it will be expanding its poultry processing plant in Hamilton, Georgia.

Koch Foods

Koch Foods (photo – kochfoods.com)

The company, which produces fresh as well as frozen chicken products and sells them under several different brands, will invest $49 million for the expansion of the former Cagle plant.

The expansion will create 750 new jobs. Koch retained 350 Cagle jobs when it took over the plant last year, and then added another 350 jobs.

This latest expansion to add a couple of additional processing lines will bring the total workforce count at the plant to 1,400.

Tommy Knight, vice president of the Koch Foods Western Division, said they were happy to expand in Harris County and that their commitment towards investing in the community and building on existing relationships was further affirmed by the help they got during this process.

Based on its investment and job creation plans, Koch is eligible for state tax credits and other state incentives to the tune of $13.9 million. Harris County is taking a lot more trouble with local incentives.

Last November, the county approved an “up-front tax abatement” of $250,000 for the planned Koch expansion, to be paid out through the Harris County development Authority.

Secondly, Koch Foods’ main demand for the expansion was that the county should provide a natural gas pipeline for the plant. This requires laying out a 16 mile pipeline at a cost of about $6 million. The county is looking at the Valley Partnership, and has requested the state for $4 million to fund the gas pipeline.

They justified the gas pipeline and tax abatement by noting that the company’s expansion would have a $100 million impact on the region, fuel growth of chicken producers, and provide cheap energy for residents along the length of the 16-mile gas pipeline.

Harris County Commission chairman Harry Lange also claimed that if Koch did not get the natural gas pipeline, they might have moved the entire operation to Montgomery, Alabama.

Georgia Governor Nathan Deal said in a statement that Koch Foods is one of the reasons Georgia is the top poultry producer in the U.S.

“Our network of supporting resources and experience makes our state ideal for any existing company to expand its operations and remain competitive,” added Gov. Deal.

Canada Deserts UN Desertification Convention

The United Nations Convention to Combat Desertification (UNCCD), established in 1994 after the first Rio Earth summit, is the only global binding agreement which explicitly links development and the environment to sustainable land management.

World Day to Combat Desertification

World Day to Combat Desertification (photo – unccd.int)

Its 195 signatories include all 194 nations of the UN and the EU. This includes Canada for now, but maybe not for long, because the Canadian government has informed the UNCCD they are pulling out of the agreement.

This makes Canada the only nation in the world not to be a part of the UNCCD. The ostensible reason given was that the UNCCD is a “talkfest” which spends only 18 percent of its $15 million budget on programs, while 75 percent is spent on administrative expenses.

This U.S. State Dept audit does indeed show serious funding and human resource problems at the UNCCD.

However, this is the second previously ratified environmental UN agreement which this Canadian government has backed out of. Back in 2011, Canada became the first country to have withdrawn from the Kyoto Protocol after having previously ratified it.

The UNCCD agreement was similarly ratified by Canada in 1995, and has now been withdrawn in 2013.

The Canadian International Development Agency (CIDA) has already paid the UNCCD its 2012 commitment of $350,000, and says it will honor its 2013 commitment of $315,000 since the UNCCD requires a one-year notice if a member wants to withdraw.

Some of the more interesting reactions to Canada’s decision to withdraw from the UNCCD:-

“He’s making us a rogue nation. The North Korea of environmental law.” – Canadian Green Party Leader and MP Elizabeth May.

“We are sorry to see Canada go . . . it is regrettable. We don’t know why it happened, we will dig deeper now.” – UNCCD official in Bonn

“They make Bush look like a treehugger” – former UK diplomat

“Vainglorious nose-thumbing at the international community’s efforts to tame a very present threat to hundreds of millions of the world’s poorest and most desperate people.” – Robert Fowler, former Canadian ambassador to the United Nations.

World Day to Combat Desertification is on June 17, 2013. This year’s theme is drought and water scarcity, and the slogan is “Don’t let our future dry up.”

Cherokee Nation to Undertake $100M Health Care Overhaul

Tahlequah, Oklahoma-based Cherokee Nation, the government of the Cherokee people, announced that it will be investing $100 million to overhaul the largest health care system in the U.S. operated by a tribe.

