News and Press Releases

POCATELLO — Plans to develop an industrial park at the Pocatello Regional Airport, stalled on the tarmac since the 1970s, may finally be taking off.

Airport Director David Allen said the city is close to landing a large manufacturer that would build a facility encompassing a total of 135,000 square feet on a 20-acre site.

Furthermore, on Friday, Allen sent a final version of a lease to operate at the airport to Petersen Inc., which announced plans in June to relocate to the industrial park. Petersen, a metal-fabrication company currently housed at the Gateway Industrial Park, has already dug test wells to determine what builders may experience as they dig to build a foundation.

The land has already been surveyed, and the start of construction on the Petersen facility is imminent, Allen said.

Allen said Petersen’s decision has clearly influenced the potential tenant.

“I’m probably about 90 percent complete,” Allen said of the negotiations. “There are no show-stoppers that we know of. I think this is really going to happen.”

Allen said it’s too early to disclose the identity of the potential tenant, or even the nature of what the tenant would manufacture, due to the possibility that revealing too much information could compromise negotiations. He said Bannock Development Corp. has been in the recruitment effort. He anticipates an announcement will be forthcoming before the end of the year, and possibly as early as within a couple of months.

The manufacturer would not make products related to the aviation industry.

Mayor Brian Blad said two or three businesses, all of which utilize clean manufacturing processes, began eyeing the airport’s industrial park after Petersen’s announcement.

Allen said the city now plans to expand a tax increment financing district created when Hoku Materials initially build at the airport to accommodate future growth. About two-thirds of the 1,200-acre industrial park would be encompassed by the expanded TIF district.

In TIF districts, tax dollars generated by business improvements are diverted from the normal tax rolls and are used to cover the cost of infrastructure to serve those businesses.
“It’s a big facility,” Allen said. “Between this one and Petersen, it’s going to change everything at the airport. In fact, I think it’s going to bust everything wide open in terms of future development at the airport. This really is going to make the difference.”

Blad noted development at the airport benefits every community in the region. The Power County Commission, for example, has passed a motion vowing to assist with the TIF district and support development at the airport in any way possible. Blad also recognizes that the Shoshone-Bannock Tribes have an interest in the airport, and working with them will be imperative for the industrial park to be successful.

“They recognize that it needs to be developed out there. We’ll address their concerns when we do,” Blad said, adding the city and other entities have been meeting with the tribes to discuss issues including the airport and jurisdictional concerns. “To develop the airport is going to be beneficial to the tribes, to the cities of Chubbuck and Pocatello and to Power County. And most people who will be employed there will be from Bannock County.

“If we want to make the airport bigger and have more flights come out of there, we’ve got to develop it.”

Governor says expansion shows ON’s commitment

POCATELLO — Idaho Gov. C.L. “Butch” Otter said a planned expansion at ON Semiconductor in Pocatello shows the continued commitment between the Phoenix-based company and the Southeast Idaho community.

Otter received a standing ovation from the crowd of about 350 community leaders and ON employees Tuesday. He commended workers at the manufacturing plant and said the investment into the community will be returned several times over.

“It’s not our job to choose winners,” Otter said. “It’s our job to provide support to companies like ON.”

Legislation passed last year enabled the planned $11 million expansion at the Pocatello plant that is expected to add 35 jobs to the payroll and bring the total number of workers to 700.

Bannock County granted a five-year, 50 percent reduction in the assessed value of new equipment, and the Idaho Department of Commerce and Idaho Department of Labor are contributing grants.

Arlen Wittrock, spokesman for ON Semiconductor, said the celebration was a way to recognize the partnership between the company, its employees and local officials.

Pocatello Mayor Brian Blad said two years ago when ON Semiconductor took over operations at the plant, its future in Pocatello was questionable.

But Blad said the partnership with ON and the expansion illustrates a commitment to private business in Pocatello.

Former Mayor Roger Chase recognized employees at ON Semiconductor and the crucial role they played in the expansion.

“We got to this point because of the workers,” he said. “I take my hat off to all the staff at ON.” ON site manager John Spicer, a native of Pocatello and a graduate of Idaho State University, said the company’s investment in Pocatello paid off.

