November 30th, 2008
Moventas, a company that builds wind turbine gearboxes, is coming to Faribault, Minnesota. So I learned when yakking with an attorney in Faribault. Wind turbine gearboxes… Now that’s the sort of economic development we need – a lot better than a new prison, eh? But there’s a catch — it’s JOBZ which means massive tax exemptions. CLICK HERE FOR JOBZ HOME PAGE. It’d probably be easier to list what few taxes they will pay. How will the community provide the infrastructure they want, provide schools for the workers kids, provide the roads and airport and maybe train siding they’ll want? Here’s perks they’ll get, per the “Moventas deal closer to reality” article below:
• Corporate franchise tax exemption;
• Income tax exemption for operators or investors;
• Sales tax exemption on goods and services used in the zone;
• Property tax exemption on commercial and industrial improvements, but not the land;
• Wind energy production tax exemption;
• Employment credit for high-paying jobs.
This is a company I know zip about, so I’m getting up to speed. From their site, there are two manufacturing sites in the U.S. that make wind gear boxes, one in Portland, OR and another in Big Spring, TX.
John Agliata, special to the News
A wind turbine gearbox manufacturer is building its first North American assembly plant in the Rice County area, a move that will provide a multimillion dollar spark for the local economy, said city and company officials Thursday.
Finland-based Moventas, which employs about 1,300 people worldwide, announced Thursday morning it would be building a 75,000-square-foot assembly and distribution facility in the Met-Con Business Park that is currently in Wells Township by Interstate 35. Faribault city officials said they expect that land to become part of Faribault by October 2009.
The project is part of a nearly $145 million worldwide expansion for the company, its third expansion in the past three years.
Along with the facility will come about 90 jobs and an initial annual payroll of roughly $4 million, said Jim Bjork, Moventas’ vice president for the North American expansion project. Peter Waldock, community development director for Faribault, said the hope is the facility could one day employ as many as 200 people if the wind energy market continues to grow.
Moventas’ wind turbine division makes gearboxes that provide a key step to help convert wind into an alternative form of energy. The company is the largest independent manufacturer for wind turbines. While other gearbox manufacturers such as Winergy — the largest in the industry — are bigger, they are owned by a turbine manufacturer.
Construction on the roughly $8 million facility will start in October and be completed in September 2009, said Troy Zabinski, vice president of development for Met-Con, which spearheaded the deal.
In addition to the jobs the completed project will create, the construction of the facility will mean more employment for area workers. Zabinski said Met-Con, which as of last week had 403 employees, will be able to keep more people employed during the winter months than it typically does. He said its employee roster typically falls to about 350 in the winter but it will be fully staffed this season.
When the facility is finished, Met-Con will retain ownership of the facility and lease it to Moventas. Terms of the lease have not been finalized, Zabinski said.
Moventas hired Bjork in October 2007 to research setting up an assembly plant in North America. Rising fuel prices and calls to reduce dependence on foreign oil for energy in the United States have led to greater interest in alternative energy sources, such as wind.
“The United States is one of the world’s fastest growing wind power markets, with the annual installation of new capacity expected to double by 2010,” Bjork said. “Being closer to our U.S. customers will further strengthen Moventas’ position in the … U.S. market.”
An important aspect for the company was to make sure a North American plant would be supplied by vendors with quality components to build the high-precision gearboxes.
By the end of 2007 the company was satisfied that would be the case, Bjork said, and the project moved forward with site selection. The upper Midwest was the target because of its proximity to the company’s potential vendors and customers, Bjork said.
“The closer you can get to the action, the lower your shipping costs in or out are going to be,” Bjork said.
That brought the states of Ohio, Michigan, Illinois, Iowa, Indiana, Wisconsin and Minnesota into play.
Bjork said the first priority was to separate the states that say they want wind energy businesses from those that back their words with economic incentives and a solid labor market.
Minnesota was one of the states that passed that initial test — mainly because of its business climate. Among the things that helped it do so was its JOBZ — Job Opportunity Building Zones — program. Passed by the Legislature in 2003 and launched on Jan. 1, 2004, the JOBZ initiative provides tax relief to companies that start up or expand in targeted areas of Greater Minnesota.
Once its interest in the state was confirmed, the company looked at individual labor markets, doing studies on each community it was considering. This area scored high.
“Faribault has a nice market. You’ve got Faribault, Owatonna (and) Northfield all within a 40-minute commute. For certain professional positions, you’ve got the southern suburbs of the Twin Cities that are attractive. It’s a good, educated workforce,” Bjork said.
Officials from Faribault, Rice County and Wells Township cooperated and worked with Met-Con, which Zabinski said was one of five developers originally being considered for the project. In addition, state Rep. Patti Fritz (DFL-Faribault) and Sen. Dick Day (R-Owatonna) wrote letters in support of the project. The chambers of commerce for Faribault and Minnesota got involved, as did Tim Penny, president and CEO of the Southern Minnesota Initiative Foundation.
