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Two economies

mendiola MARK
MENDIOLA

 
Reports

To paraphrase the start of Charles Dickens’ classic novel “A Tale of Two Cities,” Pocatello’s economy has witnessed the best of times and worst of times in recent decades, experiencing bipolar mood swings that have wildly swung like a pendulum.

Shutdowns of the Bucyrus-Erie complex, Garrett Freightlines’ trucking empire, FMC’s elemental phosphorus plant, various Gateway West Industrial Center manufacturing concerns, Ballard Medical, etc., have been major Gate City setbacks over the years. Closure of the Heinz frozen food plant earlier this year in Pocatello was another major economic and psychological blow.

At its peak, the Heinz plant in Pocatello employed more than 800 who worked its food processing lines, eclipsing the J.R. Simplot Co., ON Semiconductor and Union Pacific Railroad as the Gate City’s largest private employer.

Heinz’ announcement several months ago that it would close its 500,000-square-foot factory near the Quinn Road overpass and terminate its remaining 410 employees stunned the community, sending shock waves throughout Bannock County. The unexpected shutdown was devastating for many and a gut punch to Pocatello’s economy.

That bad news came on heels of the ignominious shutdown of the $700 million Hoku polysilicon plant in Pocatello. Once operating, Hoku was to initially employ 200 and eventually boost its payroll to 400. Those ambitious plans quickly evaporated into the stratosphere, leaving many contractors in a financial lurch, when Hoku filed for bankruptcy.

At the end of October, however, Idaho Gov. Butch Otter and Pocatello Mayor Brian Blad announced that Amy’s Kitchen had acquired the Heinz plant and expects to begin operations as soon as December, initially hiring 200 but anticipating its payroll could swell to 1,000 in 15 years -- an announcement that frankly exceeded my expectations.

Amy’s Kitchen Co-Founder Rachel Berliner and CFO Mark Rudolph joined Otter and Blad, plus city, state and county officials, at the revamped Pocatello Regional Airport to make the announcement to a large, enthusiastic, receptive crowd.

Berliner praised Idaho’s swift response in making the mutually beneficial arrangement possible. Rudolph said Amy’s Kitchen could expend $75 million in capital investments here over the plant’s duration. He said the company’s growth would have exceeded 30 percent this year had the Gate City operation been up and running.

To their credit, Otter, Blad, Idaho Commerce Director Jeff Sayer, Bannock Development Corp. Executive Director John Regetz and a host of other Idahoans rapidly mobilized to finalize the Amy’s Kitchen deal, giving laid off Heinz workers a boost of direly needed hope and encouragement, revitalizing an important production site.

Amy’s Kitchen is the nation’s leading maker of organic, vegetarian and non-GMO convenience foods, riding a burgeoning wave of popularity among Millennials and other health conscious Americans that promises to ensure the private, family-owned company’s longevity. The California-based company has enjoyed double digit growth since its inception 26 years ago.

Amy’s Kitchen employees in Pocatello are expected to average $33,000 a year in wages that are anticipated to total $342 million over 15 years, in addition to health benefits and scholarship opportunities. New state tax revenue from the operation is projected to hit $35.7 million. Commerce’s Sayer said Idaho’s reimbursement will be worth $6.7 million.

Some critics have questioned the wisdom and effectiveness of granting Amy’s Kitchen a 26 percent credit on its corporate income, sales and payroll taxes through 2029 under Idaho’s new Tax Reimbursement Incentive, which took effect on July 1, and Bannock County commissioners giving it a matching 75 percent tax abatement on the existing plant and future investments.

Proponents counter that the hundreds of food processing jobs created, the multiplier effect of wages paid, the positive impact on eastern Idaho’s agriculture sector, spinoff business generated and vote of confidence from Amy’s Kitchen more than offset any negatives from the tax incentives, which competing states effectively have used to attract industry at Idaho’s expense. (more…)

At the energy summit

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MENDIOLA

 
Reports

U.S. Department of Energy Secretary Ernest Moniz and other high-powered industry and government speakers generated a buzz of voltage at the recent Intermountain Energy Summit in Idaho Falls attended by some 300 participants from 19 states and two Canadian provinces.

Idaho Falls Mayor Rebecca Casper warned those in attendance midway through the summit that the Shilo Inn where they were meeting might be blacked out after a truck slammed into a power pole in the city. As it turned out, the lights stayed on, but many of those at the energy conference could not help but be bemused by the incident and see the irony.

