The NanoChemonics Fiasco in Wise, Virginia
compiled by Lewis Loflin
Pulaski County's NanoChemonics is another example why we must sever government from private business. Why would taxpayers spend $7 million to setup an energy research facility for a company that manufactures iron oxide coatings for video tapes? There is no public record of the company even doing any such research and I have been unable to contact the company. Then I found out why my e-mails were never answered.
Let me be clear I don't believe NanoChemonics or any other party has done anything illegal or improper. The question is the judgment of those operating the economic development industries of this region that mainly benefits contractors, consultants, and the agency itself. The general public sees little measurable results from these efforts.
As of April 26, 2010 my request for information from the Wise County IDA has not been returned. I sent a 2nd. request June 3, 2010. I finally got a statement from Mr. Snodgrass of the Wise County IDA:
In response to your request:
No agreements, contracts, etc. have ever been executed with NanoChemonics of Pulaski, and, therefore none of the requested documents exist.
- There are no status changes to report, since no documents were ever executed with the company.
- GRC Construction of Kingsport, TN was awarded the general construction contract as the low bidder for the job after normal procurement and due diligence processes were completed.
- It is presently unknown who will be the occupants of the center.
- It is also unknown as to the number of jobs that will be created at the center.
- Until a tenant is identified, it is impossible to predict the percentage of cost the private sector will contribute to the facility.
- There will be no subsidy provided, except for tax and job creation credits offered under the State Enterprise Zone program, an subject to a company meeting qualifying criteria.
Then why all the press announcements? In other words no jobs were created in Wise again, the money went to an out-of-state contractor, and we have no prospects of anything any time soon. Yes there will be subsidies in setting up some company to get government grants to spend, then giving them free or discounted office space to spend it in.
There will be no private sector money put into this. This whole project was based on NanoChemonics according to press reports. Another $7 million down the toilet again in impoverished Wise County, Virginia.
In reality the economic development industry has a tough job as politicians hammer them for results and this seems to force these various agencies into making bad decisions. Economic development must be more than wasting government grants or political pork if this region is to have any real future. This is further compounded by having no specific stated goals or standards to measure by.
The Coalfield Progress on October 2, 2009 stated that NanoChemonics was going to be the anchor company at the new $7 million research facility in Wise, Virginia. According to the Coalfield Progress this 24,000-square-foot center is expected to open mid-2010. 14,000 square feet of the finished office and laboratory space is going to NanoChemonics. Some 10,000 square feet will be left as shell space for future tenants.
The building is financed with $5 million in grants from the Virginia Tobacco Commission and a $1.045 million grant and $955,000 loan package from VCEDA. The Tobacco Commission has also committed operating funds to help run the facility for its first few years in business.
The last sentence is critical in that the taxpayers will fund this boondoggle and no private sector funding is really expected. This center along with those in Abingdon, Danville, etc. are due to funded with an additional $22 million in 2010 alone because it seems no private business is jumping in on this. This is part of the system of creating a high-paid government funded economy open only to those with advanced degrees and social or political connections. The vast majority of the general public this was supposed to serve are shut out of the entire process.
This is reality just a few miles from Remote Area Medical whose record setting crowds has been such an embarrassment public officials moved the event from the taxpayer subsidized airport to the Wise Fairgrounds. See:
2008 Remote Area Medical (RAM) in Wise Virginia
$8 Million Wasted on the Wise Inn
To further quote,
..it (NanoChemonics) wants in on the ground floor of special technology using tiny particles to remove sulfur and mercury from coal before it's burned, and from flue gas after combustion. The company is also working on ways to remove heavy metals from fly ash to allow greater use of the coal combustion byproducts, which are frequently dumped in landfills.
The goal of providing jobs and hope for the average citizen living in poverty ridden Southwest Virginia continues to be ignored in this orgy of pork-barrel waste. The money is funneled to private companies, state agencies, and universities, bypassing the general public. To quote Virginia Tech,
Energy Research and Development Centers : OED provided thought leadership and facilitated discussion between the Tobacco Commission, communities, and the University for facilities and major R&D investment based on experiences with the Institute for Advanced Learning and Research in Danville, and the development of the Center for Advanced Engineering and Research in Region 2000.
With support from the Virginia General Assembly and the business community in the region, the Virginia Tobacco Indemnification and Revitalization Commission provided $36M toward construction of five facilities, $4M for operating support, and $100M for R&D to support university-based energy research and development.
Not one penny of that money will a single job or education opportunity for those displaced by recent economic upheaval in tobacco farming and manufacturing. To quote the Virginia Tobacco Commission's own internal Blue Ribbon Commission on this situation in 2008:
Given the existing state of the Southside and Southwest economies, it is fair to ask whether the expenditure of over $400 million by the TICR since the year 2000 on "regional transformation" projects has had the desired transformative effect on the regions...