That cooperation and widespread support was key to Moventas proceeding with Faribault as an option.
“The fact that they worked together demonstrated they were willing to get into this highly competitive market. That was impressive,” Bjork said. “If it were a train wreck like it can be when different agencies get involved, I would have very quickly walked away from that. They made it very clear that they wanted to work with us.”
Part of that cooperation came in the form of financial incentives. The city will pay $600,000 toward infrastructure improvements leading out to the business park. The county will contribute $3.2 million, the state will pitch in $500,000 and Met-Con will pay $400,000.
Bjork had worked with Met-Con before when he was with another Finnish company, Uponor, based in Apple Valley.
“I knew that I wanted to at least get a quote from them,” Bjork said of Met-Con. “They always have had a good reputation. They did what they said they were going to do.”
The two companies started talking about the land at Met-Con’s new business park.
“Overall, the prospect of working with a quality builder who does what they say they are going to do and making it a reasonable overall package seemed attractive,” he said.
Company officials came to Faribault twice, once in April, once in June, the city’s Waldock said. Faribault’s efforts were strongly on the marketing side.
“We talked about our quality of life, our proximity to the metropolitan area, the lakes and other environmental features, about our education system and all of those things that make Faribault a great community,” Waldock said.
One of those things was South Central College. School officials gave presentations to Moventas about how it could help train its employees and perhaps even provide assembly plant workers at some point.
As the process went along, communities were eliminated from consideration until there were two — Faribault and Cedar Falls, Iowa.
“Then it’s about the people,” Bjork said. “Does the market have the horsepower to provide the candidates to fill the job? The last thing you want to be doing a couple of years down the road is hiring 50 or 100 people that the market doesn’t have or busing them in from somewhere else or reducing your standards.”
In addition, the facility’s proximity to the Minneapolis-St. Paul International Airport played a role in the decision, as did the Met-Con Business Park’s location along the Interstate 35 corridor.
“What it all boils down to is that the most important thing is going to be to attract good people to work for us, and being visible on the I-35 corridor will make people who are driving to and from the Twin Cities stop and wonder what we’re all about,” Bjork said. “This is going to be Moventas’ North American headquarters for its wind businesses. Location matters.”
Moventas has facilities elsewhere in North America, though none do manufacturing. A facility in Portland, Ore., services gearboxes — rebuilding them, testing them and sending them back into service. An operation in Greenville, S.C., does service work for the company’s industrial operation, which provides gearboxes for such things as pulp paper plants. There are also facilities in Big Spring, Texas, and Cambridge, Ontario.
“(The Faribault facility) will very quickly become our largest facility in North America. Some of the people working in Faribault are not going to be focused just on Faribault. There will be people in human resources, in information technology, in quality control, in supply chain management that will be deeply involved in Faribault but will also have responsibilities outside of Faribault.”
The expansion in Faribault will handle mostly new business, though some production will be shifted here from Finland.
“It’s not going to leave a void for long, though, because Finland’s operation is rapidly increasing capacity,” Bjork said.
What kind of jobs?
Of the 90 people expected to be hired, approximately 20 of those jobs would be white collar positions, said Bjork, who will soon start to recruit his leadership team. He declined to say how many people he is hiring for that team or what salary they would earn. He did say, however, that the hope is to find most or all of them from within commuting distance.
Once that leadership team is established, which he said could be by the end of the year, the effort will transition to hiring shift leaders and assembly operators. The starting wage would be from $13 to $15 an hour with the possibility for advancement and promotion.
“It’s important to have cost effective labor but even more important to have highly competent labor. Making a mistake in this business is very, very costly,” Bjork said. “So we’re going to be looking for good people with a good work ethic. We aren’t expecting to find people who have assembled things quite like what we assemble. We’re mainly looking for a work ethic, people ideally with factory experience who have done shift work.”
Bjork expects the plant to operate nearly around the clock, with two shifts as the norm and up to three or four as needed. He said he wasn’t sure how the hiring process would go and would wait for his leadership team’s ideas and vision.
“It’s all about building a positive culture from the beginning,” Bjork said. “I know that one of the most important things for me is that it’s a renewable energy field. I like going to work everyday in a place that’s part of the solution.”
So what’s a wind gearbox? Here’s a couple brand new ones:
Here’s their Moventas Wind Turbine Gears Brochure.
What about that huge state-of-the-art Excelsior-Henderson factory that’s sitting vacant in Belle Plaine? What about that Chrysler plant in Newark, Delaware that’s soon to be closed? Time for some wind manufacturing in the U.S.!