Casper and Post Register Publisher Roger Plothow were driving forces behind the successful summit, which took 10 months to organize and drew Idaho Sens. Mike Crapo and Jim Risch, Rep. Mike Simpson, Gov. Butch Otter, Idaho National Engineering Director John Grossenbacher, U.S. Nuclear Regulatory Commissioner Kristine Svinicki and other notables.

Featured speaker Robert Bryce, an energy issues author and journalist, pointed out that while the United States leads the world in reducing carbon dioxide emissions, even if it could cut those greenhouse gases to zero, global CO2 emissions would increase by 7 percent as Third World countries burn more coal to ramp up their economies.

Bryce noted that coal consumption in Thailand, Vietnam and Indonesia -- with populations totaling 400 million -- has increased from 2,500 percent to 5,900 percent since 1985.

“They are building their economies on the back of hydrocarbons,” following the examples of the United States, Canada and Europe, Bryce said, adding that China and India also are burning large volumes of fossil fuels to stoke their economic growth.

Calling himself a “resolute agnostic” in regards to the climate change debate, Bryce said he is adamantly in favor of nuclear energy and natural gas, adding “you can’t just wish coal away.” (more…)

Merging development groups

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MENDIOLA

 
Reports

When he addressed a large crowd of eastern Idaho business and government leaders May 30 at Idaho Central Credit Union’s state headquarters in Chubbuck, Idaho Commerce Director Jeff Sayer acknowledged there has been some resistance to merging the economic development agencies of Bannock, Bingham and Bonneville counties into one entity.

Accompanied by Idaho Labor Department Director Ken Edmunds, Sayer spoke at a Regional Economic Development Initiative gathering sponsored by ICCU, Pocatello Medical Center and Idaho National Laboratory. Those attending included INL Director John Grossenbacher, five mayors from the region and congressional representatives.

Similar meetings were held at Idaho Falls in February and Blackfoot in March to address possibly creating a single economic development organization for the region.

Some Pocatellans have expressed concerns that the drive to merge Bannock Development Corporation with Grow Idaho Falls Inc. and Bingham Economic Development Corporation will be to the advantage of Idaho Falls and Blackfoot at Pocatello’s expense.

Sayer said he has heard some refer to creating an eastern Idaho economic development organization “a hostile takeover” and express misgivings that the matter is being forced on them. Others have wanted it created as soon as June.

“There’s a lot of mistrust under the surface,” the commerce director said, mentioning he has heard frustrations that are 10 years old. “If this fails, it will not be resurrected in our professional lifetimes.”

He urged those in attendance to proceed slowly, clarify their message and listen to each other. Combined, eastern Idaho’s work force is the second largest in the state. The Interstate 15 corridor has “a powerful collection of assets,” he said, noting it took Magic Valley 10 years to hit its stride and perfect its business model.

“If eastern Idaho comes together, the ‘great state of Ada’ would wonder what in the heck happened,” Sayer remarked.

Sayer said Idaho is “a long ways behind” competing with other states, some of which are merging as regional forces in the Southeast and the Midwest. He agreed with Mike Mullis of J.M. Mullis, Inc., a project location specialist, who said Idaho has an identity problem. Mullis assisted in bringing a new Clif Bars bakery to Twin Falls.

Sayer emphasized that Idaho boasts robust aerospace, manufacturing and energy industries in addition to its agricultural strengths.

Edmunds said a central focal point or voice is needed to represent regional economic development, but local organizations also need to be retained in some format. He also suggested an independent group be brought in to evaluate the eastern Idaho economic development issue. (more…)

Otter at Pocatello

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MENDIOLA

 
Reports

Facing a May 20 Republican primary election challenge from Idaho Sen. Russ Fulcher of Meridian, Gov. C.L. “Butch” Otter touted the state’s economic advancements under his leadership when he spoke at an April 29 Greater Pocatello Chamber of Commerce breakfast.

Fulcher, Senate majority caucus chairman, hopes to derail Otter’s drive to secure a third term as the Gem State’s chief executive. During his morning speech to a crowd of about 400 at the Red Lion, Otter said after his 99-year-old mother urged him to run for re-election, he helped her fill out her absentee ballot.

Otter paraphrased Anglo-Irish statesman Edmund Burke who said all that needs to happen for a good organization to go bad is for good people to do nothing. “Idaho is in pretty good shape,” he said. “The economy in the state continues to grow.”

Publications such as the Wall Street Journal and Forbes have ranked Idaho as the fifth best state in which to do business. The top five states are all governed by Republicans in the West, with Utah topping the list, Otter said.

