County, city face uphill battle to retain industry

By Kathy Helms-Hughes

STAR Staff
khelms@starhq.com

   (Third in a series)

   It's difficult to lend a helping hand when you don't know that someone's in trouble. It's especially hard when that someone is local industry.
   For example: Company presidents, chief executive officers, and shareholders meeting at corporate headquarters far removed from Carter County often make decisions of which their local entities are unaware until news trickles down through the corporate pipeline.
   While local business representatives may believe they're on solid financial ground, corporate might take a different view and decide to ax the business in order to remain viable in today's uncertain economy. When this happens, city and county leaders who might be in a position to offer assistance to keep those businesses operating, may be the last to know.
   "Unless we have information that the industry is in need of help and the local community could help that industry, it's hard to respond after the fact -- when the decision to leave town has already been made," says Elizabethton City Manager Charles Stahl.
   Inland Paperboard & Packaging announced Friday, March 21, that it would be closing its West Elk Avenue plant in Elizabethton in 60 days. Not only did the news leave Inland workers in shock, but city and county officials as well.
   Stahl said that though Inland announced the decision on Friday, the letter to the city was postmarked Saturday and received in his office on Monday.
   "I'm not faulting anyone there," Stahl said. "Alcoa's situation was similar to that, as well as Moody Aviation's situation. We've had three recent examples of devastating news to our community from good, viable, long-term businesses that were a complete shock to us."
   Though it is too late for Alcoa, the city and county have taken an active role in trying to salvage Moody and Inland operations. But Stahl cautioned that even though they have responded, "it's difficult for us to do so effectively when that decision has apparently already been made."
   Stahl said city leaders met with representatives of Moody and with their legal counsel from Chicago. "We have made overtures to them locally as well as to the Chicago-based Moody Bible Institute."
   The city has not had a direct response from Moody. Because Elizabethton Municipal Airport has had a close working relationship with Moody Aviation for the past 35 years, "we've asked Airport Commission Chairman Bill Green and his commission to work with Moody Bible Institute," Stahl said Friday.
   "They didn't come to us and say, 'This is what we need to stay open.' They basically made a decision to close. We since have asked what, if anything, we can do to get Moody to reconsider that decision," Stahl said.
   Carter County Executive Dale Fair said Inland representatives also have been approached and are being asked to delay their decision to close until the true economic future is in focus. "We'll know when the war's over if the economy is going to rebound fast or slow. Then they can make a decision, if we can get them over this hump right now."
   Fair said Inland's president apparently left the United States after the March 21 announcement but is due to return soon. Upon his return, "We're expecting to get a response from him," Fair said. "If not, we will get back with him directly. We did shoot a letter off with some concessions that we will look at."
   Several options were proposed, according to Fair. "We talked about a break on utilities -- both power and water -- a break on taxes. We would work with them on their collective bargaining to discuss concessions with the work force, and we have investigated some very, very low-interest rate loans to assist," he said.
   Phil Isaacs, general manager of Elizabethton Electric System, said he suggested that Inland might receive assistance from Tennessee Valley Authority's economic development loan program.
   "We didn't throw a dollar amount out there because I don't know what their specific needs are," Isaacs said. "But if they're interested, I could get with the economic development folks with TVA in the Johnson City office, and I'm sure they could come up with some. We just wanted to make sure they were aware that it was available."
   Isaacs said the TVA loan program also is available to other existing city/county industry. "It doesn't really help to bounce somebody out of bankruptcy, but it would help to retain jobs if they need to buy equipment or things of that nature."
   Isaacs said that to the best of his knowledge, existing industries have not applied for help. "We have visited a lot of our industries and we have done our best to let them know what programs are available through TVA," he said. Under the Comprehensive Services Program, power company representatives can help a business use their energy more efficiently. "If they've got leaks, or if they've got some mechanical/electrical equipment or switchboxes that could be arcing and letting off some energy, we can help them identify those with an infrared scan."
   Unfortunately, there is nothing EES can do about the power rate structure. TVA is the regulatory authority on power rates, Isaacs said. "They pretty much look at the whole valley and not just what can we do about the rates in Carter County."
   In January, TVA proposed a restructuring of its rate system which would raise residential and commercial rates by 8.1 percent, but lower industrial rates by 2 percent, effective in 2004. The restructuring would raise an estimated $365 million a year to help TVA pay for pollution-control equipment at its coal-fired plants.
   Isaacs said the reduction in rates for industrial customers would not only help existing businesses, but also might be an incentive to industry looking to locate in the area.
   Isaacs said he is working with Stahl, Fair, and Economic Development Commission Director Haynes Elliott to try to do what they can. "It's very competitive out there. It's just a tough market. I know there are a lot of big corporate decisions being made that are not right here in Carter County. I guess they don't realize the real impact, and I guess they have to do what's best for their corporate business," he said. "Haynes is doing his best in a tough time. It's bad everywhere, but there are some brighter things in the future -- we hope."
   Fair said he believes that if Inland's decision to close could be delayed six months to a year, "it would be worth our effort right now. We've asked for a hearing either before the board or the president of the company when he gets back. If not, we'll follow it up and see if we can just show up there on his doorstep."
   The county also must have a contingency plan, and in that regard, "We're also working on what we would do to try to help the individual employees be relocated to new jobs," Fair said.
   Tomorrow: Courting industry