Wacker’s $1.8B takes No. 1
by DAVID DAVIS, Managing Editor
Jan 01, 2013 | 3130 views | 0 0 comments | 5 5 recommendations | email to a friend | print
Bradley County Mayor D. Gary Davis described 2011 as the best of times and worst of times in his January address to the Kiwanis Club of Cleveland. But looking ahead to 2012, Davis said Wacker is “building a city in north Bradley County,” with its billon-dollar-plus polysilicon production investment.

“They’re now beginning to get skyscrapers into the air,” he said, according to a previous news story.

Because of the magnitude of its impact and what is expected to follow, as well as an announcement by the company that it would increase its local investment to $1.8 billion, the “city in north Bradley County” was named the No. 1 news story of 2012, as voted by Cleveland Daily Banner editors and staff writers.

The first three months of the year saw a whirlwind of activity as Wacker Polysilicon North America moved 4 million cubic yards of dirt and began vertical construction on its site west of Charleston at Exit 33 east of Interstate 75. The three largest buildings of the plant were moving upward with the installation of precast walls.

During the same first quarter, Wacker Institute students received job offers; the company’s investment increased to $1.8 billion; construction crews logged 900,000 safe hours; the Cleveland/Bradley County Industrial Development Board approved the first Wacker supplier agreement; the first tank arrived on site and Wacker began training new operators.

In May, Wacker began barging in equipment via river transportation to set another milestone in the birth of the new plant.

The single construction-related story in the last six months of 2012 concerned core Wacker equipment that arrived in July by an innovative process.

In retrospect, news from the company in June seems to have shifted from concrete, steel and earthmoving operations to personnel.

One hundred students enrolled in Wacker Institute received employment offers and in August, the company announced it was still looking for workers.

But then tragedy struck in October and “the city in north Bradley County” was no longer viewed in terms of just a massive construction project. It became populated with real names and real faces when two construction workers fell to their deaths.

Unrelated to the deaths, Wacker announced 13 days after the accident that it had rescheduled the opening of the plant to mid-2015. The move was in response to changing solar market conditions and current overcapacities for polysilicon.

“This time schedule brings the development of our global polysilicon capacities in line with anticipated customer demand,” Group CEO Dr. Rudolf Staudigl said.

With that announcement, Wacker refined its construction schedule and staffing ramp-up to correspond with the startup date for production though key project targets for plant capacity, investment and jobs remain unchanged.

Cleveland/Bradley Chamber of Commerce Vice President for Industrial Development Doug Berry said in a November interview Wacker is in full compliance with the terms of a performance agreement.

“The performance agreement doesn’t actually take effect until Dec. 31, 2017,” he said. “We would like to have all of the jobs today, but when you are dealing with a company and a project on the scale of Wacker, one of the largest in the nation that’s ongoing in the private sector, there needs to be flexibility on both sides to work this through, get it settled and operational and productive for us. The long term is what we’re looking at.”

The Bradley County plant is the company’s largest capital investment outside Germany and is one of the largest continuing private industry investments in the United States.

He said if market conditions improve and if Bradley County provides a good work environment and good employees, efficient, low-cost operations and adequate utility infrastructures, “then hopefully we can convince Wacker to put other divisions and product lines in here because this is an anchor for North America.”

According to the agreement between Wacker and Bradley County, the company would pay a base amount of taxes for three years.

“They pay no taxes other than the baseline property taxes that the property was generating at the time they purchased it. That was effective Jan. 1, 2011, to Jan. 1, 2014,” Berry said. “There will be a reduction of the tax abatement if they fall below $800 million in capital investment and 400 full-time employees by the determination date, which is Dec. 31, 2017.

“Based on our last conversation with them, they already had over 200 employees and invested more than $1 billion,” Berry continued. “Wacker has been extremely honest and open with us on decisions they are making and adjustments they are making to their schedule.”

He said production equipment was either being fabricated or en route, but the money is spent.

———

But, the year began with the March announcement of three precast buildings going up. The fully enclosed production facilities were the first of more than 30 buildings, either precast structures or cast-and-place steel structures, planned for the site.

