This will be another boost for the Tri-Cities.
Hemlock Semiconductor splits investment; $1B for Thomas Township, $1.2 in Tennessee
by Barrie Barber and Paul Wyche | The Saginaw News
Monday December 15, 2008, 10:00 AM
Hemlock Semiconductor Corp. today, for the second consecutive year, announced up to a $1 billion expansion at its Thomas Township manufacturing complex, promising 300 full-time positions and the potential of drawing job-producing solar companies to mid-Michigan.
Gov. Jennifer M. Granholm was to attend a press conference today at Saginaw Valley State University, where company officials gave details on the most recent part of $2.5 billion in investments at its Geddes Road site in the past five years.
Tennessee Gov. Phil Bredesen was to headline a second press conference later in the day at Austin Peay State University in Clarksville, Tenn., where HSC will announce a $1.2 billion facility, the company's debut in that mid-South state. HSC will funnel an additional $800 million either to Saginaw or Clarksville in coming years. The two states vigorously competed for the expansion.
HSC President and Chief Executive Officer Richard S. Doornbos said the investment in Thomas Township will take place during the next couple of years, expansion made possible when lawmakers offered the largest energy tax credit in the state's history -- $300 million to $350 million over 12 years.
"A year or so ago, we weren't even considering Michigan because of the energy costs," he said. "But the state's delegation of lawmakers really worked with us to make this happen."
Rep. Kenneth B. Horn, a Frankenmuth Republican whose district includes the 500-acre HSC site, and local officials sought out the company without it ever "asking for a dime."
"We were on the verge of losing this next expansion," he said.
Instead, more jobs are in the works. Dow Corning Corp., a majority owner of HSC, also will build a facility to manufacture monosilane gas next to HSC. The cost and employment numbers on that project weren't available, said spokesman Jarrod J. Erpelding.
Monosilane is a specialty gas that liquid crystal display and thin-film solar cell makers use in their manufacturing.
The decision to make the gas launches the company, already thriving in the burgeoning solar power industry, into still another technology for harvesting renewable energy from sunlight.
Construction on all projects will begin immediately.
A global leader grows
HSC is the world leader in production of polycrystalline silicon, a super-pure, rock-like material used to make solar panels and computer chips.
"We're tapped out," said Gary R. Homan, HSC vice president and director of marketing, sales and quality. "We're basically selling everything we can manufacture today."
HSC's plans in Thomas Township will bring total employment to more than 1,500 workers when the latest expansion finishes in 2011, Erpelding said. At least 800 to 1,200 construction workers will stay on the site until the work is finished.
Clarksville could get 500 new jobs and up to 900 total in future expansions. The project will employ 1,000 construction workers there for five to seven years. Every manufacturing job, researchers have determined, adds at least 3.5 workers in the service or retail sector.
Already in the midst of a $1 billion expansion in Thomas Township through 2010, the company expects to produce 50,000 metric tons of polycrystalline silicon within three years at four plants at its Geddes Road operations.
In 2005, it manufactured 7,700 tons and today 19,000 tons. Clarksville will add another 10,000 tons, with further expansions upping that to as much as 21,000 tons. Worldwide, producers make 60,000 tons of the material today.
All told, the company that first opened in Saginaw County in 1961 could supply 60 percent of the global demand for the product when its plans are complete, Homan said. And company leaders expect more growth.
"HSC's investment further establishes this region as 'Michigan's Solar Valley' and positions the area for continued growth in renewable energy," said Saginaw Future Inc. President JoAnn T. Crary. "Our team worked together for 18 months to address competitive issues and crafted an incentive package that supports HSC's expansion for years to come."
The Saginaw Valley has evolved into a hotbed of solar growth.
Dow Corning opened a Solar Solutions Application Center in Freeland for research and development in solar cell technology. Buyers from all over the world come to the center for demonstrations of what local engineers and scientists can do to make solar collector materials more efficient.
Evergreen Solar Inc., of Marboro, Mass., is constructing a $55 million silicon wafer technology plant in Midland.