“ON has a great future in Pocatello,” Spicer said. “We have the potential to become a manufacturing hub.”

Gynii Gilliam, executive director for the Bannock County Development Corporation said a willing work force is Southeast Idaho’s biggest asset. That, plus the low cost of doing business in the state will attract other businesses, she said.

Rep. Ken Andrus, of Lava Hot Springs, said tax incentives are needed to attract companies to Southeast Idaho.

“These companies come because the environment to accommodate them is here,” Andrus said. “It’s very competitive to attract companies that bring very many jobs to the area.”

Passed into law last March,. Rep. Diane Bilyeu - Pocatello, said House Bill 490, coupled with the success of ON Semiconductor will attract other businesses to Idaho.

“I knew the bill would create jobs, I didn’t know that Bannock County would be the first to take advantage of it,” Bilyeu said.

Steve Brown from Congressman Mike Simpson’s office, said when ON Semiconductor took over at the plant, the unavailability of an uninterrupted power source threatened the future of the company in Idaho.

But through a partnership with Idaho Power Company the problem was resolved.

“We were able to identify the problem and solve it,” Brown said. “It benefited ON and the entire community.”

ON Senior Vice President Bob Klosterboer said the company will ship 40 billion units this year — that’s about seven for everyone on the planet.

Klosterboer said the Pocatello plant is now one of the most cost-effective and efficient in the company’s broad network.

Bannock County Commissioner Larry Ghan congratulated the staff at ON Semiconductor for being able to weather the current economic storm.

“It’s wonderful to have a strong and growing company here and we look forward to the continued partnership.’’ Ghan said.

Bibiana Nertney with the Idaho Department of Commerce said ON’s success looks good to other companies considering relocating to the Gem state, and Roger Madsen, director of the Department of Labor, said with annual sales of $2 billion, ON Semiconductor offers good jobs with good benefits.

“Looking out on the city I see the Hoku Corporation and the expansion at PMC,” Madsen said. “There are good things going on in Pocatello.”

DEBBIE BRYCE
dbryce@journalnet.com

Chip-maker’s business booming

POCATELLO — Other local business officials might have a hard time empathizing with the challenge facing ON Semiconductor. As the economic slump lingers on for most, managers with the local ON plant are pushing forward on a strategy to keep pace with customer demand.

On Thursday, the Phoenixbased company, whose local semiconductor plant is one of Southeast Idaho’s key manufacturers,announced a $336 million deal to buy Sanyo Electric Co.’s semiconductor unit. Though the Sanyo chips division wasn’t profitable, ON’s local plant manager, John Spicer, notes the company has a knack for turning businesses around. He also believes the acquisition will provide ON a better presence in Japan.

ON is also in the process of acquiring and installing $11 million in new equipment to increase its productivity and hiring 35 new workers to provide the manpower to run the new equipment.

Gov. C.L. “Butch” Otter, ON CEO Keith Jackson, Mayor Brian Blad and other dignitaries are scheduled to attend a celebration of ON’s investment, scheduled for 10-11 a.m. on Aug. 3.

“The Pocatello facility, we went through that big downturn in 2009, and we’ve come out of it in 2010. Our demand has gone up tremendously, and we’re backlogged. Our lead time to our customers have been extended,” Spicer said. “All of this equipment is to reduce that and improve delivery times to our customers.”

Spicer said the new equipment will increase output at the plant by about 50 percent. ON is installing the new equipment in its former Fab 9 facility, which manufactured 5-inch wafers — less efficient products to produce than larger wafers — and was recently shut down.Much of the new, 8-inch equipment will be installed in the former Fab 9 area and will supplement the equipment that remains in use, Spicer said.

As for the equipment from Fab 9, Spicer said some of it was converted for 6-inch production for utilization in other ON factories, the company is seeking to sell some of it, and some of the equipment is simply too old to be of much use.

Spicer estimates all of the new equipment will be installed by October.

After Fab 9 closed, some temporary workers hired to help close the facility were let go. Many of those workers are now being hired back in full-time positions, Spicer said.

Last year at this time, Spicer estimates ON’s local workforce was about 620 strong. It’s jumped to about 650, and he said there are about 20 more positions remain to be filled. ON is seeking full-time workers including facilities engineers, process engineers and equipment technicians.

