Failed green energy in the Pine Belt: Investments that cost Miss - WDAM-TV 7-News, Weather, Sports-Hattiesburg, MS

Failed green energy in the Pine Belt: Investments that cost Mississippi taxpayers millions

HATTIESBURG, MS (WDAM) -

Former Mississippi Governor Haley Barbour led Mississippi on an ambitious endeavor into green energy in 2010.

"They will spend more than $85,000,000 a year on Mississippi labor," Barbour said.

Barbour was speaking of Kior, a biofuel corporation, and the legislature backed this hopeful venture by loaning Kior $75 million to set up shop in Mississippi. Other green projects followed with Twin Creeks Technologies, Green Tech Automotive and Stion.

"Our people are hungry for it," Barbour said at an event in 2011 announcing Stion would come to Hattiesburg.

Fast forward seven years and there is a void the green projects failed. The latest bust happened in the Pine Belt when Stion, located in the Hattiesburg-Forrest County Industrial Park, announced in October that it would be closing its plant on Dec. 13 and laying off more than 130 employees just before the holiday season.

"Every operator in this building is feeling terrible not knowing if you're  going to have a job before the holidays, and two weeks before Christmas you won't have a job at all," one Stion worker said.

"Nobody back in 2012 saw this coming," Forrest County Board of Supervisor President David Hogan said.

Hogan said he was one of those people and that Stion notified the county of the closure through an email. According to Hogan, the reason given was "intense and unfair competition from foreign manufacturers."

"Who knew that China was going to start making really inexpensive solar panels and flooding the U.S. market," Hogan said.

"There was no way for Stion to make the panels in the United States as cheaply as the Chinese were able to, and therefore their market shares suffered," Forrest County Board of Supervisor Attorney David Miller said.

Miller said Mississippi's failed green energy plants are not an isolated case, it's a trend happening around the country.

"Hopefully the national government is gonna get those trade imbalances straightened out for us in the future," Hogan said.

Until then, the City of Hattiesburg said it's taking legal action to get it's money back. As for the county, Miller said Stion's tax breaks totaled $2.3 million, and Stion has only handed over a little more than $200,000. But does that put a dent in their balance for both the county and city?

"A little over $2 million left. About $800,000 of that is owed to Hattiesburg Public Schools, $600,000 to the City of Hattiesburg and the remainder to the county," Miller said.

The road to bringing those funds back to Forrest County starts at the state capitol, and it will be a legal fight led by State Auditor Stacy Pickering and Attorney General Jim Hood. As of right now, according to the Mississippi Development Authority, while Kior is in litigation, Green Tech and Stion are classified as "now with the attorney general's office." 

"Stion in particular, here in the Pine Belt, $75 million left holding the bag, that's the state's portion," State Auditor Stacey Pickering said.

Pickering said Stion's $75 million bill to the state is just scratching the surface. According to the numbers from the auditor's office and MDA, since 2004, green jobs aren't the only failures leaving taxpayers dollars on the hook.

"Not just the green jobs, but all the other failed investments, over $240 million," Pickering said.

Pickering is honest and stern when approached with the question of can the state get its money back from Stion and the other failed green energy companies.

"No," Pickering said.

Pickering said he hopes the state can get some of the funds back, but he doesn't think the state can get the $75 million, plus what is owed to the school district or the county. He said if the company has gone under, you can't get blood out of a turnip.

Pickering's firm explanation is echoed by State Senator John Polk.

"Usually in a situation such as this, those assets will be worth only pennies on the dollar and will not come close to repaying the entire amount," Polk said.

However, AG Hood takes a resolute stance.

"I intend to collect every dime owed to the taxpayers, plus the cost of litigation,' Hood said.

Governor Phil Bryant considered the failed green projects a lesson learned.

"This serves as a good example of why the Bryant Administration does not make sizable investments of taxpayer money in start-ups," according to a statement from Governor Bryants's office.

