Polysilicon is the starting material for producing both computer chips and high-quality solar cells.
ennessee, like many territories, is putting its trust in the clean energy sector. Unlike some, however, it’s trumpeting results more than goals.
On Feb. 26, Wacker Chemie announced it had secured the land to build a $1-billion, 500-employee hyperpure polycrystalline silicon plant to Charleston, in Bradley County, just northeast of Chattanooga.
Tennessee is getting used to good news, as Wacker’s was the third announcement in eight months to unveil a billion-dollar project, after Volkswagen’s in summer 2008 and Hemlock Semiconductor’s own polysilicon plant announcement in December 2008.
"Under Governor [Phil] Bredesen’s leadership, we’ve developed a strategy for the creation of ‘green collar’ jobs in Tennessee," said Matt Kisber, commissioner of the Tennessee Dept. of Community and Economic Development, at the Wacker announcement on Feb. 26. "That strategy has resulted in more than $2.5 billion dollars in capital investment and over a thousand new jobs being announced in the past year, and we truly believe Tennessee is well-positioned for the growth of a sustainable economy in the U.S."
Among a slew of incentives the state has created, most recently the potential for a future national carbon emissions tax convinced the state legislature to promise in 2008 to offset a portion of such taxes for a select group of companies, including Wacker ("vock-r") and Hemlock/Dow Corning, which is investing $1 billion in its own polysilicon plant in Clarksville, at the state’s western end.
"It’s part of a long-range plan, and a lot of great vision by our governor," says says Ross Tarver, chairman of the Cleveland/Bradley Industrial Development Board, of Bredesen’s legislative vision. Bredesen’s tenure will end in 2010 because of term limits. "Obviously he wants to leave a legacy behind when he does leave, that Tennessee is going to be known for its alternative energy vision."
Of the $1.2 billion that U.S. Department of Energy Secretary Steven Chu announced in March would go to DOE’s national labs for major construction, laboratory infrastructure and research efforts, the Oak Ridge National Laboratory (ORNL) will receive $71.2 million for laboratory modernization.
John Bradley, senior vice president of economic development for the Tennessee Valley Authority (TVA), says the carbon tax legislation was the turning point.
"They were very strategic in legislation in recruiting industries such as this," he says. He thinks the Hemlock announcement toward the end of 2008 "piqued Wacker’s interest even more" in moving forward in Tennessee. As with VW and Hemlock, he says of the Wacker deal, "there is just going to be more down the road customers and other industries involved in solar."
U.S. Congressman Zach Wamp (R-Tenn.), a recently announced candidate for governor, thinks the state could go from third to first in automotive industry manufacturing in the next 15 years, and could be the absolute leader in the south when it comes to export of alternative energy solutions.
"Twenty years ago, Chattanooga embraced the notion of sustainability, before the nation understood it was not a fad, but a trend," says Wamp.
Even in Hard Times, Some Dividends Pay Out
Asked if the renewable energy initiatives now in play in Washington have the strongest across-the-board support of the many measures up for debate in Congress, Wamp, who served for eight years as co-chair of the renewable energy caucus in the U.S. House of Representative, simply says, "Yes."
"People ask me all the time ‘my business is hurting, what should I do next?’ Get a crew, and learn to weatherize a home. Look at the stimulus $6.5 billion into weatherizing homes. The DOE is not prepared, and the private sector is going to have to do it. Alternative energy is so much in vogue today that there is money being spent by the federal government that can’t even be spent in a timely manner because the private sector is not yet ready."
Many Points of Light
Wacker Chemie AG’s growth spurt stretches well beyond Tennessee. Its 270-job, $398-million expansion of polycrystalline silicon production at its 95-year-old site in the Bavarian city of Burghausen, Germany, started up production in November 2008.
Wacker is growing in many places around the world, including this site in Singapore.
That same month, Wacker and Schott Solar announced they would press ahead with expansion of their new solar wafer production facility that came online in April 2008.
Also in November 2008, Wacker and Dow Corning their fellow Tennessee billion-dollar investor started raw materials production at the $1.2-billion, 10/7-million-sq.-ft. (1-million-sq.-m.) integrated silicone manufacturing site the two companies are developing in Zhangjiagang, Jiangsu province, China.
A month earlier, Wacker announced it would construct a new polysilicon plant at its Nünchritz site in Saxony (where it also maintains a large silicone production division), investing $1 billion and hiring approximately 450 new employees.
Tennessee and more specifically, the Chattanooga area might very well be ready. In addition to the big-impact VW plant, the area has seen recent energy-sector investments from Ahlstom (power plant modules) and wind turbine tower manufacturer Aerisyn, among others.
"Our quality of life dramatically improved when we cleaned up our own city," Wamp says. "My mother was on the original Moccasin Bend task force that led the cleanup of the riverfront. Now it’s a super city, and everybody talks about it. Technology has been enhanced, and there is a desire on behalf of leaders to recruit and retain new, green manufacturing technology and industries. It’s almost a perfect storm for growth. People are real excited about it. What we’ve been doing for 25 years in southeast Tennessee is [now] paying dividends, even in the middle of a global recession. We’re not going to have the brain drain we had 30 years ago."
