The megaloads questions: If we ship it…Will manufacturers come?

Governor joins other backers trying to entice oil companies to explore manufacturing capabilities of Lewiston area

By Elaine Williams of the Tribune
February 27, 2011
Idaho’s governor wants to recruit a factory to Lewiston that could make the type of equipment the oil industry is transporting as megaloads on U.S. Highway 12.

“What I’m interested in is what it would take for the manufacturer to come to Lewiston and build those components,” Gov C.L. (Butch) Otter told those attending a Capital for a Day event in Pierce back in August.

But a recent round of inquiries by the Tribune found publicly backed business recruiters are doing little on that front and numerous challenges would be involved in such an effort.

Click here for a graphic that shows the origin, trips and destinations for all the megaloads.

Asked whether the drums from Japan going to a refinery in Billings, Mont., or the processing modules from Korea going to the Kearl Oil Sands in Canada were available from U.S. factories, Don Dietrich, director of the Idaho Department of Commerce in Boise, said: “I can’t honestly tell you where most of that would come from.”

Dietrich has had conversations with a U.S. company he declined to identify that came to Lewiston once. He characterized its level of interest as “tire kicking,” and too early to know when any decision might be made or how many jobs it would create.

“Any company that does this type (of work) typically employs a fair amount of people,” he said.

Lewiston is the only Idaho city on the company’s list of potential sites that rated a visit, Dietrich said. “In this case, you have a strategic asset, a waterway and the farthest inland port.”

As much as the prospect would need the port, Dietrich didn’t know if its output would create oversized loads, requiring both lanes of traffic when traveling on U.S. 12.

Dietrich, however, advised Lewiston residents to publicly back the current megaloads since the interested company might be following the news and use the community’s level of support as a factor in its planning.

Valley Vision, the organization charged with business recruitment for Lewiston and Clarkston, is also early in its recruitment efforts. Valley Vision Executive Director Doug Mattoon said he is just getting up to speed on what the requirements for such an operation might be.

He’s also involved in initial steps toward that goal. He is backing welding programs at Lewis-Clark State College as well as classes at Walla Walla Community College that teach students how to be technicians on wind turbines.

Such instruction is crucial since companies don’t want to locate in a town where workers lack basic skills needed for their industry, Mattoon said.

Components for wind energy are another variety of oversized shipment that’s surfaced in requests from the Port of Lewiston for federal dollars, but the Idaho Transportation Department has no permit requests for that type of commerce at this time.

Another organization charged with economic development, the Port of Lewiston, has been encouraging haulers of megaloads to use the port since July 2008, according to two applications for more than $1 million of federal money to extend its dock.

The port hasn’t, however, focused on attracting manufacturers. “We are not currently negotiating with anyone along those lines,” said Lewiston port Manager David Doeringsfeld.

Fostering growth of manufacturers that make high volumes of large equipment for the oil industry is tough, said John Rudi, president of Thompson Metal Fab, a company that builds modules similar to those being transported to the oil sands.

The more than 200 modules that ExxonMobil/Imperial Oil commissioned for its Kearl Oil Sands project could have been made in the United States, but the deal likely wouldn’t have been cost effective, Rudi said.

“There’s a huge cost differential,” said Rudi, whose company employs between 300 and 350 in Vancouver, Wash. “They’re going to get it cheaper overseas. That even includes shipping it.”

In at least one instance, the winning bid of an overseas competitor would have covered the cost of the material used, something Rudi said he knows because the material was only available from one source.

Wages in Korea are probably about half those in the United States where environmental and worker safety rules are tougher, Rudi said.

And the extra expense would travel all the way to the gas pump, he added. “We, as consumers, are going to pay more down the pipeline.”

Capacity is also an issue. His company likely could have handled the project but only in cooperation with his competitors in the Portland, Ore., area, since alone his company might be challenged by the volume. “We have done this work in the past,” Rudi said. “If they really wanted to execute the work here they could.”

In such an environment, Thompson Metal Fab has pursued a variety of strategies. It bids highway projects that give preference to American manufacturers. It also serves businesses that might need 10 or 20 modules and would likely have to wait a long time if they went to a company that had a number of much larger customers.

In the absence of bringing the industry to north central Idaho, the economic impact of the megaloads so far appears to have been limited to hotels and restaurants, with some exceptions.

TGM Investments at the Port of Wilma had a contract for fabricating metal pedestals that the megaloads sit on when they’re transported on barges on the Columbia and Snake rivers and when waiting at the Port of Lewiston to go on U.S. Highway 12, said Gaylord Newbry, an owner of the business.

That work took about two months and involved a business that painted the pedestals as well as another that did welding, Newbry said.

A crew of seven people from TGM helps the barges with the megaloads tie up to shore and orchestrates the movement of water in internal tanks so the barges stay flat as the huge pieces of equipment come onto the shore, Newbry said.

Americans, Rudi believes, could shoulder even more of the labor. “The bones are there. The work force is quite capable of doing it.”

Williams may be contacted at [email protected] or (208) 848-2261.