SPRING 2008 ISSUE


Transforming a Community



After several years of setbacks, one Ohio community seizes opportunity with the arrival of the state’s first ethanol plant.




Mark Borer expected the grand opening of Ohio’s first ethanol plant—a $105 million facility in Leipsic, about 60 miles south of Toledo—to draw a large crowd. He got a little more than he bargained for.


More than 3,000 community members attended the January 2008 opening celebration of POET Biorefining — Leipsic, an impressive turnout for a town of only 2,200. Local residents enjoyed a ribbon-cutting ceremony, lunch and a flyover by ethanol-powered planes. The line for guided tours of the new plant—expected to produce 60 million gallons of ethanol per year—stretched hundreds of feet out the door.


“You get into these rural towns and you don’t hear much that is positive these days,” says Borer, the plant’s General Manager. “Everybody is welcoming POET with open arms.”


A HOPEFUL CHANGE


The Leipsic ethanol plant—POET’s 22nd operational plant and the first of three Ohio plants scheduled to come online in 2008—is projected to generate $75 million worth of business annually in the community, says Martin Kuhlman, Director of Economic Development for the Putnam County Community Improvement Corporation.


“You can see for a small community what this is going to mean,” says Kuhlman. “Everything has been better in Leipsic and the surrounding areas. From the top to the bottom.”


The POET plant represents the latest good fortune to befall Leipsic. The community fell on hard economic times in the mid-1980s when a large tomato-canning facility closed its doors, leaving 1,000 local residents unemployed.


“The closure wreaked havoc throughout the community,” says Kuhlman. “You would have thought this place was going to become a ghost town.”


In fact, he remembers an evening in September 1986 when the city council announced it wouldn’t make payroll if it paid all its bills. “The atmosphere in the room was one of almost disbelief that they could be in that bad of shape,” says Kuhlman. “They were strapped.”


But Leipsic resolved to fight its decline by making improvements to local utilities and infrastructure, and in turn attract quality companies to the area. A major gamble for the cash-strapped town, but the investments paid off. In 1993, U.S. Steel and Kobe Steel built a joint $250 million steel-galvanizing facility in Leipsic, bringing with it a total of 250 jobs. The steel plant was followed by Iams Pet Food in 1998 with a $75 million facility, bringing 150 jobs, and a 2002 $25 million expansion, which added another 100 jobs.


CLOSE TO HOME


Sixty-five-year-old Ed Rigel grows corn, soybeans and wheat on 1,200 acres outside of Leipsic. His farm produces about 50,000 bushels of corn in an average year. Before the ethanol plant came to Leipsic, his grain was shipped to the East Coast. Now he can sell it to POET five miles away.


The ethanol plant directly affects Leipsic-area farmers like Rigel by increasing the demand for local corn, and thus the price farmers can get for their grain.


POET is paying local farmers 5 to 10 cents more per bushel than the local grain elevators have in past harvests, says Borer. “We are an additional option beyond the middleman that farmers can exercise by selling directly to us,” he says. The local presence of the plant also lowers distribution costs for Leipsic farmers, whose corn has long been shipped out of the region.


The end result? More money in the pockets of local farmers, who historically have received less than market rates for their corn. Borer estimates that POET will use 22 million bushels per year, which will create an additional marketing opportunity for corn farmers.


ADDED BOOST


The presence of the plant also increases sales for local businesses. “Farmers have a different attitude right now and are willing to spend some money,” says Kevin Evers, Owner of Leipsic’s Village Hardware.


Many local farmers are investing in new equipment such as tractors and combines—big-ticket purchases that can run into six figures. “Business is the best I’ve ever seen it here in 20 years,” says Tony Schroeder, Store Manager for Northwest Tractor Company, the local John Deere dealership. “New tractor sales are way up, and I’m sold out of corn planters right now.”


