As the future of the Hoku polysilicon plant in Pocatello dims with a Chapter 7 bankruptcy and desperate attempts being made to save the facility from the scrap heap, there are those who would like to point fingers of blame.
Actions by city of Pocatello officials, Bannock County Development Corp. and state and federal agencies made this gamble on the future of solar power and the Gate City's role in it possible. They were willing to take a gamble on an investment that could have landed more than 200 full-time, high-paying jobs in Pocatello and did provide a big employment boost during construction efforts that happened in the bleakest days of the Great Recession.
Was it wrong for city officials to create a tax increment financing district to pave the way for Hoku?
Can the city's purchase of a 67-acre property for $900,000 that was then leased to Hoku for $1 per year over the next 99 years be labeled as foolish?
Could JH Kelley have possibly seen that it would be left holding the bag on $25 million of unpaid construction costs?
Were numerous businesses in Pocatello and the rest of the state overly optimistic when they provided goods and services to Hoku on credit?
Those may all be questions left in the air as the bankruptcy action against Hoku continues, but the most important question is: Will future gambles on big business in Pocatello ever take place again?
For everyone's sake, we hope so.
Strange as it may seem, Hoku was an experiment in cooperation and optimism that nearly paid off. With encouragement and help from government at all levels this upstart company out of Hawaii managed to nearly complete a $700 million plant in Pocatello. Hoku had secured contracts for continued power consumption to run the plant and it built a plant that used excellent engineering standards.
The problem was the intended product and the volatile world of polysilicon solar panels. When Hoku first proposed a new manufacturing plant, the price of the finished product was sky high. Before the first panels could be produced, the bottom had fallen out of the market.
By 2012, half the polysilicon “tier 3” producers in the world had filed for bankruptcy. Tier 3 producers were defined as producing less than 15,000 tons per year of polysilicon.
Even the big players, mostly in China, were having financial problems in 2012. However, prices for polysilicon used in the photovoltaic industry began to gain strength this year.
That may not be enough to keep the Hoku plant producing polysilicon like it was designed to do, but we'll all know for sure in the near future.
Now that Hoku is in bankruptcy and the Pocatello plant is its chief asset, a bankruptcy court must decide what to do with that asset to best satisfy the debts of the company. Tearing it down and selling the pieces is one option. Best guesses on the amount of money that could be recovered lie between $6 million and $25 million.
Principal contractor for the Hoku plant, JH Kelley, and a new financial player on the scene, JCF Funding of Henderson, Nev., say they want to keep the plant whole. They have both made proposals to the bankruptcy trustee to do just that.
Whether that will happen and who might gain control of the Hoku plant is anyone's guess.
In the meantime, we have to remind ourselves that sure things in the world of business are rare. In the unfolding world of new technology there may be no such thing as an iron clad project with no potential downside.
If Southeast Idaho is going to remain competitive in the 21st century, it has to be willing to take some risks. If we are fearful to put any chips on the table, we'll never win a hand.
As hockey great Wayne Gretzky once said about shots on goal,"You miss 100 percent of the shots you don't take."