Cherokee Nation Principal Chief Bill John Baker announcing $100M health care investment

Cherokee Nation Principal Chief Bill John Baker announcing $100M health care investment (photo – cherokee.org)

The overhaul includes construction of a new 100-bed hospital and renovation or replacement of four other health centers in Oklahoma over the next 2-3 years.

The $53.1 million hospital project will replace the existing W.W. Hastings Hospital that serves tribe members in Tahlequah. The new hospital will additionally become an outpatient center.

These investments are fueled by Cherokee Nation Businesses LLC profits accrued in the Cherokee Nation general fund, which gets 35 percent of CNB profits as per the tribe’s law. Last year, this 35 percent worked out to $57 million.

CNB, whose biggest profits come from gaming and hospitality, generates revenues of $750 million each year. The general fund which gets 35 percent of the profits is supposed to be used for providing services such as education, housing and health care.

This $100 million project is the first major investment made by CNB towards the tribe’s infrastructure. CNB is paying for the development, and will then lease the facilities to the tribe.

Even the construction work is being done in-house by Cherokee Nation Construction Resources (CNCR), which is a CNB subsidiary. Cheryl Cohenour, executive general manager of CNCR, said that this project was much more meaningful because it was not just about job creation or profits adding to the general fund.

“For the first time, our work will directly affect citizens in ways the 35 percent dividend or job creation cannot. There is so much pride in knowing that as a Cherokee Nation, tribally owned business, we have something tangible to show our businesses’ commitment to making change for the Cherokee people,” added Cohenour.

Shawn Slaton, CEO of CNB, said it was a great opportunity to show why the casinos were there. He reiterated their commitment to creating jobs, growing businesses and providing funding for services utilized by the Cherokee people.

Cherokee Nation has 300,000 citizens and 8,000 employees. Their tribal businesses have diversified beyond gaming to include everything from government contracts to manufacturing and telecom companies. Cherokee Nation has a $1.5 billion economic impact on Oklahoma’s economy.

New Jersey Spotlights Benefits of $100M Navy Contract for Lockheed Martin

Earlier this month, Lockheed Martin Corporation (NYSE:LMT) announced that it had won a $100 million U.S. Navy contract under the Aegis Combat System Engineering Agent (CSEA) program.

Lockheed Martin Aegis testing facility in Moorestown, NJ

Lockheed Martin Aegis testing facility in Moorestown, NJ (photo -lockheedmartin.com)

Lockheed said work on the contract would be performed at its Moorestown, New Jersey facility.

NJ Gov. Chris Christie visited this facility yesterday, and the Governor’s Office put out a statement that highlighted the benefits of the contract, along with details about the groundwork and incentive agreement which led to the Moorestown facility being selected for the Aegis CSEA work.

In Dec 2011, Gov. Christie wrote to the admiral overseeing the contract, highlighting the state’s commitment to support its defense contractors, Lockheed’s long presence in the state, and the company’s long-standing and prominent role in the Aegis missile defense program.

The New Jersey Economic Development Authority last year approved a $40 million “Grow New Jersey” grant award for Lockheed, to be used for equipment purchase and infrastructure improvements at the Moorestown facility.

The 10-year grant helped retain 1,000 at-risk jobs and created another 47 construction jobs. The expected net benefit to the state over 15 years is $266,200,000.

The navy’s $100 million contract will help retain the remaining 3,000 out of the 4,000 jobs Lockheed has in Moorestown. These jobs might otherwise have been at risk because foreign government Aegis contracts would likely follow whichever company and facility got the U.S. Navy’s Aegis contract.

Lockheed successfully competed for the contract against Boeing and Raytheon. Lt. Governor Kim Guadagno said the New Jersey Partnership for Action had worked closely with Lockheed to support the company and help it win the Aegis contract.

“With more scientists and engineers per square mile than any other place on earth, New Jersey is the ideal location for both Lockheed Martin and the Navy’s Aegis program,” she added.

The state is also working with Lockheed to set up the New Jersey Advanced Research Technology and Talent Center. The center aims to provide high-tech training and education to provide Lockheed with qualified talent. The center will also do research to develop new technologies through collaboration between Lockheed’s technologists and academic researchers.

Bethesda, Maryland-based Lockheed Martin Corp. generated sales last year worth $47.2 billion, and has 120,000 employees around the world, including 5,200 in New Jersey.