Dow Chemical Co. is making progress on a building and its equipment for a $53.3 million integrated photovoltaics center at its Michigan Operations complex in Midland. The research and development operation will determine whether Dow can profitably manufacture construction materials, shingles and siding for example, that include solar cells to capture sunlight and convert it to useable energy.
New industry, more jobs?
With an onslaught of sour economic news and the future of the Detroit Three automakers in doubt, state and local leaders said the HSC project couldn't arrive at a better time.
Mid-Michigan authorities hope the HSC announcement will bring more expansions and more companies in the solar industry supply chain. An "anchor zone" gives HSC tax breaks if its customers move within 10 miles of its headquarters. Saginaw Township, for example, has created a Campus Business District along Tittabawassee between Mackinaw and Lawndale in part with the hope of snagging HSC supplier companies and those that use its products.
"You have the opportunity to recreate an entire industrial corridor right up the I-75 corridor," Horn said. "It will never fully replace the auto industry, but it's a great alternative in the diversification of the economy. ... We're going to be hungry for them because we know the importance of manufacturing."
State Rep. Andy Coulouris agreed.
"We have known all along that the key to our economic future is diversifying our economy," the Saginaw Democrat said. "This expansion means we have a critical mass sufficient to draw in the rest of the supply chain, which means we could be on the verge of a sea change for our region."
Added Saginaw County Chamber of Commerce President and Chief Executive Officer Robert Van Deventer: "It opens up a lot of possibilities of attracting those smaller companies here. We're reliant upon manufacturing, but this is a different type of manufacturing that will require skilled trades workers."
Area leaders worked with state leaders to attract the expansion.
"We have done everything at our disposal at the state level, and the locals did the same," Coulouris said. "It was not looked on kindly at times by folks who represent the rest of the state. We definitely had to do some maneuvering on the state level."
Locally, the city of Saginaw agreed to sell excess capacity in its water system to the township; Saginaw Township expanded its wastewater treatment plant in a shared cost agreement with HSC and Thomas to handle the growth.
"We'll do anything we can to increase that expansion," said Thomas Township Supervisor Robert Weise, a Republican. "A lot of people did a lot of hard work."
County Board of Commissioners Chairwoman Cheryl M. Hadsall hopes the new expansion and more jobs will bolster the sale of big-ticket items, such as homes and autos, and bring in millions of dollars in tax revenues that could lessen or end an ongoing reduction in government services.
"It would be a huge shot in the arm right now for Saginaw County," the Birch Run Democrat said.
Tri-County Economics Club President Mike Rush said business people should use HSC's success as a chance to learn from the past. The automotive industry once blossomed too, and many towns embraced it.
"Another billion-dollar expansion is a definite shot in the arm," he said, "but we need to be careful because diversity is the key. We've seen the impact of what happens when you depend on just one or two industries and how devastating it can be."
A second site
Doornbos said Michigan business boosters shouldn't feel slighted that the Geddes Road location didn't get the bulk of the project.
"It's a matter of risk management, really," he said. "This is our home, our headquarters, but it's better not to have all of your operations at one site."
Natural disasters, work stoppages, terrorism and other threats are reasons for "diversifying" HSC's manufacturing hubs, Doornbos said. "It just makes sense."
Tennessee offered incentives with "very attractive" energy rates, an "excellent" location, he added, and other specifics not disclosed.
Clarksville, Montgomery County and Tennessee state officials aggressively courted HSC to locate in Commerce Park, a 1,215 acre industrial "megasite," The Tennessean newspaper reported on its Web site.
The region's city-county Industrial Development Board offered a tax incentive package for a prospective company code-named "Project Washington" that reduces local property taxes 50 percent during construction and 20 years afterward, the Nashville newspaper reported. The County Commission also rezoned 940 acres of farmland next to Commerce Park for industrial use.
Hemlock Semiconductor LLC, a new company, will oversee operations in Tennessee. HSC and its partner are joint ventures with Dow Corning and two Japanese firms, Shin-Etsu Handotai Co. and Mitsubishi Materials Corp.
A global leader grows