“We’ve found some in town and we’ve brought some in from out of town. It’s been both,” Spicer said.

Spicer isn’t certain what has fueled the increase in demand for semiconductors , but it has been an industry-wide trend, he said.

“As an industry, year over year (demand) is up quite a bit,” he said. “I just think we’re real excited about the future and the opportunity

“That’s kind of why we want to do this ribbon cutting and celebration. It’s just kind of to recognize that ON is investing in Pocatello’s future and that we have a strong future, and there’s a real positive outlook on Pocatello’s manufacturing capability.”

Spicer said a state law passed in the last session helped ON more affordably purchase its new equipment. The law enabled ON to pay just half of the usual taxes on that machinery. He believes ON was the first manufacturer in the state to take advantage of the change.

ON plant manager John Spicer stands inside a part of Fab 10 that will house new equipment and expand ON’s 8-inch wafer production on Friday afternoon in Pocatello.

BY JOHN O’CONNELL
joconnell@journalnet.com

Chip-maker to invest $11M to hike production capacity here

POCATELLO — Pocatello received some long-awaited good news on the jobs front Thursday when ON Semiconductor announced it will add $11 million worth of production equipment to its local manufacturing facility, a move that will greatly increase production capability.

The investment will provide about a 50 percent increase in the capacity of ON’s local eight-inch semiconductor wafer manufacturing facility, said John Spicer, ON’s Pocatello site manager.

“We’ll be able to improve our capacity tremendously,” Spicer said. “I think this speaks volumes about the commitment ON is making to Pocatello.” The capital investment not only will lead to the hiring of an additional 35 employees at ON’s Pocatello plant this year, but company officials said the move further secures current jobs at the plant.

ON employs about 630 people at its Pocatello facility, which produces semiconductors for the automotive, medical, industrial and military and aerospace markets. ON is one of Pocatello’s largest private employers and Bannock County's third-largest property tax payer. In 2009, ON paid $1.33 million in real and personal property tax in Bannock County.

When ON acquired AMI Semiconductor in March 2008, rumors swirled that the company was considering leaving Pocatello. Local leaders hailed Thursday's announcement as proof of ON's commitment to its Pocatello operations.

“The expansion of ON is great news for Pocatello,” said Mayor Brian Blad. “With this expansion, it solidifies the fact that they are going to be here long term.”

“It certainly bodes well for the future staying power of ON Semiconductor in our community,” said Gynii Gilliam,executive director of Bannock Development Corp.

ON plans to begin installing the additional equipment at its Fab 10 manufacturing facility in Pocatello immediately. According to a company news release, ON has weathered the recession and is moving forward to address increased demand and opportunities.

“Expansion in Idaho is part of the company’s overall strategy to maximize its in-house manufacturing capabilities to address increased customer demand,” stated Chuck Spinner, vice president of ON’s eight-inch manufacturing operations in Pocatello. “This is positive news for our employees, for the Pocatello community and for our global customers.”

Spicer said incentives provided by local and state governmental entities played a key role in the company’s decision to invest in and expand its operations in Pocatello.

Taking advantage of a state law, Bannock County provided ON a 5-year, 50 percent reduction on the assessed value of the new equipment.

Through Pocatello, ON was awarded a $200,000 Idaho Department of Commerce grant for electronics infrastructure development.

ON was also awarded a sizable workforce development training grant through the Idaho Department of Labor. The grant is for up to $4,000 per employee and will be integrated into a similar grant provided to the company when it acquired AMI.

ON officials said the governor, departments of labor and commerce, Pocatello, Bannock County and Bannock Development all helped make the expansion a reality.

“That shows the state’s commitment to keeping ON here,” Spicer said. “It shows business and government can work together.”

June 4, 2010
BY SEAN ELLIS
sellis@journalnet.com

Paul said his workforce put in long, exhausting hours throughout the test. Two six-person crews worked 12-hour, back-to back shifts. Paul noted the majority of the employees are local people who had no experience in the polysilicon industry before joining the company between six months and a year ago.

“To be able to get equipment on line and make polysilicon in ... reactors as smoothly as we did I believe may be unprecedented for a start-up plant,” Paul said.

Paul added that all of the workers were trained in-house and will be relied upon to train new workers.