BankcorpSouth Creates $500M Grow Mississippi Fund

BancorpSouth, Inc. (NYSE: BXS) announced that they are creating a $500 million loan pool called “Grow Mississippi” to help the state solicit business expansions and support job creation projects.

BancorpSouth Mississippi

BancorpSouth Mississippi (photo – BancorpSouth/wikipedia)

The announcement was made at a joint event by BancorpSouth CEO Dan Rollins and Mississippi Governor Phil Bryant.

Rollins said the $500 million was allocated specifically to create a fund that will provide loans to entrepreneurs and businesses that select Mississippi as their location, and for existing businesses in the state to fund their expansion plans.

He said they could allocate more money for the loan fund if required, depending on the success of the initial allocation in identifying suitable candidates.

Gov. Bryant applauded BancorpSouth’s leadership in providing businesses with access to capital, which the Governor said was “a critical element in positioning Mississippi as the top spot for economic development.”

BancorpSouth will be working with the Mississippi Development Authority (MDA) and the bank’s network of local community lenders to select small businesses, entrepreneurs and corporations for funding from the Grow Mississippi loan pool.

Brent Christensen, executive director of MDA, said in a statement that the MDA will be offering full support for the initiative, and will provide whatever resources are required to ensure its success.

Aubrey Patterson, chairman of the BancorpSouth, Inc. Board said the objective of the Grow Mississippi loan pool was not just about funding startups and expansions, but also to “show the confidence BancorpSouth has in Mississippi as an ideal market place for businesses to grow and prosper.”

Patterson is a former chairman of the Mississippi Partnership for Economic Development and the Mississippi Economic Council, and is an ardent supporter of the state’s economic development programs.

The bank will structure loans in such a way as to be compliant with their normal loan policies, while allowing applicants to leverage it to take advantage of local and state economic development project funding programs and incentives, along with SBA and other federal loan programs.

Gov. Bryant added that attracting good jobs to Mississippi called for teamwork. “We look forward to working with additional partners who want to show the world that ‘Mississippi Works’ and is open for business,” added Gov. Bryant.

Tupelo, Mississippi-based BancorpSouth, Inc. has $13.4 billion in assets and more than 4,400 employees.

Newell Rubbermaid Plans Design Center in Kalamazoo, MI

The next new sharpie or paper mate you see is likely going to be designed in Kalamazoo, Michigan.

Newell Rubbermaid design center rendering

Newell Rubbermaid design center rendering (photo – michigan.gov)

Newell Rubbermaid Inc. (NYSE: NWL), whose brand portfolio includes Sharpie, Paper Mate and Rubbermaid, is planning to set up a design center in Kalamazoo where it will consolidate all its graphic and product design work for the U.S.

The company is investing $2.3 million to set up the design center and will create 100 high-paying design jobs with average annual wages in between $70,000 to $90,000.

Kalamazoo successfully competed for the design center project against competing sites in Chicago and Atlanta, where the company has its global corporate headquarters.

Chuck Jones, chief design and R&D officer for Newell Rubbermaid, thanked Michigan for its support and cited Western Michigan University’s talent pool of designers as one of the main factors in favor of Kalamazoo.

The City of Kalamazoo has offered the company $164,000 in tax abatements as local incentives. The state has approved a $2 million performance-based grant from the Michigan EDC’s Michigan Strategic Fund.

Southwest Michigan First, the privately funded economic development organization serving the Southwest Michigan area, has been working on this project for a year.

Southwest Michigan First will be putting up $4 million for construction of the Newell Rubbermaid design center building at the WMU Business Technology and Research Park. They will then lease the building to the company.

MEDC President and CEO Michael A. Finney said the Newell design center would diversify the state’s economy, and said they were happy to support this collaborative effort involving WMU, the City of Kalamazoo and Southwest Michigan First.

Ron Kitchens, CEO of Southwest Michigan First, said Newell Rubbermaid would like its new location because the region and company’s cultures are “rooted in innovation and the creation of things that change peoples’ lives.”

Atlanta, Georgia-based Newell Rubbermaid is an S&P 500 company with $5.9 billion in sales last year. The company had 19,900 employees around the world as of Dec 2012.

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