Hemlock ranks as the largest single-facility consumer of energy in the state. The firm successfully negotiated a compromise rate package with the Michigan Public Service Commission, which established a new rate for industrial consumers that consume at least 70.2 million kilowatt-hours annually.
   "This special rate was crafted for HSC," says JoAnn Crary, president of Saginaw Future Inc., the local economic development organization that spearheaded the deal from the government's side. "This is a new utility rate for power consumption giants. With this new rate, it gives us the ability to attract other silicon fabricators to the area."
   Hemlock is the world's largest producer of polycrystalline silicon, the key material used in the manufacturing of photovoltaic cells. With the Michigan expansion, HSC will capture 35 percent of the global market.
   The project creates 463 new jobs, including 150 directly by the company, in several phases. Crary says that an additional 150 contractor jobs at the plant will be created and will average $31,000 a year in pay and benefits.
   A University of Michigan economic analysis estimates that the company's expansion will generate another 313 indirect Michigan jobs as a result of increased economic activity. The project is expected to generate more than half a billion dollars in personal income for Michigan workers over the life of the state's incentive package.
   That package totals $90.46 million, including state sales tax exemption, investment tax credits, personal property tax abatement, rural property tax abatement and state education tax abatement.
   "That number does not include the reduction in energy costs, which was really the biggest and most important incentive offered in the deal," says Crary. "We had a team of management and labor at HSC that wanted to do the project here, but they had to make it competitive enough to beat out Carrollton, Kentucky. They had to present a business case to Dow Corning and the two minority partners from Japan."
   The project's importance attracted the attention of Michigan Gov. Jennifer Granholm. "This expansion will continue to strengthen Hemlock Semiconductor's presence in Saginaw County," she said on Nov. 15, the day of the announcement. "Their decision to choose Michigan over Kentucky is a testament to the state's leadership in competitive-edge technologies and will create jobs in the high-tech field of alternative energy investment and research."
   Granholm especially likes the HSC project because of its focus on high-tech R&D in alternative energy. The expansion is being driven by increasing global demand for poly-silicon, the building block used in the production of solar cells used to make renewable energy from light rays and in semiconductor device manufacturing.
   Phase one is set for completion in January 2008, with a potential second phase concluding one year later. The exact size of the project hasn't been revealed, but the company says it will increase the footprint of its physical plant by 50 percent.
   "It's exciting to announce this expansion on a number of levels," said Donald Pfuehler, president and CEO of HSC. "Not only will we expand our ability to provide high-quality products to solar and semiconductor industry customers, we'll also be creating a significant number of jobs and improve the economic activity in this region."
   Hemlock expects the solar energy industry to grow at a rate of 20 to 24 percent a year over the next 10 years. Today, solar energy accounts for about 10 percent of all renewable energy produced.
   Pfuehler added that while Hemlock in Thomas Township was the preferred location for the expansion, "several issues needed to be addressed to ensure the Hemlock site remained globally competitive."
   Pfuehler said that HSC "received excellent support from Gov. Granholm's office, Michigan Economic Development Corp. (MEDC), Thomas Township, City of Saginaw, Saginaw Future Inc., Department of Environmental Quality and Consumers Energy. We appreciate the support of these groups which enabled our expansion to remain at this site," he added.
   Skufca echoed those thoughts: "It is very difficult to make this product and test it," he notes. "The labor costs remain high here — they are what they are. But we were looking at productivity. Water also was a key part of the deal. State funding to cover roughly 20 percent of the water infrastructure upgrades was critical to this deal."