While much has been said of North Dakota’s oil and natural gas boom, it is not well known that Idaho is now a natural gas producing state with 4.2 million cubic feet a day of “sweet gas” pumped in southwestern Idaho’s Payette County, where Idaho Power runs the Langley Gulch Power Plant capable of generating 300 megawatts of power, the governor said.

In 2008, Otter launched “Project 60” to boost Idaho’s Gross Domestic Product from $51.5 billion in 2007 when he took office to $60 billion last year. The state’s GDP is projected to hit $62.4 billion this year, creating jobs and broadening the tax base, he said. “We’re running ahead of economic projections a little bit.”

Idaho’s unemployment rate went from 2.7 percent about seven years ago to a peak of nearly 9 percent about four years ago before declining to its existing rate of 5.2 percent, which is 1.5 percent better than the nation’s jobless rate, Otter noted. (more…)

Education and Idaho

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MENDIOLA

 
Reports

Idaho’s natural beauty and the inherent decency of its people can mask serious problems confronting the state, Idaho Business for Education’s president and chief executive officer says, comparing the Gem State to an old, stately, beautiful mansion whose foundation is rotting, cracking and direly in need of repair.

Addressing a recent City Club of Idaho Falls luncheon, Rod Gramer said unless its owners get to work and invest money, the foundation will crumble and the damage will worsen.

Answering an audience question, Gramer -- a veteran Idaho Statesman and KTVB news professional who recently returned to Boise after working in Oregon and Florida -- said it has been estimated that it will take $82 million to $120 million to replace the education funding lost in Idaho the past six years.

He commended legislators for this year pumping $32 million in new dollars for education, stressing that that money should be viewed as an investment, not an expense, emphasizing the dots need to be connected between education and Idaho’s economy. He called it “the best public school budget in seven years.”

Gramer said simple formulas mean a weak education system, plus a weak economy, equal a poor quality of life as opposed to a strong education system and a strong economy combining to boost Idaho’s standard of living.

“Fate won’t determine this. The people of Idaho must decide. The choice is ours,” he said, warning that like the Roman Emperor Nero, Idahoans can fiddle while metaphorical Idaho burns.

Gramer noted that in 2012, Idaho ranked 50th among the states in per capita wages. Idaho was No. 1 in the nation for the percentage of hourly workers -- 7.7 percent -- who made the state’s minimum wage of $7.25 or less in 2012. Nationally, 4.7 percent made minimum wage or less in 2012.

The Idaho Department of Labor reported that more young people are leaving the state than moving to the state.

“These are statistics we ignore at our own peril,” Gramer said. Rebuilding starts with education, which is “a passport to the American dream.” Government for and by the people cannot and will not succeed without an educated populace who can make wise decisions, he added.

Only 39 percent of Idahoans have earned college degrees or have post-secondary trade certification, but 61 percent have some college, high school or less. That level of education was fine in the past for most of Idaho’s history when mining, logging, farming and other such jobs sufficed, but that is not now the case, Gramer said, noting manual work such as driving trucks or working in a body shop now requires computer training.

When the J.R. Simplot Co.’s new 380,000-square-foot Caldwell potato processing plant opens in April, its robotics will make it the most state-of-the-art processing plant of its kind in the world, but only 250 will be needed to operate it. Its existing plants in Nampa, Caldwell and Aberdeen will be shut down with a net loss of 800 jobs.

“The shift in the job market is all over the United States, causing a dramatic effect on the economy and the lives of people,” Gramer said. (more…)

A new phosphate project

agrium
A large truck hauls phosphate ore from an Agrium open pit mine on the Caribou/Targhee National Forest. (photo/Mark Mendiola

 

mendiola MARK
MENDIOLA

 
Reports

An earlier version of this column appeared in Green Markets

The U.S. Bureau of Land Management has approved the transfer of operating rights for the Dry Ridge Phosphate Project in southeastern Idaho from Solvoy USA Inc. to Fertoz USA LLC, a wholly-owned subsidiary of Fertoz Ltd., an Australian company with phosphate operations in Australia and Canada.

Fertoz joins Canadian companies Agrium, based at Calgary, Alberta, and Stonegate Agricom, based at Toronto, Ontario, as foreign companies hoping to realize hefty profits by developing phosphate mines in southeastern Idaho, but at great up-front capital investments.

Agrium has operated Conda processing plant for decades as Nu-West Industries near Soda Springs and runs the North Rasmussen Ridge Mine. Stonegate Agricom is developing the Paris Hills underground phosphate mine near Bloomington and Paris.