Sales at Village Hardware were up 8 percent last year in a tight local economy where most stores reported down sales, says Evers. His store sold double his normal sales—largely from POET employees and contractors looking to stay warm while receiving grain deliveries, loading ethanol for transport or conducting outdoor maintenance.


The ethanol plant has also stabilized local businesses such as Maag’s Hotel Cardinal Dining. The only sitdown restaurant in town, offering American fare in both casual and more-formal settings, Maag’s closed in December 2006 when the owners fell on hard times. Local investors reopened it nine months later looking to preserve Maag’s 50-year legacy.


“In the restaurant business, in a small town, you never know what’s going to happen,” says Ida Velasquez, a Manager and Waitress at Maag’s. The first Monday they were open, they netted a dismal $50 in sales. Now they boast a much fuller operation since POET came to town, sometimes filling up all 50 seats.


“We’ve noticed that we are getting a lot of ethanol people,” says Velasquez. “They are most of our lunches. We know a lot of them by name now. … We hope they keep coming. We need their business.”


BETTER JOBS FOR LOCAL RESIDENTS


Debbie Reynolds worked for Leipsic’s phone company for 14 years as an Administrative Assistant until she was laid off when her office closed in December 2006. With POET, she found a better job in a stable industry.


“They came at the right time, in the right place,” says Reynolds, now an Administrative Assistant for the ethanol plant. “I probably would have been in the unemployment line.”


The full impact of the ethanol plant on Leipsic’s economy will take time to develop. But POET has already benefited local residents by providing better jobs today.


“We’re already impacting the community through the people we hire,” says Borer. POET Biorefining — Leipsic has 45 employees with an annual payroll of $2 million. All but two employees are natives of northwest Ohio.


An electrical apprenticeship had 22-year-old Ryan Schroeder driving more than 100 miles to Columbus each day, while his 48-year-old father struggled to grow corn, soybeans and wheat on the 1,500-acre family farm.


“It’s year-round work: planting, taking weed off, the harvest,” says Schroeder. “Doing that by himself is quite a bit for [my father]. I saw him struggling to get everything done, but I just didn’t have the time to help.”


Schroeder quit his electrical work to return home and farm full-time but needed another job for stability. He found work with POET five miles away.


“With farming, you never know what’s going to come the next year,” says Schroeder, now a Commodities Assistant at the ethanol plant. “I have a lot more reassurance in this.”


Borer says the ethanol plant provides a stable haven of employment to local manufacturing workers often hit hard by industry downturns. Many of his employees lost jobs when a major county employer, LG Philips, closed a television picture-tube factory in 2004 and displaced 1,200 workers. Other employees came to POET from northwest Ohio’s troubled automotive manufacturing industry.


“I believe it has permitted many, including myself, to leave sectors that are not as positively charged … as the ethanol industry is, and more importantly, POET,” says Borer. “This really makes a difference when you come to work every day.”


Lead Mechanic Dan Langhals worked in the auto industry for 18 years at Tower Automotive in nearby Bluffton, Ohio, until his plant was slated to close in 2006. After weathering union concessions on pay and benefits to keep the plant open, he decided to move on.


“That was one of the toughest decisions I’ve ever had to make,” says the 47-year-old Langhals, a lifelong resident of Leipsic. “But I figured this could be my opportunity to get out of the auto industry. Ethanol is the wave of the future.”


A BRIGHT OUTLOOK


Leipsic will use its estimated $75,000 boost in annual tax revenues to revitalize its downtown and improve education for the 775 students of its K–12 school system, says Village Administrator Jim Russell.


“This little community has looked into the future and said, ‘What do we want to become?’” says Kuhlman. He notes that Leipsic spent $18 million in the last 18 months to upgrade its infrastructure, which will allow other businesses to follow in POET’s footsteps.


“POET was the catalyst Leipsic needed for the city council and the financing to come together and make infrastructure projects a reality,” says Russell. “Now we have a real good base from which to build industrial development.”





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