Tennessee, Michigan battling for major Dow Corning subsidiary

The battle for VW was won by Chattanooga, but another big plant could land in the Volunteer State soon - this time in Middle Tennessee

Email | Print By Ken Whitehouse

When Volkswagen announced two weeks ago that it will build an automobile plant in Chattanooga, one would think that state leaders were popping bottles of champagne.

You would be wrong. They likely switched over to Hemlock.

No, we aren't talking about the brew that Socrates drank to meet his maker. Instead, the topic here is Hemlock Semiconductor Corp., a unit of Dow Corning.

HSC is the world's largest maker of polycrystalline silicon, an ultra-pure rock-like material used in solar panels and semiconductor chips. HSC is looking at sites to expand production and one of them is the Tennessee Valley Authority's megasite in Clarksville, according to multiple sources in the state's economic development community.

Sources said the total employment for such a plant could reach 4,000 jobs – double the number VW has projected at its Chattanooga plant. Dow Corning, which rang up almost $5 billion in sales last year, now employs about 10,000 people.

TVA megasites are properties designated by the agency as ideal locations for the automotive or other major manufacturing operations. Each site must have a minimum 1,000 acres, be immediately available, have completed environmental and geotechnical testing, be close to interstate highways, railways and auto suppliers, and have a plentiful labor force. The recently announced VW plant will be built on a TVA megasite.

While many in the state thought Tennessee's main competition to land VW was Alabama, don't tell that to state officials in Michigan. Along with Tennessee and Alabama, the Wolverine State was on the short list to get the new plant.

Now Michigan officials have turned all of their attention to HSC and trying to get the company to expand at its existing facilities in Thomas Township, west of Saginaw.

While Tennessee economic development officials have been understandably silent on their prospects and Clarksville's city leaders are holding their breath, the folks up in Michigan haven't been as quiet.

On Feb. 14, 2008, Michigan Gov. Jennifer Granholm (D) told the Saginaw (Michigan) News that she had lobbied Dow and HSC leaders to grow the company in Michigan on the same day that Tennessee Gov. Phil Bredesen had made a pitch.

She told the paper that should Michigan land the plant, "We're going to have the biggest hoo-hah celebration when they make the announcement."

HSC-Dow Corning spokesman Jarrod J. Erpelding was more circumspect with the Saginaw paper, stating that "any assumptions would be premature and irresponsible, really, based on us having a meeting with Gov. Granholm."

Although Dow Corning's headquarters are in Midland, Mich., it hasn't stopped company officials from trying to sweeten the deal.

In April, the Michigan legislature passed tax breaks that could be worth up to $35 million a year for HSC. The legislation will let the company claim a credit for some of its electricity costs against the Michigan Business Tax for 12 years starting in 2012, as long as it builds another new or expanded facility in the state.

Joining in at the federal level is U.S. Senator Debbie Stabenow (D-Michigan). She said in March of this year that she would lobby to enact alternative energy tax credit legislation and respond to any HSC request to make sure its patents were protected from theft. She also pledged to work to secure federal aid to defray the cost of a sanitary sewer system around a manufacturing complex.

Even at the local level, elected officials and political candidates in Michigan are jumping in on the act. State Rep. Kenneth B. Horn (R), who is finishing his first term in the Michigan state legislature said in March, "The absolute No. 1 priority for me is continuing our work and not losing our next expansion of Hemlock Semiconductor to Tennessee."

While lips are loose in Michigan, mum has been the word in Tennessee.

Contacted by NashvillePost.com, Mark Drury, assistant commissioner for the Tennessee Department of Economic and Community Development declined to say anything, citing ECD policy of not commenting on major corporate recruitment efforts.

Despite the silence, there are some clues as to what Tennessee is doing to get HSC to Clarksville.

In May of this year, the Tennessee state legislature approved a budget proposed by Bredesen that included a $100 million economic development "contingency fund." While knowledge of efforts to lure Volkswagen were widespread at the time, state officials refused to acknowledge that the money was to entice the German car maker and said that other companies also were looking at Tennessee.

Also in Bredesen's latest budget was a provision that created a business tax credit for companies manufacturing products necessary for green energy. Since the materials processed and manufactured by HSC are a vital component in solar panels, it is highly likely they would benefit from the tax credit should they locate in Clarksville.

There is no timeline known as to when a decision will be made by HSC or Dow Corning.