4A Wichita Falls Economic Development Minutes - 10/21/2014MINUTES OF THE
WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION
October 21, 2014
PRESENT:
Dick Bundy, President
Reno Gustafson
Darron Leiker
Glenn Barham, Mayor
Jim Dockery, Asst. City Manager /CFO
Kevin Hugman, Assistant City Manager
Julia Vasquez, Acting City Attorney
Kevin Pearson
Mike Pepper, President
ABSENT:
Leo Lane
Dave Lilley
1. CALL TO ORDER
§ Members
§ Mayor
§ City Staff
§ Chamber of Commerce and Industry
§ Alcoa Power and Propulsion
§ Members
Dick Bundy called the meeting to order at 4:00 p.m.
2. APPROVAL OF MINUTES (OCTOBER 9, 2014)
Reno Gustafson moved for approval. Seconded by Darron Leiker, the motion
carried.
3. PRESENTATION BY ALCOA POWER AND PROPULSION
Mike Pepper, President of Alcoa Power and Propulsion (APP), thanked the Board for
today's meeting. Most people know the company as Howmet, which was acquired by Alcoa in
2007. APP is a $1.8 billion division of Alcoa, and has 25 manufacturing plants in seven
countries. It is the world's largest producer of gas turbine airfoils, and has 25 manufacturing
plants in seven countries.
He told the story of how Ray Clymer encouraged Howmet's founder, Ted Operhall, to
bring Howmet to Wichita balls. In early 1979, Howmet made its largest single investment ever
in a new plant in Wichita Falls. Today, the company employs 908 people, and is on target to
generate just under $50 million in payroll, and another $15 million in local contracts. This
company has built a product that has deeply penetrated the commercial aerospace market and has
grown tremendously. It has nine years of firm order backlog in commercial air space.
Mr. Pepper is from Wichita Falls, and a graduate from the first class of the engineering
program at MSU. He has spent l I years working in the plant, and has been president of APP for
three years. He is asking the Board today to participate 50150 in an effort taken by his company
to reduce its use of potable water. From average water meter readings over the past 10 years, the
plant uses about 85,000 gallons per day. It has come up with a two -prong attack that should
reduce its water usage by 65 %. It is a combined reverse osmosis plant with a technology that
Alcoa has developed called NEWT, that stands for Naturally Engineered Water Treatment. It is
basically a designed wetlands. They will take sanitary water and clean and polish it for the next
use application. Through the combination of the reverse osmosis system and the NEWT system,
they will create a blended water pool to take back in for their own processed water reuse.
The cost for this process is $2.4 million. The plan will absorb about $26,000 per year in
incremental operating expenses, but Mr. Pepper said he thinks that is the right thing to do to
reduce the environmental footprint of the plant, and to possibly take advantage of any growth
opportunities that might happen. This project would reduce APP'S consumption of water by 13
million gallons of water a year and secure the future of the plant.
The company has announced a $125 million expansion this year; $100 million of that is a
new plant in La Porte, Indiana that produces a component that APP does not produce. The
second expanse is of a plant in Hampton, Virginia, which will produce components very similar
to what APP does produce, but in a new casting technology. This technology will reduce the
weight of turbine airfoils about 20 %, which is a significant cost savings for the airlines.
Estimates on the total market size for this lighter weight turbine airfoil by 2022 are about $225
million. That kind of product that will go into this new technology are the kinds that are made in
Wichita Falls. It is important that APP be positioned to better compete for any new investment.
Mr. Bundy asked how long it would take to implement this system. Mr. Pepper replied it
would take nine months. The company installed a pre - treatment plant earlier this year to deal
with issues of nickel and silver. The building is big enough to hold a reverse osmosis system, and
they have already had site visits with engineering firms to talk about how to site wetlands
technology on the 66 acres.
Mr. Pepper said the estimate is based on final engineering. The technology is already in
use in Saudi Arabia. The company is joint venture partners in the world's largest integrated
aluminum site.
Mr. Bundy asked if the amount requested is a fixed number. Mr. Pepper replied
affirmatively. If there are cost overruns, he will not ask for more money from the WFEDC for
the project.
Mayor Barham asked if the payment needed to be in a lump sum or if it could be spread
out over two years. Mr. Pepper said he would be happy to look at options. Mr. Pearson discussed
typical long -term forgivable loans that the WFEDC has entered into with other companies.
Depending upon negotiations, this would be presented to the City Council for its consideration at
its first or second meeting in November. Mr. Bundy expressed his desire that the agreement be
simplified rather than based on complicated formulas.
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Mr. Bundy thanked him for the presentation. It is something the Board is definitely
interested in. Kevin Pearson told Mr. Pepper he will contact him later with the Board's decision.
Mr. Pepper thanked the Board for their time and attention and left the meeting.
I�NEUMROMUEM
Mr. Bundy adjourned the meeting into executive session at 4:37 p.m. pursuant to Tt:XAS
GoVERNmr--NT CODE §§551.071, 551.072, and 551.087. He closed the executive session and
announced the meeting: back into regular session at 5:09 p.m.
Darron Leiker moved to authorize the expenditure of $1.2 million related to the
construction of the reverse osmosis/NEWT project for Alcoa Power and Propulsion, and
authorize the chairman to negotiate specific terms and enter into an incentive aLyreement.
Seconded by Reno Gustafson, the motion unanimously carried.
Dick Bundy, President
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