MANISTEE -- Gov. Jennifer Granholm grabbed center stage at the Democratic National Convention by touting Michigan as a jobs creation leader powered by an emphasis on alternative energy development.
Meanwhile, a small group scrambled to secure private financing to manufacture a job-generating, cutting-edge wind turbine in Manistee, a whirlwind effort forced upon them because a state agency quashed their request for a $2 million start-up loan.
The state's refusal to support the wind turbine project upset local businessmen and officials, many of whom question Michigan's commitment to alternative energy efforts.
"Apparently, we don't have the political clout that some other parts of Michigan do," said John Holcomb, operations manager at MasTech Manufacturing Inc. in Manistee, shortly after the Michigan Economic Development Corp. rejected a loan request MasTech sought through the state's 21st Century Job Fund. "We're a little distraught by that ... it looks like politics as usual in Michigan."
MasTech is working with Mariah Power, a Reno, Nev., start-up company that developed a vertical wind axis called a "Windspire."
The unit stands about 30 feet high and operates with three sets of airfoils that catch wind and rotate around a vertical axis. It turns a 20-foot tall rotor that generates electricity, and an inverter converts electricity from direct current to alternating current for residential or commercial use.
The unit can generate approximately 2,000 kilowatt hours per year with average winds speeds of 12-mph, and sells for around $5,000, plus installation costs.
Mariah sought a U.S. manufacturing company to mass produce the appliance, and connected with MasTech through a Detroit-area renewable energy dealer that sells the Windspire. Holcomb said about 50 Windspires are in operation around the country.
Local support, state rejection
Manistee-based Alliance for Economic Success rolled up its sleeves and garnered project support from Manistee's county and city leaders. The group also helped secure a $400,000 federal community development block grant to help pay for equipment upgrades at MasTech to manufacture the wind generator.
Alliance executive director Renee Ihlenfeldt said Mariah was impressed with how the community backed the project.
"They're extremely pleased with what they see talent-wise at MasTech," Ihlenfeldt said. "They know the product, the marketing and the engineering."
Holcomb said the Windspire project would create around 40 new jobs at MasTech's plant -- doubling its current workforce -- and add up to 120 positions over the next three years. The company also is looking to expand into a vacant plant next door.
"We were able to convince Mariah that we were the best fit for them," Holcomb said.
But MEDC dealt the proposal a potentially fatal blow two weeks ago when it rejected a $2 million loan application from the state's much-touted 21st Century Jobs Fund. The Jobs Fund is a $2 billion, 10-year initiative that makes grant and loan money available for companies that do high-tech research and product development.
Its aim: diversify Michigan's economy.
The loan would have funded about half the estimated $4 million start-up costs for the Windspire manufacturing, with the other $2 million coming from Mariah Power.
MEDC's rejection both surprised and perplexed Mariah founder and CEO Mike Hess. He said analysts questioned his business plan as "too aggressive" and challenged the company's sales projections.
"I have orders in hand for 3,400 units" with estimated sales volumes of more than $14 million, Hess said.
He also expressed disappointment that he never had a face-to-face meeting with Jobs Fund consultants who rate proposals for the state.
"I thought I was going to get a chance to stand in front of them and answer their questions," Hess said.
Ohio offer considered
The state's rejection led Hess to consider other manufacturing options, including what he said was a $1.8 million zero-interest loan commitment from Youngstown, Ohio, officials. But he wants to keep the project in Manistee.
"I really like the community. (It) has impressed me to no end," he said. "But in the end, I still have to make the best economic choice for the company."
MEDC won't discuss individual projects, since proposals are covered by confidentiality agreements to protect applicants' proprietary information, spokeswoman Bridget Beckman said.
Applicants can review their project ratings from the consultants who review the proposals, Beckman said. She added that MEDC is in "overdrive" trying to line up other state funds for the Mariah proposal.
But those confidentiality agreements concern some lawmakers who supported the 21st Century Jobs Fund proposal. State Rep. David Palsrok, a Manistee Republican, said nonexistent feedback from MEDC on proposal evaluation and approval makes it difficult to assess the agency's work, as well as the program's effectiveness.
"I'm very frustrated with lack of information from the MEDC regarding this and other projects," he said. "They may have a very strong case (for rejecting the proposal), but that information should at least be shared with the legislators and the locals."
Holcomb said his company scrambled to line up $1 million in private financing to close the funding gap. He's confident the local effort will persuade Mariah to pass on the Ohio offer and set up shop in Manistee.
"Mariah's ponied up, we ponied up, the county and the city ponied up ... everybody's participated but the state," Holcomb said. "I don't have what I need yet, but we have enough to get started."
Manistee County board Chairman Allan O'Shea, a strong advocate for alternative energy development, estimated that local public and private parties invested $500,000 in planning and infrastructure toward the Windspire project.
He's also confident those efforts will seal the deal with Mariah.
But O'Shea also called MEDC's loan rejection "very frustrating," and said the state's actions haven't matched Lansing rhetoric that boasts of support for alternative energy development.
"The question is, are we about fundamental change, or are we about superficial change?" O'Shea said.
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