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Serving Northern St. Louis County, Minnesota

Hoyt Lakes siding plant

A hopeful development, but facility remains a long way from a done deal

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The possibility of a new Louisiana-Pacific wood siding plant on the East Range is certainly welcome news. The company’s analysis shows a growing market for their engineered wood product and that could mean permanent and sustainable jobs in the region, both for plant workers as well as the struggling logging industry. If this project happens, the economic boost would be significant.

Yet residents of the area have certainly learned to temper their enthusiasm whenever the Iron Range Resources and Rehabilitation Board announces another potential project. We’ve seen the headlines so many times before. Company names like Segentis, Excelsior Energy, Essar Steel, Endotronics, Technimar, and others all received significant fanfare when first announced, only to fizzle, leaving disappointment and, sometimes, unpaid bills in their wake.

That seems less likely in this case, in part because Louisiana-Pacific is a major company with strong revenues, not to mention a history of successful plant operation in Two Harbors. If the company decides to move forward in Hoyt Lakes, it’s likely to be a success, and bring 250 permanent direct jobs and 500-600 indirect jobs, mostly in the logging sector. It would particularly help loggers in northeastern St. Louis County, where the loss of the Ainsworth plant near Cook has meant an exceptionally long haul to remaining wood buyers in the Arrowhead. A Hoyt Lakes plant would easily cut most hauls from this region in half.

The company did consider the former Ainsworth plant, but a variety of encumbrances on that facility made it too difficult to do a deal at that location. That’s unfortunate, and suggests that work needs to be done to clear the way for future development there.

In either case, we’re still a long way from the end zone at this point. While company officials have identified Hoyt Lakes’ Laskin Energy Park as their top pick in a continent-wide selection process, there’s still plenty of work to do before the company will make a final decision. Company president Brian Luoma said that decision may not come before early next year.

IRRRB officials set a reasonable tone regarding the plant, emphasizing that while the company is leaning toward the Hoyt Lakes site, this isn’t a done deal by any means. The public needs to view the project in that context.

The public also needs to recognize that this project, if it ultimately moves forward, will require a significant public investment— about $30 million just to prepare the site for the plant, not to mention an additional $36 million in other financial incentives.

Unfortunately, given the premium on manufacturing jobs these days, states and provinces are constantly competing to land big employers like Louisiana-Pacific, and that means Minnesota has to provide incentives. And a $66 million public price tag would seem to be a reasonable investment to land a $440 million project offering long-term employment.

IRRRB officials say any agreement on site preparation will require the company to reimburse the state for any funds expended if the plant doesn’t go forward. That’s good, but as the Essar project revealed, enforcing such agreements can prove difficult, so due diligence is definitely in order.

One thing is certain. The IRRRB has learned from past mistakes and has generally included more protections in its agreements with companies over the years. Failure is always disappointing, but it usually provides a learning opportunity. And failure, it must be noted, is not uncommon in the economic development field. Lots of things have to align to actually implement a major project. When it happens in the private sector, the public rarely hears about it. When it happens at the IRRRB, it makes the news— as it should. Hopefully, the siding plant will prove to be one of the success stories.