In December, Fertoz acquired an option to explore and acquire up to 100 percent of the Dry Ridge lease on the phosphate-rich Caribou/Targhee National Forest, expanding into the United States as it embarks on an ambitious expansion.

It has engaged World Industrial Minerals as a consultant to provide additional geological services to develop an exploration program in alignment with BLM requirements. Cascade Earth Sciences also has been contracted to start environmental permitting as required by the BLM. CES has teamed with Sound Ecological Endeavours and Sundance Consulting to expedite the biological and archaeological processes, respectively.

The approval process is expected to take 12 to 15 months. Fertoz Managing Director Les Szonyi said the BLM’s approval of transferring Dry Ridge operating rights will allow Fertoz to accelerate the permit and exploration approval process and begin drilling at the end of 2015 in Idaho.

Exploration in the United States requires significant third party input and reports before drilling can be approved, he noted, adding he expects Fertoz will submit in the next few months an exploration application, which outlines the proposed exploration plan. An environmental assessment of the project’s impact also must be submitted. (more…)

Otter, Little review the Idaho scene

Otter
Idaho Gov. Butch Otter converses with Dakota Bates, who chairs the ISU College Republicans, as Mike Webster, Otter’s eastern Idaho field representative, listens. (photo/Mark Mendiola)

 

mendiola MARK
MENDIOLA

 
Reports

Top elected Idaho Republicans did not fritter away their time on the Friday afternoon before the evening Bannock County Republican Lincoln-Reagan Banquet Feb. 21 at Pocatello’s Clarion Inn, which drew about 250 of the party’s faithful, including the state’s GOP elite from Boise and Washington.

Idaho Gov. C.L. “Butch” Otter and Lt. Gov. Brad Little discussed education issues at Idaho State University shortly after U.S. Sen. Mike Crapo warned business people at a Mystique Performing Arts and Event Center lunch in Chubbuck of the nation’s worsening fiscal crisis.

Questions about the controversial “guns-on-campus” bill wending its way through the Legislature in Boise were among several questions fielded by Otter and Little in the ISU Student Union Building ballroom. On the previous Thursday, they spent time with Dr. Arthur C. Vailas, Idaho State University’s president.

Vailas told them he had been notified by the Nuclear Regulatory Commission that it does not allow nuclear research and development on campuses where guns are allowed because of security concerns. “I had never heard that,” Otter said, noting about 60 percent of ISU’s R&D is nuclear-related.

Another complication if guns are allowed despite the opposition of the state’s university presidents and law enforcement officials is ISU’s Meridian campus is shared with a high school, and state law forbids guns to be carried at high schools, the governor said.

Asked if he would sign a “guns-on-campus” measure if it is passed by legislators, Otter says he never signals his intentions as lawmakers finalize a bill’s provisions, mentioning he has been a lifetime member of the National Rifle Association.

Little defended the controversial Common Core curriculum being implemented by school districts nationwide that is supported by governors and superintendents. While the U.S. Department of Education puts money into it, it’s really driven by the states, the lieutenant governor said.

In November 2010, the Idaho State Board of Education adopted Common Core standards. In January 2011, the Idaho House and Senate Education Committees gave final approval to adopting Idaho Core Standards in mathematics and English. Some Idaho school districts have implemented those standards, Little noted.

Many Idahoans are concerned that Common Core is part of a national curriculum and the federal government is developing a massive data base on each student in the United States, Little said, noting his father and grandfather had to meet standards to graduate from high school.

Otter noted that of Idaho’s $2.85 billion budget, 68 percent of it goes toward K-12 programs. The State Board of Education has set a goal that 60 percent of Idahoans 24 to 35 will get a degree or certification by 2020.

Right now, Idaho boasts a high school graduation rate that is relatively high at 88-89 percent, but only 38 percent of high school graduates go onto college and even fewer graduate, making Idaho’s college graduation one of the nation’s lowest. (more…)

At the tele-town hall

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MENDIOLA

 
Reports

Several Idahoans who phoned into Idaho U.S. Sen. Mike Crapo’s tele-town hall meeting Wednesday night, Feb. 12, expressed concerns that President Barack Obama is abusing executive orders, creating a constitutional crisis that might require impeachment proceedings to be brought against the nation’s chief executive.

They said they fear Obama is directly violating the U.S. Constitution’s separation of powers between the government’s executive, legislative and judicial branches by arbitrarily circumventing Congress and ignoring or even contradicting enacted laws with his executive orders.