Pickering wants the public to know the state has more success stories with industries than failures, but he said when it comes to investing in emerging technology companies, there has to be safeguards in place from start to finish. He added he believes the legislature has the ability to put safeguards in place.

"Before we cross that line and invest taxpayer dollars or put incentives or loans in place to these companies, we've got to make sure that the money is there on the back end so we can recoup it if the company does not survive, they don't make or create the jobs they say they are going to create," Pickering said. "There has to be skin in the game, and there should be bonds in place or insurance policies to make sure the taxpayers are protected. We've got to do a better job as a state of putting those kinds of safeguards in place and it's not something we should expect it's something we ought to demand our legislature fix going forward."

Pickering said to the state's credit, the auditor's office is included in major economic development projects, like Toyota and Ingalls Ship Building on the Gulf Coast. The state gives his office the authority and funding to oversee those projects. He added the problem with projects like Stion is they come from other funding sources where his office doesn't have the specific authority or additional funding to oversee those projects.

"MDA does not include us, the legislature has not mandated that we are included on the front end, that we get to review the MOU's [Memorandum of Understanding] to make sure there is good accountability, there's good claw backs, that the numbers are auditable numbers," Pickering said. "We don't see it until it has already been made public. Those kinds of projects like Stion that came through the Industry Finance and Revolving Fund, we don't have a role in that. They actually happen or announced and many times we don't see the problem until MDA calls us or we see it reported in the press."

Stion released a statement which said they would like to correct several factual errors that have appeared in several articles locally. "Stion is selling the assets of the company through an assignment for the benefit of the creditors," said Vice President of Business Development & Marketing for Stion, Frank Yang, in a statement. "This means that a third-party sells the assets and distributes the proceeds to creditors. Stion does not distribute or receive any of the proceeds."

The statement goes on to say that "Stion has worked very actively on placement and other assistance for departing workers."

Here are is the full statement from Stion:

1)    Stion is selling the assets of the company through an “assignment for the benefit of the creditors.”  This means that a third-party sells the assets and distributes the proceeds to creditors.  Stion does not distribute or receive any of the proceeds.  A buyer for the assets may also choose to fund the continuation of operations in MS; however, that would occur only after the assignment is completed.   
2)    Stion has worked very actively on placement and other assistance for departing workers.  We have invited local companies to come in and interview the employees on business hours, and also made numerous referrals to solar industry competitors as well as other manufacturing companies.  One issue is that China has decimated not just solar but many US manufacturing industries, so there are not a large number of similar positions in the immediate vicinity.  We are filing for “Trade Adjustment Assistance” for the federal government which provides potential benefits to workers who have been impacted by unfair trade practices.  We also continue to work actively with the MS legislative delegation to lobby the White House for a stronger remedy in the current solar panel trade case, as fairer market conditions may allow Stion to remain viable under new ownership.  

As further background, since beginning production in Hattiesburg in 2012, Stion has paid over $33M in wages to MS employees and consistently maintained employment over 125 people.  We hope we will find a way to continue however the situation is highly unsure due to the intense and unfair competition from China.

As for the economic outlook for Forrest County, President of the Area Development Partnership of Greater Hattiesburg, Mississippi, Chad Newell had this to offer:

“Stion officials have notified us that the company is discontinuing operations in Hattiesburg.  Our primary concern is for the employees and their families. Given that our market was recently ranked No. 1 for job growth among Mississippi metro areas and 68th nationally, I am confident many of these employees will have sufficient opportunities close to home.  Our economic development team here at the Area Development Partnership (ADP) is already providing assistance to connect employees with expanding employers.  The ADP is also recruiting area employers to participate in the Governor’s Job Fair slated for November 2nd from 9:00 a.m. to 1:00 p.m. here at the Lake Terrace Convention Center.  We are working closely with the Mississippi Development Authority (MDA) to proactively market the space currently occupied by Stion so that our citizens continue to have employment opportunities in this first-class industrial facility.” 

You can view Stion's press release announcing the plant's closure below:

Copyright 2017 WDAM. All rights reserved.

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