Ground preparation for the site began in December 2010 and by March, more than 4 million cubic yards of dirt had been moved.

On an average full day, there were approximately 700 construction workers onsite and by mid-March, employees celebrated completion of the plant’s first operational building, the Tennessee Distribution Center.

During future plant construction, the 165,000-square-foot structure contains equipment for the project. Following plant construction, the building will hold Wacker product, parts and packaging materials. Vertical construction for the Tennessee Distribution Center began Nov. 23, 2011. From start to completion, building construction led to no worker injuries. During the plant’s construction phase, 16 employees will work full time at the Tennessee Distribution Center that will see up to 40 trucks each day in this phase. Once the plant is completed, approximately 29 clerks and operators will staff the building. Those employees will be responsible for onsite transportation, receiving, inbound and outbound shipping, postal service, site logistics consulting, P/T management for the site and site loading and unloading.

Construction and hiring progressed together. Eighty-two students enrolled in the Chemical Engineering Technology associate’s degree program at the Wacker Institute at Chattanooga State Community College received conditional job offers. The students were in their second or third semesters and had two or three additional semesters remaining to complete the program.

“Our plants are not our only investment priority. We also invest in the people who operate our plants, who maintain and repair them, and who think about how we can become even better,” Dr. Konrad Bachhuber, vice president and site manager for Wacker Polysilicon North America, said at a ceremony held at the plant’s construction site. “And this is why we co-founded the Wacker Institute at Chattanooga State. We want you, one day, to rank among the very best in this business. We will equip you with the necessary skills for a successful career in one of the world’s most exciting and fastest-growing industries: for now, at the Wacker Institute and later, on the job in our new plant.”

An employment incentive of $3,000 was to be given to this first group within their first 60 days of employment.

Their jobs with Wacker Polysilicon North America were to begin in either January or April 2013.

“We are committed to this program at Chattanooga State, and we are committed to our students at the Wacker Institute; this conditional job offer is an expression of that commitment,” said Dr. Erika Burk, human resources director for Wacker Polysilicon North America. “We are invested in them, and we wish them much success in the program so that they may take advantage of this investment.” The job offer is conditional upon a background check, drug screening, pre-employment physical and 3.0 GPA.

“The city in north Bradley County” grew and so did the company’s investment. In early February, it was announced that the total investment was increased to $1.8 billion. Also in that time frame, Bradley/Cleveland Industrial Development Board members approved in March what was expected to be the first of several secondary agreements based on the original incentive package negotiated with Wacker.

Linde Gas North America LLC was the first supplier to locate within the footprint of the new plant under construction west of Charleston. Linde Gas will invest $25 million to build a hydrogen production facility that will result in around seven full-time jobs. Doug Berry, Cleveland/Bradley Chamber of Commerce vice president of Economic Development, said the original agreement specified that any company locating on Wacker’s existing property would fall under the same tax and payment in lieu of taxes agreements as Wacker.

The IDB also approved a modification to the Feb. 29, 2009, PILOT agreement between the county and Wacker to grant the company a one-time reduction of $1 million in its lieu of tax obligations. Wacker requested the reduction after announcing it was increasing its investment from $1 billion, then $1.5 billion and now to $1.8 billion. The Bradley County Commission later approved the reduction by a 14-0 vote.

The original PILOT agreement specified the company would pay full property taxes for 2009 and 2010, estimated to be $150,000 per year. Beginning Jan. 1, 2011, during the three-year construction period ending Dec. 31, 2013, the company would pay no taxes while the plant is under construction.

As of Jan. 1, 2014, Wacker was to make in lieu of tax payments to Bradley County in the amount of 50 percent of its real and personal property taxes for a period of 25 years until Dec. 31, 2038.

The total in lieu of tax payment for 25 years was estimated at that time to be $44.8 million. That amount has risen with the size of the investment to the neighborhood of $80 million, not including Linde Gas. The PILOT agreement also allows company affiliates, associates, subsidiaries and customers who locate inside the 550-acre footprint to receive the same tax incentive package over the same 25-year period.

