Tax Incentives Causing Plant Shutdowns

Hundreds of job seekers at the Liberty Center in Lancaster, Ohio (population 35,353) lined up to apply for several dozen jobs that will be opening when U.S. Corrugated opens it new cardboard manufacturing plant in November.

Ironically on the same day U.S. Corrugated with 20 full service manufacturing facilities in 14 states and 1,000 employees gave notice to its 75 employees at it’s Greensboro, North Carolina corrugated sheet plant that it will be closing down six days later with no reason according to the Greensboro News Record. Like pawns on a chessboard assets are moved around yet in this game the local economy suffers.

The Greensboro plant was established in 1981 and was one of three sheet feeder plants that were owned by the LINPAC Group a U.K-based company. In 2003 the LINPAC Group became a portfolio company of Montagu Private Equity through a debt and mezzanine package from Deutsche Bank.

Private equity transactions through their leveraged buyouts of manufacturing plants has it’s advantages and disadvantages. Lately over the past year many plants owned by private equity have been closing due to sour economic conditions with reasons given such as, “ realignment of capacity in order to streamline processes and be competitive in a global marketplace.”

Six months earlier, in January 2008, prior to the recent Greensboro plant shutdown, LINPAC Inc. a business unit of UK-based LINPAC Group Limited was acquired by Four M Holdings LLC (Four M), an investment vehicle controlled by Dennis Mehiel, also a super delegate in the 2008 Democratic presidential nomination Additionally, in 2004, Mr. Mehiel was New York State Chairman for the Democratic Presidential ticket of Massachusetts Sen. John Kerry and North Carolina Sen. John Edwards.

After the acquisition LINPAC INC. changed its name to U.S. Corrugated, the same private company that acquired Box USA, Solo Cup and The Sweetheart Cup Company. Four M Holdings LLC (Four M ) has completed more than 25 North American transactions in the past two decades.

The economy is very favorable in Lancaster, Ohio, especially when the city is providing U.S Corrugated with a 15 year 100 percent tax abatement, which includes $1 million in incentives. At the state level, are over $500,000 of grants and job-creation tax credits according to news report from the Columbus News Dispatch.

Greensboro, North Carolina is not so lucky as the workers become casualties mired in the investment vehicles sold, traded and acquired as in the recent acquisition that U.S Corrugated completed in March 2008 with the purchase of Anderson Packaging Inc. (API), a Kentucky-based corrugated packaging manufacturer.

2008 Plant Shutdowns Google Map

Photo Credit: Draco2008 @ Flickr

Multitude Combustible Dust Incidents in One Day

Thursday started out as a normal day at many workplaces across the nation. After the lunchtime break, things would begin to change and heat up real quick in a span of two hours across three states. Prior to the clock striking 2:00 P.M. CST, a combustible dust fire consisting of titanium dust flared up in the dust collector at a dental equipment manufacturing facility in Pennsylvania.

In the Midwest, at approximately 2:30 P.M, as firefighters were responding to the titanium combustible dust fire at the Den-Tal-Ez Inc dental facility in Lancaster, Pa, a combustible dust explosion rocked the Farmer's Co-op Society grain elevator in Sanborn, Iowa.

An hour and a half later as events were just getting heated up, the afternoon turned into a leapfrog event as Baldwin Feed and Seed grain elevator in Baldwin, Wisconsin became engulfed in flames. This is very unusual for so many combustible dust related explosions and fires to occur with a span of two hours on the same day. Luckily there were no injuries only heavy economic damage to the businesses.

It's All the Same
Combustible dust is combustible dust. It doesn't matter if it's grain , metal, rubber, plastic, wood, coal, etc. All this dust is generated from a raw product of combustible particulate solids. The only difference in the dusts is the heat of combustion (oxidation), which is a measure of the rate of combustion. Which could range from 1200 KJ/mole O2 for magnesium all the way down to 470 KJ/mole O2 for starch. Proper preventive and costly mitigative measures needs to be instituted with all classes of organic, synthetic, coal, and metals. Until a comprehensive combustible dust standard is instituted more events will occur on a daily and weekly basis.

Since the OSHA grain facility combustible standard was instituted in 1988, occurrences of grain dust explosions have been reduced 30 %, with an average of 14 events annually. Have we reached an acceptable level now with the grain facility standard ? Or should a review of current procedures be in order?

Dust Explosion Research Institute
A Dust Explosion Research Institute (DERI) facility in the United States would be a good move. The time has arrived for all stakeholders in industry, academia, and cooperation with governmental agencies in facilitating the planning stages for a combustible dust research institute. This is not a novel idea, as Norway has done so decades ago at it's CMI facility in close collaboration with the University of Norway.

The results have led to the exciting field of combustible dust computational fluid dynamic (CFD) studies in conjunction with computer aided design. GEXCON, a leading Norwegian research and consultancy in explosion scenarios took over the work of CMI in 2000 and now provides a revolutionary FLame ACceleration Simulator (FLACS) in modeling the dust explosion process.

Combining physical properties of minimum explosive concentrations, minimum ignition temperatures, minimum ignition energy, and deflagration index's into the computer application of CFD will provide a cross spectrum of industries the intricate nature of combustible dusts. Much more research needs to be done as this is only the tip of the iceberg. Question is, will, the industrial powers of our nation be up to the challenge?

For others who are up to the challenge be sure to stop by the GEXCOM booth at the 2008 AIChE Spring National Meeting April 6-10, 2008 Ernest N. Morial Convention Center
New Orleans, La. . Olav Roald Hansen and Kees van Wingerden will be there with demo programs of FLACS and the Dust Explosion Simulation Code, which is the awesome CFD code for simulating the course of industrial dust explosions in complex geometries such as we experience here in the U.S. . Click here for brochure

Click here for FLACS video