Friday, August 30, 2013

$2.5 million to be refunded from subsidies for failed Nordex wind turbine plant in Jonesboro

Posted By on Fri, Aug 30, 2013 at 1:41 PM

click to enlarge HAPPIER DAY: When Gov. Beebe announced Nordex plans.
  • HAPPIER DAY: When Gov. Beebe announced Nordex plans.
The state of Arkansas will be repaid $2.5 million in subsidies that went to help Nordex USA start a wind turbine manufacturing plant in Jonesboro.

Nordex decided to consolidate manufacturing in Germany as a result of uncertainty in the wind energy market. It will continue to use a facility in Jonesboro for service, warehousing and training. The hope had been the manufacturing plant would employ 750.

The state put $3.91 million into the project — $2.51 million for site work, a training facility and training and $1.4 million to Jonesboro for rail and road work. The state will get $2.31 million back and Jonesboro $204,814. The company had earlier returned $263,000 it had received in tax rebates for job creation when it knew layoffs were coming.

I can't recall such a clawback before, but am inquiring. From the Arkansas Economic Development Commission release:

“We receive a lot of questions about clawbacks,” said Grant Tennille, executive director of the Arkansas Economic Development Commission. “The process works, and in this case rather quickly. When it happens that we need to use clawbacks, we will negotiate keeping the unique circumstances of every project in mind.”

UPDATE: This is actually the fifth, but by far the largest, state clawback. The state said it has received $34,800 from Caterpillar, $59,550 from Pinnacle Foods, $60,000 from Allied Wireless and about $115,000 from Nice-Pak Products, all this year. Nice-Pak is paying almost $12,000 a month on a total owed of $718,000 dating back to its startup in 2008. It's a wet-wipe manufacturer in Jonesboro.

The full news release follows:
FROM AEDC

Nordex USA, Inc. will repay more than $2.5 million to the State of Arkansas and City of Jonesboro in grants received to establish its North American wind turbine manufacturing facilities in Craighead County.

Nordex announced earlier this year that, as a result of uncertainty in the wind energy market in North America, it would be consolidating its manufacturing in Germany and maintaining the Jonesboro location as its American base for service and warehousing and the Nordex Academy for training staff and customers.

“Nordex has been a dedicated partner in moving wind manufacturing forward and creating Arkansas jobs. Unfortunately, that dedication has not been shared by the United States Congress, which repeatedly fails to establish a long-term policy for wind energy,” Governor Mike Beebe said. “But even now, under these unfortunate circumstances, Nordex continues working with Arkansas to ensure that taxpayer incentives are properly repaid. Hopefully, the U.S. government will act more pragmatically in the future and Nordex will again ramp up production in Jonesboro.”

A total of $3.91 million of the Governor’s Quick Action Fund was paid out for the project — $2.51 million for site preparation, a training facility and training expenses, and another $1.4 million to the City of Jonesboro for rail and road work which remain as infrastructure improvements. The state will recoup nearly $2.31 million and the City of Jonesboro $204,814.

Taken into account is the fact Nordex earlier returned to the state more than $263,000 it received in an earned Create Rebate payment when it realized it would not be able to move forward and layoffs were imminent.

“We receive a lot of questions about clawbacks,” said Grant Tennille, executive director of the Arkansas Economic Development Commission. “The process works, and in this case rather quickly. When it happens that we need to use clawbacks, we will negotiate keeping the unique circumstances of every project in mind.”

With this agreement, all draws against the committed Quick Action Funds stop and the balances will be used for future projects.

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