"We have a booming economy in the middle of an economic downturn coming out of Oak Ridge," said Congressman Wamp at the Science Applications International Corporation’s (SAIC) dedication of its new shared service center, which will employ 150 people.
Wamp is thrilled to see the big projects extend the economic development vision for the Tennessee Valley Technology Corridor that he’s promoted during his 14 years in the U.S. Congress.
He says he got the idea from reading the work of Dr. George Kozmetsky, one of the architects of Silicon Valley, who said that the World War II R&D infrastructure stretching from Huntsville, Ala., to Oak Ridge, Tenn., had the potential to be another technology region. Now it stretches across 11 congressional districts in five states, most recently adding the western North Carolina district of one Heath Shuler, D-N.C., who made his first claim to fame as a quarterback for the University of Tennessee.
"When VW lands in Chattanooga, and when Wacker lands next door, it is not an accident to us," says Wamp. "It doesn’t eliminate the recession, but it makes us more resilient. It gives us growth in the middle of a severe downturn, so we’re able to stabilize, and not lose too much ground. It might exceed 15,000 jobs in the region to support those two investments.
It also reinforces Wamp’s belief in manufacturing as economic bedrock.
"What I say to people is ‘If somebody doesn’t build it, make it or grow it, you can’t service it or sell it," he says.
They’ll Be Back
As a longtime community leader and proprietor of Cleveland, Tenn.-based Anheuser-Busch distributor Tarver Distributing, Ross Tarver is well versed in service and selling, in keeping with the venerable brewer’s motto: "Making Friends Is Our Business."
Above (left to right): Dr. Rudolph Staudigl, president and CEO of Wacker Chemie, ECD Commissioner Matt Kisber, Tennessee Governor Phil Bredesen (also pictured above right) and Dr. Peter-Alexander Wacker, chairman of Wacker Chemie AG's Supervisory Board celebrated Wacker's announcement in Cleveland.
Today, having played a role in attracting the Wacker project, he knows even better the truth of that slogan.
"In the German culture, trust is not taken lightly. I think they trusted all the individuals associated with the project," says Tarver, chairman of the Cleveland/Bradley Industrial Development Board.
Wacker first considered the area for a plant in 2005. But, as Tarver explains it, demand for the product was so high that the time frame for constructing a greenfield plant was not conducive, and Wacker expanded at its 95-year-old site in Burghausen, Bavaria, instead, where operations just started up in November 2008.
But the individuals in Tennessee were sure their site was the North American choice, and so were equally sure to keep up the cordial relations.
"We maintained contact with their executives on a friendly basis," says Tarver. "I would occasionally contact a few of them, ask them how they were doing small talk."
The small talk turned big again in June 2008, when company officials contacted the Tennessee team, comprising, among others, Gary Farlow, vice president of economic development for the Cleveland/Bradley Chamber of Commerce; Kisber; Bradley; and Reagan Farr, commissioner of revenue for the state.
"All the players they dealt with in 2005 were still in those positions of responsibility in 2008," says Tarver. "We had gained their friendship and their trust, and I think that was some of the major difference in making the decision. There are still a lot of papers to be signed and agreements to be reached, but bottom line, no matter how many documents you get signed, you have to trust the individuals you’re doing business with."
Dirt, Water, Power ... and Chlorine
Expansion continues at Wacker's site in Burghausen, Germany, the location that originally won out over Tennessee when the company first looked at expansion opportunities in 2005.
Indeed, the $20-million purchase of land announced in late February was just the next step on the long road ahead. Wacker was not able to make an executive available for an interview. The company on March 18 forecast a rough year ahead for all divisions but its polysilicon division. Christof Bachmair, senior manager of media relations and information at the company’s German headquarters, said this by e-mail:
"While the acquisition of the land in Tennessee is an important prerequisite to execute quickly on our intention to set up a new polysilicon plant, we have not yet determined when we will actually start with this project. Consequently, many key data points ... are still work in progress."
Amid the general economic malaise, qualified statements such as that are close enough to good news for most folks.
Some data points about the Wacker project are well established. Among them are close proximity to a 500-kilovolt power line and a dependable water source in the Hiwassee River.
Also in proximity is a major chlor alkali plant operated by Olin Corporation, a company playing a major role in the project. First, significant acreage Olin owned was approved for sale by its board to the Bradley Cleveland Industrial Development Board as part of the 550-acre (223-hectare) site Wacker will occupy.
Critical Mass Could Boost Future Transportation Options
Does the increase in international business in southeastern Tennessee combine with the steady growth of Atlanta and of its airport traffic to support the argument for a new regional airport in north Georgia or in Tennessee? Some think so.
"I can’t see any reason they wouldn’t support that," says Ross Tarver, chairman of the Cleveland/Bradley Industrial Development Board. "Given the level of visibility of the Tri-cities —Chattanooga, Cleveland and Dalton [Ga.]. There’s a little hub right there, and it’s gaining a lot of attention." U.S. Congressman Zach Wamp (R-Tenn.), says there are a couple ways to go.
