October 20, 2014

State gives economic development incentives to Sioux City, Ankeny, Dubuque

IDEDThe Iowa Economic Development Authority (IEDA) board today approved state incentives for a food plant, an insurance firm and a railcar maintenance facility. IEDA spokesperson, Tina Hoffman, says the railcar facility will be built in western Iowa.

“Trinity Industries is going to be building a new facility in Sioux City and creating 250 jobs as part of that. This project has a capital investment $29.5 million,” Hoffman says. “They will have an operating facility to do railcar maintenance, to do railcar remanufacturing there have been some new regulations that have gone into effect that really are demanding a reworking of railcars. So, that’s and industry need and this is a great project for Sioux City.”

The company won an award that is specific to cities on Iowa’s borders. “We actually have 5 around the state that are able to use this program, and over the course of the next 8 years as these jobs are created by Trinity Rail, they could receive $1.9 million, based on the jobs that are created,” Hoffman explains.

The program involves the taxes paid by the new workers, as Hoffman says the withholding taxes of the new employees at the company are diverted back to the company as the new jobs are created. The company says 160 of the new jobs will pay around $17 an hour.

Another award went to an eastern Iowa company for insurance services. “Kunkel and Associates is an insurance consulting firm that is going to do a project in Dubuque. It will be an expansion for them and will have a capital investment of $2.4 million, and will create 18 new jobs,” Hoffman says.

The board awarded them a $128,000 half-loan, half-forgiveable loan under what’s called the “High Quality Jobs Program,” along with some tax credits. The company promises to create at least 16 jobs of the 18 which will pay more than $20 an-hour.

Mrs. Clark’s Foods in Ankeny also won state incentives today. “This is a $7.3 million project that would add an additional 69,000 square feet for warehousing and refrigeration. The board awarded them tax benefits through the high-quality jobs program and that will help them create 13 new jobs,” Hoffman says.

The jobs will pay $25.52 an hour. Mrs. Clark’s Foods makes fruit and vegetable juices, salad dressings and other sauces.

 

Gas prices drop below $3 in most parts of the state

Gas-pumpDropping oil prices are partly responsible for a drop of prices at the gas pump. Department of Agriculture analyst, Harold Hommes, says a lot of the state is seeing gas for under three bucks a gallon. “Right now we’re finding things are fairly varied. We do have some in the low three’s yet, but most of the gasoline has crossed the $3.00 mark and has fallen into that two-70 to two-90 mark,” Hommes says.

He expects prices to continue to drop. “I do look for that trend to continue, there’s a lot of downward pressure right now on crude right now from the general economy, and recently, European recession woes,” Hommes says. He says one of the biggest factors is the substantial build up of crude oil stores. “We are producing a lot of it, and most storage hubs are sitting on ample supplies and inventories.”

Switches in production to produce heating oil can make the price go up, but Hommes says that’s no long a factor. “The heating fuel production, it’s really already occurred. And I think the industry is ready to move that and has been moving it through pipelines. It’s pretty much placed where it needs to be placed for this winter,” Hommes says.

While the gas in your area may be under the $3.00, others may still be paying much more. Hommes says there can be wide variations on price, and sale philosophy and location are a couple of keys for the differences. “Some retailers have a bit wider margins. Some focus on narrower margins to attract customers in for other products,” Hommes explains. “But maybe the single biggest factor is location. When you’ve got to drive more than an hour to get your product from a terminal, those costs add up.”

He says competition can also be a factor in gas pricing. “And in most places in Iowa we do have that competition,” Hommes says. He says when there are a lot of stations in one area, it is hard to not match a station that drops its gas price, as customers can quickly move to the lowest priced station. Crude oil prices dropped nearly $6 or more this week — leading to the drop in gasoline prices.

The Triple-A average price for regular unleaded gasoline in Iowa Tuesday was $3.03. That is down nine cents from last week and down 25 cents from one year ago.

 

Winnebago reports increase in quarterly sales

WinnebagoQuarterly sales surged for Winnebago Industries as the Forest City-based RV maker reports a 22-percent jump in net income to nearly $13 million and delivering more than 700 motorhomes above the same quarter last year.

Net income for the fiscal year grew 41-percent to $45 million. Winnebago CEO Randy Potts says the company is seeing success after the impact of the recession. Potts says the company will be most effective and efficient if it can grow the business at a measured and predictable rate. He says he wants to continue to grow the company beyond where it is now, but to do it profitably and effectively, it’s best done if there’s a gradual increase.

Pottsthinks the market is settling into that pattern. Potts says with the market increasing in size slowly, the company getting a bigger piece of the market is what’s going to create sustained growth. Potts says the demand continues to be up for the company’s motorhomes as well as towable units.

“The towable market fully recovered to pre-recessionary levels, be we still have for Winnebago specifically, we still have great opportunity in the towable market because we just go into it. On the motorized side, that market is still below prerecession levels and likely still in a recovery mode,” Potts says.

Potts says the company’s motorhome backlog fell about 44-percent during the quarter as production rates rose. He says backlog is watched, as it’s an indicator of the strength of your business. He says the company has stated in the past that too much backlog is a bad thing since it means you’re not filling your orders in a timely manner, while not enough backlog is also a bad thing.