“These guys are that seed, that first group that has learned how to do it and done it successfully,” Paul said. “This is the group that will be our future trainers, plant supervisors, managers and will grow with the company. I think the opportunity for this group is really unlimited.”

Hoku has solicited applications during the past two years and already has resumes of several qualified workers, assuming they’re still available, Paul said.

“It’s a huge milestone. This dates back four years since we announced we were going to start this plant. ... A lot of people thought we would never get this far,” Paul said.

Indeed, Hoku faced a myriad of challenges as it sought to build a $390 million factory during the severe economic downturn. The recession forced a major slow-down of building on the plant, and at one point last summer, JH Kelly and several subcontractors had $16 million in liens active against Hoku.

Then in December, Hoku announced a deal with Tianwei New Energy Holdings Co., Ltd., to secure the necessary funding to complete the plant and resolve debt issues. Under the agreement, Hoku issued 33,379,000 new shares of its common stock to Tianwei and granted the company an option to buy another 10 million shares at $2.52 per share. The deal gave Tianwei the majority investment in Hoku.

Once complete, the local plant will be capable of producing 4,000 metric tons of polysilicon per year to be used for making solar panels.

Paul noted the raw materials used for making the test batch of polysilicon weren’t of the highest quality, and
handling practices weren’t up to the standards that will be employed once the plant is fully operational. Nonetheless, he anticipates Hoku will find a buyer for the test batch.

After news of the test was released, Hoku’s stock (NASDAQ: HOKU) closed up 17 cents at $2.79.

Paul said the price of polysilicon has gone up a little bit during the past few months, and he’s heard forecasts that there could be a supply shortage later this year.

Gynii Gilliam, executive director of Bannock Development Corp., was among the local economic development
officials involved in recruiting Hoku. She was thrilled by the news of the company’s successful test.

“It’s been a long, bumpy and interesting ride, and I’m glad we’re at this very historical moment where it’s like,
‘Yay!, we can finally move forward now,’” Gilliam said.

Given the number of established companies that haven’t survived the recession, Gilliam believes Hoku’s test is all the more impressive.

“It took a whole lot of people, and everybody did it,” Gilliam said.

Gilliam recently announced news that four large companies, including three in the energy sector, are eyeballing
Pocatello as a potential place to locate. Some of those companies would bring new opportunities for Hoku, she
believes.

“There’s some possible collaborations most definitely,” she said.

April 30, 2010
BY JOHN O’CONNELL

China supplies most of the rare earth minerals found in technologies such as hybrid cars, wind turbines, computer hard drives and cell phones, but the U.S. has its own largely untapped reserves that could safeguard future tech innovation.

Those reserves include deposits of both "light" and "heavy" rare earths - families of minerals that help make everything from TV displays to magnets in hybrid electric motors. A company called U.S. Rare Earths holds the only known U.S. deposit of heavy rare earths with a concentration worth mining, according to a recent report by the U.S. Geological Survey (USGS).

Light rare earths include the minerals ranging from lanthanum to gadolinium on the periodic table of elements, while heavy rare earths range from terbium to lutetium.

Averting disaster

If developed, such deposits could help the U.S. avoid a possibly crippling rare earth shortage in the next decade. China has warned that its own industrial demands could compel it to stop exporting rare earths within the next five or 10 years.

"There is already a shortage, because there are companies that already can't get enough material," said Jim Hedrick, a former USGS rare earth specialist who recently retired. "No one's trying to expand their use of rare earths because they know there's not more available."

U.S. Rare Earths practically stumbled upon its first rare earth deposit at Lehmi Pass, on the border between Idaho and Montana, about 15 years ago. The company founders coveted the area's reserves of thorium - an alternative nuclear fuel - and took little interest in the rare earths that were only used, at the time, in lighter flints and tracer bullets for the military.

Their view changed over the years as rare earths became practically irreplaceable in high-tech products used by millions of people today. The company only recently changed its name to U.S. Rare Earths after staking out another deposit at Diamond Creek, Idaho.

"The fact is, the Diamond Creek property is today, the most accessible, undeveloped rare earth resource with significant [heavy rare earths] that there is in North America," said Jack Lifton, an independent consultant who works with U.S. Rare Earths.