"With 100 million passengers a year coming out of Atlanta, the Atlanta Regional Commission has voted that they will not allow a second airport," he points out. "It would have to come way north. There’s been talk about it, and there are tracts."
The other option is high-speed rail, "if we can get in the final number of routes supported by federal government for high-speed rail," he says. "But the alternative is a bullet train, all the way through Chattanooga to Nashville, and all the way to Chicago. We’re at the second stage of feasibility. I have funded those studies. [Senate Majority Leader] Harry Reid (D-Nev.) put in $8 billion for high-speed rail, but it’s mostly in the West. At some point they’re going to have to deal with this because of non-attainment and traffic in Atlanta. As growth comes to southeast Tennessee, it becomes more viable."
"Olin provided Wacker about 130 acres [52.5 hectares] for its new project and provided about six acres [2.4 hectares] for building a new access road that will be beneficial for both of our businesses," says John McIntosh, president of Olin’s Chlor Alkali Products Division, in a prepared statement. The rest of the parcel came from the Wright family, via Wright Bros. Construction Co.
Second, the Olin plant will supply Wacker with chlorine through a new pipeline.
"This is a long-term contract that will be beneficial to all of us seeking to build a strong, long-term business enterprise in Bradley County," says McIntosh. "On behalf of our employees at Olin’s Chlor Alkali Products Division who live in Bradley County, I want to welcome Wacker Chemie AG to our community. We are excited to be working with our new customer and helping them to succeed."
TVA, a cornerstone of the region’s economic development past, present and future, was pretty thrilled too, having also been central to landing Hemlock on one of its certified megasites, across the state in Clarksville.
John Bradley, senior vice president, TVA economic development
"You have the number one and number two companies in the world in the industry," says Bradley. "It’s amazing to land one of these, but to get two is just mind-boggling."
Bradley says one of the things TVA studies is whether a community can handle it when a massive project comes to town. Though the Wacker site near Hiwassee Industrial Park was not a megasite, it was a parcel on which TVA and local agencies had performed significant due diligence of their own. As for the power itself, the TVA electricity will come in at about half the rate Wacker pays in Germany. But Bradley says reliability can be just as important as price to such a high-tech, 24/7 operation.
"They just can’t allow for a hiccup," he says. "Reliability is key, and I would say reliability in this case is more important than price, because the financial implications are much higher. Think about the loads 100 to 130 megawatts in phase one. A nuclear plant is 1200 megawatts. Fully built out, they could be a third of a nuclear plant. Not everybody out there can handle that size of a load. We’re selling the fact that we have the reliability, and we have a very diverse portfolio across coal, nuclear and hydro. Companies are very interested in utilities that have that."
According to published reports, the Wacker plant will pay an average wage of $41,600 a year. Wacker will qualify for statutory incentives on the state and local level, including the FastTrack Infrastructure Development Program, the FastTrack Job Training Assistance Program and the Super Jobs Tax Credit. Bradley County commissioners authorized their own $50-million incentive package. A key provision is a 25-year payment-in-lieu-of-taxes (PILOT) arrangement whereby the company will pay just 50 percent of real and personal property taxes through 2038. The same offer will be made to other Wacker divisions, customers or suppliers who locate in the same general physical footprint.
Here’s to Good Friends ...
Unlike many business recruitment efforts, the Tennessee team working the Wacker project was fortunate enough to have another big prospect looking at the same parcel at the same time. Though the parcel had been studied by Wacker in 2005, it had not been put under option since that time, says Tarver.
Click above to view the two-part film of the Wacker project announcement, courtesy of the Tennessee Department of Community and Economic Development.
"We had had another large industrial prospect here at the time, and we had the property optioned in the event we could land this other prospect," he says. "It just happened it worked out that we had two very large prospects interested in this same location, and we had to choose which company we wanted to partner with, which one we felt would be the most benefit to the community. We chose the right horse in the race ... though I’m not saying the other company isn’t a great company.
Having visited Wacker’s Burghausen campus, Tarver and others are eager to see the company’s sophisticated and environmentally responsible operations and training hit the ground running in Tennessee. He already has seen the VW and Wacker announcements’ result in the eyes of his fellow citizens as he makes his retail rounds.
"Before, you saw a lot of desperation on people’s faces," he says. "If nothing else, with VW and with Wacker, it has really inspired a lot of hope in people that we will have a brighter tomorrow for our children and grandchildren. It’s something that will be great for the next 50 to 100 years."
Tarver is also eager to continue building the relationships he and his colleagues have cultivated with their German friends. Asked if the executives from a nation synonymous with beer had deigned to sample the Anheuser-Busch products he’s been distributing for most of his life, Tarver says, "We have a large selection of new craft brews within Anheuser-Busch bocks, ales, Hefeweizen all through the new Michelob craft brewing company, and they were quite impressed with them —very surprised, as a matter of fact.
"We’ve enjoyed many of those over the last eight to 12 months," he says. "We’ve made a lot of friends."