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4A Wichita Falls Economic Development Minutes - 03/16/20101 MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION Present: Gary Shores, President Dick Bundy Dave Lilley Lanham Lyne Gary McLendon Charles Elmore, Liaison March 16, 2010 § Members § City Council Darron Leiker, City Manager § Miles Risley, City Attorney § Jim Dockery, CFO /Assistant City Manager § Kevin Hugman, Assistant City Manager § Linda Merrill, Recording Secretary § Tim Chase, President Kevin Pearson, Vice President § Chamber of Commerce & Industry Hank Rugeley, Davison Rugeley § Warren Ayres § Attendees Mark Stuebe, Wichita Clutch (via telephone) § 1. CALL TO ORDER President Gary Shores called the meeting to order at 4:02 p.m. 2. APPROVAL OF MINUTES (2/22/10) Lanham Lyne moved, seconded by Gary McLendon, to approve the minutes. The motion carried. 3. WICHITA CLUTCH 1,500 HP TEST STAND UPGRADE Kevin Pearson noted that Wichita Clutch and the WFEDC have entered into two Memorandums of Understanding: the first (in 2002 -03), resulted in the 21 new jobs when Industrial Clutch was transferred to Wichita Falls; the second (in 2006) resulted in the training and employment of 25 employees. They were on the payroll for three years, but some were let go due to the recession. He then placed Mark Stuebe, General Manager of Wichita Clutch, on speakerphone. Mr. Stuebe said that the company's products have gotten larger over the past few years. Their current products range in size from 6 to 60 inches. Twenty years ago, most were in the 6 to 14 inch range. The average product size now is 24 to 42 inches, and their current test stand can test only up to 18 inches. They need to purchase a 1500 Hp variable speed motor test stand in order to provide solid test data to promote its products. l o Mayor Lyne asked if the test stand would allow for testing of 60 inch products. Mr. Stuebe said the test stand will only test up to 42 inches; they do not have enough product at 60 inches to justify that investment. Mr. Shores asked for assurance that the company will not need such a test stand five years from now. Mr. Stuebe said he does not feel this will happen. Mr. Shores asked if this would increase the company's business, or simply serve its existing customers. Mr. Stuebe said it would allow them to provide test data to large drilling rig manufacturers and contractors. Wichita Clutch is requesting $440,000 to cover the equipment purchase and the installation costs. The main investment is the electric motor and the controls package. It will cost $100,000 for an electrical contractor to install the large power source; Wichita Clutch will hire a local contractor. The rest of the rigging will be done in -house at a cost of $75,000 to $100,000. It would take six to eight weeks to have the test stand operational from the date of purchase. The purchase of the test stand would create two jobs immediately. They would hire a design engineer, and add a lab tech to run the equipment on the first shift. As they build up testing abilities, they would hire additional lab techs to run on the other shifts. Mr. Pearson asked what would happen if the 4A Board chose not to fund this request. Mr. Stuebe said he wants to standardize testing in one facility. Wichita Clutch is contractually obligated to have a test facility in Waukesha. They have a test lab in Bedford, England, and that community has submitted a proposal. If it is not located in Wichita Falls, the company would cut 50% of its eight engineers at the plant (average $70,000 salary base). Mr. Pearson said he would contact him with the Board's decision. 4. 411ENG SOLAR PANEL DISTRIBUTION PROJECT Mr. Pearson noticed that a footnote to the company's business plan referenced an SIC code that corresponds to a NAICS code for solar installers (rather than distributors). Therefore, this project does not qualify as a primary jobs creator for purposes of 4a funding. It is looking at acquiring a solar panel manufacturing company in Richardson, which could possibly qualify for funding. 5. EXECUTIVE SESSIONS President Shores adjourned the meeting into executive session at 4:25 p.m. pursuant to TEXAS GOVERNMENT CODE § §551.071, 551.072, and 551.0871. He announced the meeting back into I Executive Session in accordance with Texas Government Code § 551.071, consultation with attorney on matter involving pending or contemplated litigation or other matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Texas Open Meetings Act (including, but not limited to, legal issues related to potential projects for the development retention, or expansion of clutch manufacturing, aircraft manufacturing, washing machine manufacturing, medical device refurbishment, solar panel distribution, teleservice operations, coating manufacturing & distribution, heat exchanger assembly and manufacturing, and projects with other entities named in this agenda for creation and retention of primary jobs (as defined by Tex. Local Gov't Code § 501.002)). Executive Session in accordance with Texas Government Code § 551.072, to deliberate the purchase, exchange, lease, or value of real property interests due to the fact that deliberation in an open meeting would have a detrimental effect on the position of the City in negotiations with a third party (including, but not limited to, the purchase and/or value of various real property interests to be used for incentive agreements with aircraft manufacturing project, air conditioner manufacturing project, and projects with other entities named in this agenda for creation and retention of primary jobs (as defined by Tex. Local Gov't Code § 501.002)). regular session at 5:23 p.m. He noted that the subjects described in Footnote 1 were deliberated, and no action was taken on these subjects in executive session. Tim Chase said Natura has hired 20 folks, and will begin to manufacture gel this Friday. Kevin Hugman distributed an updated financial report; showing the last approvals made. 6. ADJOURN The meeting adjourned at 5:37 p.m. AGAR HORES, PRESIDENT Executive Session in accordance with Texas Government Code § 551.087, to discuss or deliberate the offer of a financial or other incentive to a business prospect that the WFEDC seeks to have, locate, stay, or expand in or near the territory of the City of Wichita Falls and with which the WFEDC is conducting economic development negotiations (including, but not limited to potential projects for the development, retention, or expansion of clutch manufacturing, aircraft manufacturing, washing machine manufacturing, medical device refiubishment, solar panel distribution, teleservice operations, coating manufacturing & distribution, heat exchanger assembly and manufacturing, and projects with other entities named in this agenda for creation and retention of primary jobs (as defined by Tex. Local Gov't Code § 501.002)).