Monday, June 24, 2013CONNEAUT, Ohio -- There is hope for new jobs, new users for Conneaut’s port on Lake Erie where raw materials and commodities flowed to industry for more than century -- and then there is the recent past.
“We’ve lived through the U.S. Steel plant coming to Conneaut and it didn’t. We lived through the Saturn plant coming to Conneaut and it didn’t, so I guess we’re a little gun-shy,” says Joe Raisian, chairman of the Conneaut Port Authority.
Like Youngstown, Conneaut’s industrial prosperity vanished decades ago with the steel industry. Unlike Youngstown, however, this Ashtabula County town, situated in the northeastern corner of Ohio, population 12,900, has yet to get a bounce let alone a big one like V&M Star, now Vallourec, gave the Mahoning Valley.
“Prospects? We’ve got several,” says Raisian, “but nothing that we’re ready to announce.”
Perhaps by July, says the chief operating officer of the Economic Development Corp. of Erie, Regina Smith, announcements could come regarding one or two companies said to be considering the construction of distribution facilities in Erie County, Pa., reportedly in the Albion and Cranesville areas. Should these projects come to fruition, the companies would be the first to turn shovels as part of the Erie Inland Port project, a proposed regional logistics hub that includes the Port of Conneaut. According to the Erie Times-News, one project is a $300 million iron-ore processing plant; another is a $40 million wood-pellet exporting facility.
The Erie Inland Port project, four years in development by the Economic Development Corp. of Erie, Pa., includes creation of a rail-truck transfer terminal, a rail business park and enhancing the ports of Erie and Conneaut, which combined enjoy less than 1% of the economic impact generated by Great Lakes shipping, according to the Economic Development Corp. of Erie.
Government-funded planning studies have been completed. One market analysis estimates “more than 1,200 importers and exporters in western Pennsylvania may be able to take advantage of cost savings by using one of the components of the Erie Inland Port Initiative.”
Meantime, at the site of the old Pittsburgh and Conneaut Dock Co., where hundreds of workers once manned the docks 24/7, fewer than 50 workers are employed by Canadian transportation giant CN, which now owns and operates the 900-acre dock and rail yard.
The docks process aggregates such as rock or limestone coming in on lake vessels for loading onto trains and trucks that transport the materials to markets in eastern Ohio and western Pennsylvania, says CN’s spokesman, Patrick Waldron. The dock workers also load iron ore brought by the huge freighters to trains destined for steel manufacturers in the Pittsburgh area, and it processes coal loaded from trains to vessels for export.
CN, formerly the Canadian National Railway, employs more than 22,000 in Canada and the United States. The company operates the largest rail network in Canada and the only transcontinental network in North America, according to its website. The company’s Conneaut complex shows up online as a small dot on its extensive network map.
Raisian recalls joining elected officials three years ago for a meeting with CN executives. “We asked them to get off Square One and said, ‘How can we help?’
“We’re hoping to hear some good news soon, possibly 80 more ships docking here and 20% more tonnage,” Raisain says.
“We have the ability to pump two million gallons of water to a industrial site. And we have opportunities to warehouse here – bulk products and container projects,” he adds.
CN announced May 28 that it would invest $33 million (U.S.) at its terminal in Wisconsin to facilitate “the growing frac sand supply chains.”
Raisian is hopeful that the emergence of the oil and gas industry in the Mahoning and Shenango valleys will travel north to Ashtabula County and Crawford and Erie counties in Pennsylvania. But in the meantime, he also looks to the biomass industry to seed future growth. The idea is to export and transport from the Conneaut dock and rail tracks pellets and pulp made in Conneaut from miscanthus grass grown nearby.
But first, a 3-year-old company, Aloterra Energy, needs to obtain the contracts that could convince the financial community to help fund construction of a $35 million miscanthus grass processing plant, potentially in Conneaut, Ashtabula or Erie.
“I’d say we have 80% of this together and we’re just working on the remaining pieces,” says Scott Coye-Huhn, senior vice president for corporate development for Aloterra. ”We’re such a new industry, there are few business, so it’s a much longer, slower process.”