The first and smallest tank for the refinery arrived onsite in mid-March. Weighing approximately 10 tons and measuring more than 10 feet in diameter, it can hold more than 10,000 gallons. It was the smallest tank of more tanks to come. That tank was delivered via truck, but future tanks were delivered by barge. The first barge shipment of large equipment arrived in May. Five tanks with a capacity of more than 20,000 gallons each traveled to the United States from Europe. Two days were dedicated to preparation of the unloading dock and transportation of the tanks from a barge in Charleston to the company’s construction site. A crane more than 130 feet tall lifted each tank individually from the barge, placing it on a truck for travel.

As the new equipment arrived, Wacker Polysilicon’s 51 lead chemical operators departed for Burghausen, Germany, for on-the-job training after six months of academics at Wacker Institute.

While those employees were learning overseas, nearly 100 students at the Wacker Institute received conditional job offers in June.

“We are invested in the Wacker Institute program because we are invested in the people who operate our plants,” Bachhuber said. “These students will soon take responsible production roles at one of the world’s most advanced hyperpure polysilicon manufacturing plants.”

Dr. Erika Burk, human resources director for the Wacker complex, said the action shows commitment on both sides — employees and employer.

“Many of these students are a year away from obtaining their degrees,” Burk stressed. “We want to express our commitment to them with these offers. They know a career is waiting for them once they graduate.”

Wacker Polysilicon planned to extend at least 50 more conditional job offers to students at the school for chemical operator positions.

The students who received the job offers were enrolled in the chemical engineering technology associate’s degree program. Their careers were to begin in August 2013.

———

Large core equipment arrived in July. The equipment used in the production process, arrived by barge to a unique location, and then traveled to the company’s construction site by various methods including a self-propelled transportation unit.

The arrival was described as an exciting and momentous occasion. It was necessary to find barge access to accommodate its size, and to determine the most efficient road transportation route.

The equipment arrived in Mobile, Ala., earlier in the month after crossing the Atlantic Ocean. After travelling along the Mississippi and Tennessee rivers, the equipment arrived in Decatur.

Two trailers were used to transport the equipment through Decatur and to the Charleston site. Both trailers had 13 axles — each connected to the trailer hydraulically — with eight wheels per axle; the weight of the equipment was dispersed over 26 axles and 208 wheels.

———

Bachhuber praised the first 51 employees who returned from Germany in September.

He said the trainers in Germany were impressed with the local groups’s motivation, curiosity and level of knowledge, and referred to them as the cornerstone of Wacker ’s growth.

Mayor Davis said the senior lead chemical operators, after a year of rigorous training, represent the culmination of what local leadership has been trying to convince business of for years.

“Early on we had to convince them of our education system in Tennessee and the Cleveland and Chattanooga area,” Davis said. “From what we were told, they we very impressed with the people who trained in Burghausen. It wasn’t a surprise to us because we knew we had a good workforce in the area and people were ready to be trained. I think this is proving we were right and I believe Wacker is very, very happy with the outcome so far.”

But tragedy struck Oct. 12. Hugo Mendoza, 45, of Florida and Luis Oachoa, 31, died after falling from a tower under construction. The men worked for Baker Concrete Construction, an Ohio-based company.

———

An October press release stated its decision to delay the startup date brought the development of its global polysilicon capacities in line with anticipated customer demand.

Wacker Chemie A.G. announced on Feb. 25, 2009, amid great fanfare at Lee University, plans to build a polysilicon plant west of Charleston near Olin Chemical Corp., which will be a supplier of chlorine used in the purification process of raw silicone.

The initial investment grew from $685 million to $1 billion, then from $1.2 billion to a current estimate of $1.8 billion. In March 2009, the last “i” was dotted and the final “t” was crossed on a contract for 550 acres of land in north Bradley County where the $1 billion polycrystalline silicon production facility would be built.

The company bought approximately 78 acres from Olin Corporation and a little more than 450 acres from Wright Brothers Construction Co., of Charleston. The property is located along McBryant Road and Lower River Road near Olin Corp. Wacker Chemie AG officially started construction work on April 8, 2011, with a groundbreaking ceremony attended by area business, state and local government representatives.