Kansas' wind city is concerned at looming PTC expiry
While debate over continuation of the federal production tax credit (PTC) has centred on Washington DC, it is places such as Hutchinson in the US heartland that will suffer if Congress lets it expire.
This small city in the centre of Kansas beat long odds a few years ago to convince German manufacturer Siemens to locate its first nacelle production plant in the Americas there.
“This was the biggest economic development project in Hutchinson’s history,” city manager John Deardoff tells Recharge. “We rolled up our sleeves and got it done.”
State officials and others also helped in the effort.
Until then, the city was best known for hosting the Kansas State Fair, mining salt and having the world’s longest grain elevator, which dominates the skyline.
But it also had many attributes that Siemens was looking for, including a shovel-ready industrial park suitable for a large plant, a quality workforce, attractive business costs and excellent transport links.
“The on-site rail capability at Hutchinson allows for efficient transport to export ports and was a strong consideration during our plant siting process,” says Siemens spokeswoman Laura Snyder. Deardoff adds: “We worked hard to find solutions for the site.”
Siemens chose Hutchinson after looking at 80 possible locations across the US. Siemens pledged to invest at least $30m but the actual amount is believed to be $50m.
The plant opened in November 2010 and created 400 well-paid jobs, says Deardoff. Put in perspective, the city’s chamber of commerce was accustomed to dealing with proposals to create 20 or 30 jobs, and occasionally 100.
“The plant has had a huge impact on our city and our county. It really put us on the map,” he says. “There was a lot of local pride in having attracted Siemens. It got our spirits lifted.”
After Siemens made its decision, nearby Hutchinson Community College consulted the company to identify the skill sets it would require when it began hiring staff. The school now offers training courses in demand by equipment manufacturers, and operations and maintenance companies in the renewables sector.
Hutchinson spent more than $2m to win over the German company — a lot of money for a city of 43,000 people. It also provided a ten-year property-tax exemption and several other benefits. Deardoff says at the time, the city was looking at the possible multiplier effect of Siemens suppliers also coming to Hutchinson.
“We still are,” he says, but PTC uncertainty has put their plans on hold. “It worries us.”
There is also the real possibility that Siemens could slash its local payroll if US wind turbine orders sharply decline as expected, even if Congress keeps the tax credit. However, export orders are likely to keep the plant going at reduced volume.
“A one-year extension would be insufficient. This is a big issue for us as a community. Wind is still in its infancy,” Deardoff says.