Recent USGS figures estimate that the U.S. holds rare earth ore reserves of up to 13 million metric tons. By contrast, the entire world produced just 124,000 metric tons in 2009 - but it would take both time and money for the U.S. to become self-sufficient in producing rare earths.

Deposits near civilization

The Diamond Creek location has the added advantages of being in mining-friendly Idaho and having access to nearby highways and power lines - factors that would make opening a mine much easier.
"We have power, light and roads, so we're not in the middle of the wilderness," said Ed Cowle, CEO of U.S. Rare Earths.

Cowle hopes to attract enough funding over the next six months to do some exploratory drilling at his company's deposits. He also pointed to growing interest from national legislators in prodding the federal government to take action.

"Many times opening a mine takes a certain period of time, but if there's a strategic need for material from government, that time period can be lessened," Cowle told TechNewsDaily. "We're hopeful of that because of the nature of what's in the ground."
An expensive proposition

Another company, Molycorp Minerals, has already begun processing "light" rare earths, such as lanthanum and neodymium, from a stockpile it accumulated at its mine in Mountain Pass, California. But it still has to ship its rare earths to China for final processing, because only China currently has the equipment needed for the job.

"No one [in the U.S.] wants to be first to jump into the market because of the cost of building a separation plant," Hedrick explained. The former USGS specialist said that such a plant requires thousands of stainless steel tanks holding different chemical solutions to separate out all the individual rare earths.

The upfront costs seem daunting. Hedrick estimated that opening just one mine and building a new separation plant might cost anywhere from $500 million to $1 billion and would require a minimum of eight years.
Lifton has also suggested that many U.S. companies have not jumped into the market because China's state-owned mines keep rare earth prices artificially low. But if U.S. companies do not begin mining American rare earth deposits soon, they may be left scrambling if China does one day stop exporting rare earths.
But Cowle, the CEO of U.S. Rare Earths, seems hopeful that momentum has already begun building for the U.S. government to encourage development of its own rare earth deposits.

"From what I see, security of supply is going to be more important than the prices," Cowle said.

Taking Care of Business
Jobs recruiter sees signs of improvement

As the executive director of Bannock Development Corp., Gynii Gilliam’s hard work has helped Pocatello weather today’s difficult economic climate.

Bannock Development has played a significant role in attracting new businesses to the area including Hoku Materials, Nordic Windpower and Petersen, Inc. Bannock Development is a cooperation with regional economic development partners that seeks to facilitate a healthy economy in the Bannock County area.

Gilliam was born in Manila, Philippines. Her family moved to Los Angeles when she was 10. Both her parents were architects. She was sent to Idaho 25 years ago to head up a project in Challis, and — outside of her short stint in Michigan as a graduate student — she has called Idaho her home ever since. She says she loves the mountains in the area.

The following is a question and-answer session about the local economy with Gilliam.

Q: How have businesses and industry in this area handled the economic downturn?

Gilliam: I can’t really speak for each business, but collectively what I’ve gathered is most of our businesses had to tighten their belts. This applies to both retailers and manufacturers. Across the board, the orders were down. So, this resulted in a lot of downsizing, particularly in our retail market. Just as it is in the rest of the nation, our discounters — i.e., Wal-Mart, Costco — seem to have weathered this economic downturn the best. I’m not saying great, I just mean better than the others. Certain restaurants also seem to have fared fairly well.

Q: Do things appear to be getting better or worse?

Gilliam: They seem to be getting better. Because I’m in this industry, I’m always paying attention to how many cars are in parking lots at restaurants, shopping centers, etc. From the retailing end, stores seem to be livelier. From the industry perspective, we’ve been extremely busy with site visits since December; and they all seem to be in a hurry to get answers and move forward. I believe that has to do with everyone just sitting and waiting through the end of 2008 and all of 2009. Now that everyone can see that there is “light at the end of the tunnel” — however far away it still is — they’re now all in a hurry to get there. The most movement is in the alternate energy industry.

Q: What is the main issue facing local businesses at this moment?

Gilliam: Finding the balance between moving forward and growing without overestimating what the future growth will be. It will take a fine balance between confidence that the economy will recover and, as Alan Greenspan said, “over exuberance.”