During the hour-long town hall session, Crapo’s constituents also asked about missing Idaho POW Bowe Bergdahl, the Patient Protection and Affordable Care Act or “Obamacare,” the Keystone XL Pipeline, the U.S. Farm Bill, the minimum wage, environmental protection, broadening the tax base and reforming the tax code.

Crapo said at this point a majority of members in the U.S. House and Senate have not concluded that impeachment of the president would be a proper step.

The U.S. Constitution allows for presidents, vice presidents, federal judges and civil officers to be removed from office via impeachment if they have committed “high crimes and misdemeanors,” including criminal actions or serious misuse or abuse of office.

In American history, the U.S. House of Representatives initiated impeachment proceedings against only two U.S. presidents -- Andrew Johnson and Bill Clinton. The Senate acquitted Johnson by one vote and dismissed charges against Clinton.

Crapo said he is increasingly hearing the impeachment issue raised “as the president steps outside the law and whether that amounts to high crimes and misdemeanors.” While Congress now is unlikely to impeach Obama, the Idaho Republican said he will not say that will not happen.

Crapo was among 45 Senate Republicans to file an amicus brief with the U.S. Supreme Court saying it was illegal for Obama to make “recess appointments” of three members to the National Labor Relations Board and Richard Cordray to head the Consumer Financial Protection Bureau (CFPB) when the Senate was still in pro forma session and without its advice and consent.

Crapo said Obama was literally in violation of the Constitution by taking that action. “I don’t think he accidentally did this.”

Three federal appeals courts have ruled those appointments were improper. The Supreme Court heard the landmark case in mid-January. Its decision is expected in late June.

Last November, Senate Majority Leader Harry Reid, D-Nev., pulled the trigger on the so-called “nuclear option,” making a controversial, historic Senate rule change that eliminates filibusters blocking presidential nominees and allows a simple majority vote, rather than 60 votes, to confirm nominees, limiting the power of minority Republicans. (more…)

Price on unifying economic developmnt

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MENDIOLA

 
Reports

Bank of Idaho President and CEO Park Price strongly encourages eastern Idaho’s three economic development organizations - Bannock Development Corp., Bingham Economic Development Corp. and Grow Idaho Falls Inc. - to effectively flex their collective clout by merging into a single regional force.

Speaking at a recent Rotary Club of Pocatello luncheon, Price noted the three organizations have been discussing the possibility of consolidating into a single entity, which he said would pay dividends for years to come throughout the region.

The Idaho Falls bank executive - who holds an economics degree from Dartmouth, ran a successful Pocatello car dealership for many years and has been engaged in economic development for more than 30 years - noted the Pocatello/Idaho Falls region boasts a population of 250,000 and a work force of nearly 130,000, the second largest in Idaho behind Boise.

Price praised successful economic development efforts in the Magic Valley where communities and counties in the Twin Falls area cooperate as a cohesive unit. The Southern Idaho Economic Development Organization (SIEDO) has wracked up several impressive achievements, including $800 million in industrial projects built or announced since November 2012, creating more than 1,200 jobs.

Those projects include Chobani’s massive $100 million yogurt plant near Twin Falls, Glanbia’s $15 million cheese innovation center, Frulact Group’s $40 million fruit processing plant in Rupert adding 100 jobs, a new $160 million Clif Bar plant employing 250, McCain Foods’ expansion adding 150 jobs in Burley, Monsanto’s Wheat Technology Innovation Center in Filer with 30 jobs, Gossner Cheese’s $20 million investment in a Mini-Cassia plant, etc., etc.

“Major private investors in Bannock Development and Grow Idaho Falls with whom I’ve spoken are in favor of a regional approach,” Price said, noting the Salt Lake Valley and areas around Bozeman, Billings and Missoula, Mont., pose the greatest competition to eastern Idaho for jobs that pay living wages. “The competition is no longer other communities in Idaho.”

Price warned the trend of companies incorporating technology in all their processes and emphasizing automation to remain competitive does not bode well for low- or semi-skilled workers, whom he said are part of the long term unemployed.

He mentioned that in September he toured the J.R. Simplot Co.’s new 380,000 square foot plant in Caldwell, which has brought about the closure of Simplot plants in Aberdeen, Caldwell and Nampa.

“The three older plants employed about 1200. The new plant will employ just 265. The plant is a fine example of technological efficiency,” Price said, adding there are not fork lift operators, sorters or other laborers employed there, only employees who operate computers or maintain equipment. (more…)