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Failed wind turbine plant needed ‘special support’ from the start  

Credit:  Turbine tower operation filed for receivership in 2016, never met job or market predictions | By Michael Gorman, CBC News | Jul 14, 2017 | www.cbc.ca ~~

The Nova Scotia government knew from the beginning that a partnership with a South Korean company in a Trenton plant to manufacture wind turbine towers was going to involve major government support.

“Without special support from the Nova Scotia government, the project may not be economically feasible,” Daewoo Shipbuilding & Marine Engineering Ltd. said during a slide presentation to provincial government officials on Aug. 5, 2009.

CBC received a copy of the business proposal, which included the August presentation and one from June 2009, this week following a 2014 freedom of information request.

Capitalizing on other incentives

The two presentations are heavily redacted, blacking out references to proposed incentives and financial support, the plant’s business model and strategy and financial projections.

But what can be read shows the company was promising major industry growth possibilities, employment and export potential. It also notes federal government support was key to the plant’s success, referring to the “multitude of federal government incentives” and “federal agencies’ support for R&D projects.”

The June presentation outlines a plethora of necessary public sector support, including tax incentives, grants, loans and loan guarantees, import incentives and help with land leases. Other support requested included improving roads, a “special economic zone establishment” and establishing relations with Canadian and foreign universities.

The presentation identifies such risks as the labour union, seniority rights, the takeover procedure and market security.

The business plan overview predicted that “in light of the DSME’s world-class industrial strength, the rapid increase in cost-competitive, high-quality wind equipment will develop Nova Scotia’s industrial sector and accelerate future growth.”

Ultimately, DSME would get most, if not all of what it wanted when a deal was announced in 2010 between the Korean shipbuilding giant and the then-NDP government to create DSTN at the former railcar manufacturer site in Trenton, N.S.

Millions in and nothing to show for it

But none of the promises, most notably the projection of 500 jobs, came close to happening.

Instead, the government poured millions into the operation for which it only had a 49 per cent stake and a minority of votes on the board. Funding included:

• $19.6 million in equity contributions (2010)
• $3.76-million forgivable loan (2010)
• $36 million in other loans (2010)
• $1 million via the manufacturing and processing investment credit (2011)
• $248,000 via the capital investment incentive program (2014)

A briefing note to then-economic and rural development minister Percy Paris in February 2013 noted demand for turbines had weakened due to the global recession, low natural gas prices “and the resulting impact on government policies for mandated renewable energy targets.”

Although the company made attempts to diversify the business, it wasn’t enough to save the operation. In February 2016, DSTN filed for receivership when the province, the only creditor, called a $32-million loan.

Efforts continue to try to find someone to take over the site in Trenton.

Looking for other options

Business Minister Geoff MacLellan said last week that the receiver with PricewaterhouseCoopers continues to negotiate with a potential buyer, but so far nothing has met the requirements.

“If there’s a way to retool or refit that plant to make it functional and have it providing jobs for people in the area, then obviously that would be the priority,” the minister said.

If no plan can be found, MacLellan said the next move will be selling off the assets.

“I still hold out hope that there’s an investor out there, a private sector entity, that would come in [and] take it over.”

Holding out hope

Tory MLA Pat Dunn, whose Pictou Centre district includes the plant, said many others hold that same hope.

Dunn said he talks to people almost every day who are “concerned and worried that nothing may happen” at the plant.

“They wait and wait and nothing happens,” said Dunn.

“I constantly run into young people that are working out west that are working two weeks on, one week off, and they’re willing to come back and work here for a much lesser pay rate, just to be home.”

Source:  Turbine tower operation filed for receivership in 2016, never met job or market predictions | By Michael Gorman, CBC News | Jul 14, 2017 | www.cbc.ca

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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