The corporate headquarters of Aloterra is in Texas, where Coye-Huhn’s partners also operate separate businesses that trade commodities and sell fuel. The company’s biomass joint venture uses an 80-acre farm in Conneaut as its “base of operations,” he says.
“Everything we’ve learned, we learned in Conneaut. We see eastern Ohio as becoming a biomass corridor.”
Miscanthus giganteus grass is planted at the test farm as well as on an additional 4,000 acres that Aloterra leases in a six-county region in northeastern Ohio and northwestern Pennsylvania, including acres from a few farms in northern Trumbull County. As many as 50,000 acres could be planted in a 50-mile radius west, south and east of Conneaut, the company estimates.
Aloterra also has planted 14,000 acres at project areas in Missouri and Arkansas. The company employs about 25 year-round, and as many as 100 during the planting season.
Much of the land in Ashtabula County contains heavy silt loam soil that water does not easily move through, which makes it marginal for growing corn and beans, explains David Marrison, the Ohio State Extension educator for Ashtabula and Trumbull counties.
Miscanthus is a noninvasive high-yield perennial with low nutrient and water requirements and can grow up to 10 feet. “Once you plant it, you’re going to have a 20-year production,” Marrison says.
“Because of the marginality of the soil here, it’s going into land that was not being farmed and putting back into production land that was idle,” he continues. “It’s like taking a blighted house and making it livable.”
The U.S. Department of Agriculture has invested $22 million into its Biomass Crop Assistance Program to subsidize the growing and harvesting of miscanthus. About $3.5 million of that amount “went to the Ohio project,” says Aloterra’s Coye-Huhn. The farmers pay his company to plant the miscanthus – USDA paid for the plants that went into the ground in 2011 – cultivate and harvest the crop.
“We’ve invested millions of dollars of our own money in this process and we’ll invest more,” he hastens to add.
Aloterra Energy initially visualized growing miscanthus as a renewable energy source, and when former Agriculture Secretary Tom Vilsack announced the miscanthus grants in June 2011, his focus was on its potential to produce “renewable, homegrown, clean energy.”
But with the shale gas exploration subsequently driving natural gas prices so low, “You’re not going to see that now,” Coye-Huhn acknowledges. “Those types of projects are effectively dead.”
And so, Coye-Huhn and his partners travel the country and into Canada, demonstrating to companies how they might use miscanthus fibers and pellets to produce green products. He offers as examples tissue and paper towels, food packaging, architectural boards, livestock bedding and mulch.
“Our first production facility will be a pellet mill and a pulp plant, and we’ll be selling that pulp to third parties who want to make paper products, but we’ll also be making our own products,” he says.
There is ample land for such a venture in the city’s industrial park on Conneaut’s east end. The site was cleared 20 years ago when a state prison was built there.
The 1,800-bed prison, sold in 2011 for $72.7 million to Nashville-based Corrections Corporation of America, remains the industrial park’s sole occupant. And although CCA’s Lake Erie Correctional Facility and its 230 employees generate nearly $1.2 million in school and income taxes, sewer and water revenues, it has also created demand for transient housing, says Conneaut’s city manager, Tim Eggleston.
“Homes in the city’s inner core ended up turning into rentals, and property owners don’t keep them up,” he laments. “It does change the character of the town.”
What does not change is the beauty of Lake Erie, the influx of tourists and the seven miles of lakefront property where home values are the highest and some mansions have been built in recent years.
“There seems to be some light at the end of the tunnel,” Eggleston says. “People are looking at Conneaut as a good place to do business.”
New retailers and professional offices have opened, “and our chamber membership continues to grow,” says Wendy M. DuBey, executive director of the Conneaut Area Chamber of Commerce.
“I have always felt that Lake Erie holds the key to our prosperity and I applaud city government and the Conneaut Port Authority for all of their efforts to bring tourism and industry to our community.”
First published in the MidJune edition of The Business Journal, Youngstown, Ohio.
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Copyright 2013 The Business Journal, Youngstown, Ohio.