Q: How hard has our business community been hit during this recession when compared with other areas of the state or nation?

Gilliam: Compared to the state and the nation, we’ve fared quite well. We have not suffered through a major company closure, but we all rallied to ensure that, from ON Semiconductor to Simplot and a few others. Through the end of 2008 and most of 2009, Bannock Development spent more time checking on our local companies than recruitment. There wasn’t much movement on the latter as a whole, and it was extremely critical that we kept what we had. In some sense, it’s the equivalent of businesses tightening their belts and making sure current clients were happy. As a community, we needed to make sure our “current clients” were happy, as they were tightening their belts.

Q: Which sectors have weathered the storm the best?

Gilliam: Our call centers and medical services. Globally, certain sectors of the alternate energy industry are doing well and look poised to grow.

Q: Which have been hardest hit?

Gilliam: Most definitely, the retail and hotel industries were the hardest hit. As each household struggled to “tighten their belts,” save, and get out of their debts, disposable income spending decreased dramatically. I don’t think personal and corporate spending will go back to pre-2009 levels. I think after a global economic downturn like this, everyone — personal and corporate — will continue to keep operational expenses at a minimum.

POCATELLO, Idaho (AP) — Hoku Scientific Inc. said Monday that a subsidiary received the second installment of a total $50 million loan to finance construction of a plant in Pocatello that will manufacture polysilicon for the solar energy industry.

Hoku Scientific, based in Honolulu, said its wholly owned Hoku Materials Inc. unit received the second tranche of $30 million from China-based Tianwei New Energy Holdings Co. Hoku also confirmed receipt of $4 million in prepayments on March 1 from Solarfun Power Hong Kong Ltd. under a polysilicon sales agreement with Hoku.

The total proceeds of $54 million from the two agreements will be used to pay down past-due vendor balances and liens, and continue development at the polysilicon plant, Hoku Scientific said.

Hoku had expected Tianwei to provide the second tranche of $30 million no later than Feb. 22 — a timeline that could have allowed Hoku to conduct a reactor demonstration at the plant this month. Hoku said the payment was delayed two weeks so that the Chinese government could approve the foreign currency transaction. Hoku now expects to complete the demonstration next month, with shipments expected to begin later this year.

In December, Tianwei New Energy became the majority owner of Hoku Scientific, with control of 60 percent of Hoku's outstanding shares. In return, Tianwei canceled $50 million in Hoku debt, and agreed to loan Hoku $50 million. Tianwei makes silicon wafers and photovoltaic cells and systems.

Last July, Hoku slowed construction at the plant to preserve cash while it sought to raise capital, and the builder, JH Kelly, had filed a lien against it for $12 million in past due payments.
Hoku announced the receipt of the second installment of the loan after its shares slipped 4 cents to close at $2.30.

March 8, 2010

POCATELLO — Residential and agricultural scale vertical wind turbines will soon arrive in Pocatello for assembly and installation.

River’s Edge Energy, Inc, a newly-formed company by Pocatello-based Portneuf Electric, Inc., is entering the alternative energy industry market, according to a press release Friday.

“We’re very excited about the future and the unlimited possibilities of this adventure. We appreciate the help from the city, state, and Bannock Development Corporation for resources, leads, facility expansion and the Bank of Commerce for financing,” said president Terri Harris. “We look forward to partnering with other energy companies in the area and in growing this new company to help create jobs and establish Pocatello as an alternative energy industry hub.

”Portneuf Electric, Inc., will handle installation and maintenance, while River’s Edge Energy, Inc. covers sales and oversight. Final assembly, storage and testing will be done locally at their newly-expanded facility at the Pocatello airport.Vertical wind turbines generate twice as much power with 50 percent less wind as standard turbines. River’s Edge Energy, Inc. has contracted with All Bright International to sell and install wind turbines in all 50 states.

 In 90 percent of the applications, the payback for the initial investment is very quick — about two to five years, with unused power net metered and purchased back by the local utility company.The local company plans to offer a turnkey system in residential, agriculture and small scale wind farms.River’s Edge will provide all necessary resources and provide information on federal and state tax credits, and access to stimulus funds set aside for the wind industry.

By Idaho State Journal Staff