Despite this spending, population in the region continues to decline, wage rates still lag behind the rest of the state, there is persistent high unemployment and poor educational attainment is still endemic.
By now the expenditure is over $700 million. They went on to recommend a number of changes then, which as of 2010 none have been implemented. After spending the money to provide premium office space for NanoChemonics a little problem came up. The reports below stand for themselves.
Employees say 29 furloughed from Pulaski Co. plant
Pulaski County's NanoChemonics has furloughed almost half of its 60 employees since January because of business losses, according to unionized mechanics at the company.
Richard Adams, 57, and Kurt Marcussen, 56, said they were told to stop coming to work after this weekend and that they should begin to collect unemployment payments along with 27 other members of their United Steelworkers chapter. The week before, the men turned off two steam valves and shut off lights in the areas where they worked, Marcussen said.
The company, which manufactured material for videotapes, audiotapes and ink, owes the town of Pulaski $40,000 in back water bills after not collecting payment on a large order with a foreign client, said John White, Pulaski's economic development director. The recession and the decline of the videotape industry also hurt NanoChemonics' sales, he said.
Company and union officials could not be reached for comment.
The company was slated as an anchor tenant in a proposed commercial park for nanotech companies in the New River and Roanoke valleys, White said. (Guess who is funding that park.) That project has evolved into labeling the entire region between Wise County and Danville a "nano-hub," he said. (There is nothing "nano" as understood in the technology world about iron oxide for video tapes.)
NanoChemonics officials will meet privately with Pulaski's town council on March 16 to discuss the changes, White added.
Extract from information originally published by By Katelyn Polantz firstname.lastname@example.org
Note: they never made it to March 16.
NanoChemonics plant shut down
Melinda Williams, Staff Writer 03-01-2010 (extract)
As many as 60 people have joined the ranks of the unemployed as the fate of NanoChemonics fell into question Friday evening.
Company officials could not be reached for comment, but Adams and Kurt Marcussen say it is their understanding a bank has taken control of the facility...Tim Hopkins, who was president of the company, has been gone since January. He said the company's head chemist, Carmine DiNitto, is one of the few officials still employed.
Bob Pierce, president of Local 8-00002, said company officials haven't contacted the union to inform them of the status of the plant. "As far as I know, they're shutting it down," he said. "They haven't really contacted us."
From www.restorepulaski.com March 4, 2010:
I attended Joseph Goodmans Q&A session this morning . Several very good questions were asked from the audience. One concerned the potential loss of 5% of the town property tax base with the closure of MAGNOX (NanoChemonics). According to Mr Goodman, NanoChemonics pays about 5% of the towns property tax which would be about $150,000. Plus the town lent NanoChemonics $250,000 in a UDAG loan which is at risk.
The Southwest Times reports that the company is about $40,000 delinquent in its utility payments to the town. As, I calculate it the town stands to lose about $500,000 if the company goes belly up. To put that number in perspective, it would take about a 12 cent increase in the personal property to make up for that loss.
Goodman recommended that the town take immediate appropriate legal steps to assure that our taxpayer money is secured. He reminded us that it is taxpayer money not the town's money. His last report from town officials was that no contact had been made by the town to NanoChemonics. He encouraged quick proactive action by the manager and council.
Their website at www.nanochemonics.com is still up as of April 21, 2010.
I'll quote a news release:
The creation of a public-private energy research center for clean coal technology and alternative energy resources as well as environmental remediation products utilizing nanotechnology, to be based in Wise County, VA. with an economic impact throughout central Appalachia. $7 million is committed to the project, and includes higher education support research partners.
Up to 250 jobs over five years can be created through a Fuel Prototype Production Facility, with the research center. NanoChemonics Corporation of Pulaski, VA. is committed to locating at the site, with joint partners prepared as well, with matching funds needed for staff, equipment and research and development support.
And who exactly are these "joint partners" supposed to be? It will be the taxpayers.
Ref. Tobacco money sought to power energy research Bristol Herald Courier July 29, 2008
The commission also is expected to consider a $4 million appropriation to design, construct and open an Appalachia America Energy Research Center at the Lonesome Pine Technology Park in Wise. That center would include nearly 25,000 square feet dedicated to clean-coal technology, converting coal to liquid fuels, mercury remediation and reducing sulfur levels.
NanoChemonics, a firm based in Pulaski, VA., has committed to locating at the facility and to work with universities and corporate partners in mining and energy industries, commission documents show.
The commission's appropriation equals about half the total funding for that project and follows an earlier $1 million allocation for site development. Additional funding is expected from the Wise County Industrial Development Authority and the Virginia Coalfield Economic Development Authority.
Other energy research centers and funding proposals the commission will consider include:
* $8.07 million to establish a sustainable energy research center in Danville.
* $7.69 million to establish a nuclear energy research center in Bedford County.
* $873,845 in additional funding for a Gretna, VA., facility that converts crops into bio-diesel fuel.
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