Potts says the company is right now in a “sweet spot” with its backlog level, being able to fill backlogs in a reasonable amount of time. The company’s board of directors this week approved the reinstatement of a quarterly cash dividend of 9 cents per share to holders of common stock.

Potts says it signals the company expects stability and growth in the business going forward. He says you don’t want to declare a dividend if you can’t sustain it, so that’s the message it sends to the stockholders. He says coming through the recession and recovering, with Winnebago outperforming the RV industry as a whole, gives the company the confidence to reinstate the dividend.

Data from the Recreation Vehicle Industry Association shows motorhome shipments in the third quarter of 2014 reached the highest level since 2007.

(Reporting by Bob Fisher, KRIB, Mason City)

Sears store in Fort Dodge mall closing

After 50 years in business, the Sears store at Crossroads Mall in Fort Dodge will close its doors in mid-January, one of three Iowa stores being shuttered. Sears was one of the first stores to open in the mall in 1964.

The closing was announced Wednesday to its employees. Corporate officials at the Hoffman Esates, Illinois firm said the closing of the Fort Dodge Sears store is part of a series of closures across the country including the K-Mart stores in Ames and Clive. Sears has stores in 30 locations across Iowa.

A liquidation sale of the Fort Dodge store will begin later this month. The Fort Dodge Sears automotive center closed in September.

(Reporting by Pat Powers, KQWC, Webster City)

 

Analyst finds natural gas prices increasing as cold weather approaches

Most Iowans heat their homes with natural gas and they’re facing a good news-bad news situation as the colder months approach. A report from the American Gas Association predicts there will be a relatively “normal” winter ahead, but it also notes natural gas prices are creeping up.

Chris McGill is a policy analyst for the association. “It doesn’t appear, according to the National Weather Service, that we’re going to have a repeat of the ‘polar vortex’, so a more moderate, more normal winter this year,” McGill says. “However, the price of natural gas, the unit cost of natural gas for consumers, has been going up over the last couple of years.”

That will likely translate to Iowans facing more expensive utility bills in the coming months. McGill says, “With the increase in costs along with a perhaps-normal winter, we actually see the possibility of bills being about 7% higher this year, compared to last year.”

Demand for natural gas remains very high but he says there should not be any shortages. “Supplies are very strong,” McGill says. “We’ve been putting record volumes of natural gas back into storage, planning for the coming winter heating season. Natural gas supplies in North America in general are very strong.”

A report from the U.S. Census Bureau estimates 67 percent of Iowans use natural gas to heat their homes, 15 percent use electricity, 14 percent use propane, and the rest use wood or fuel oil.

 

MidAmerican plans to expand its wind generation

wind turbine

wind turbine

Iowa’s largest utility company announced plans today to add 67 more wind turbines in the state, producing an additional 162 megawatts of wind energy. MidAmerican Energy president and CEO Bill Fehrman says the project includes the construction of a new wind farm in southwest Iowa’s Adams County.

“It will add 153 megawatts of wind generation capacity and consist of 64 turbines,” Fehrman said. “The construction jobs related to this will be approximately 200 and then once construction is completed, it will result in 10 additional jobs in the Adams County area.”

Three more wind turbines will be added to an existing project in northwest Iowa. “Those three turbines will be added in O’Brien County and will bring the total megawatts to 502 at that project, which will be the largest single wind site in the state of Iowa when completed,” Fehrman said. This new $280 million investment in wind generation follows MidAmerican’s $1.9 billion wind energy project announced last year. Fehrman said the company is not requesting any state incentives for this new project.

MidAmerican started building wind farms in Iowa 10 years ago. “At the conclusion of this project, we will have invested over $6 billion in wind generation in this state,” Fehrman said. The blades for the 67 new turbines will be made at the Siemens plant in Fort Madison.

MidAmerican has partnered with Siemens Energy on past projects as well. “They build an exceptionally high quality product and they’re the lowest cost provider for us on these projects,” Fehrman said of Siemens. “We don’t automatically go to Siemens. They have to compete along with (other companies) and they’re very successful in what they do.”

If the plans for this new project are approved by the Iowa Utilities Board, Fehrman expects construction would begin in Adams and O’Brien Counties in the spring of 2015. Coupled with projects currently underway in Grundy, Madison, O’Brien, and Webster Counties, Fehrman projects MidAmerican will have 3,500 megawatts of wind generation capacity in Iowa by the end of 2015.

That’s enough power to provide energy to approximately one-million Iowa homes.

 

Propane association doesn’t expect price spike repeat for LP

Energy suppliers say there’s plenty of liquid propane available for Iowans to heat their homes in the winter ahead. Deb Grooms, executive director of the Iowa Propane Gas Association, says a series of events last year led to a record spike in prices, but they also will mean a better plan this time around.

“Everybody was harvesting at the same time throughout the Midwest and then it got cold right away, so we didn’t have the build of propane up the terminals like we had,” Grooms says. “Few people expected they were going to have to dry corn because it had been a dry summer and it surprised them when they got into the fields and found out they were going to have to do a lot of drying.”

Farmers need to dry the grain before it’s stored so it doesn’t spoil. Grooms says that extra pressure on LP supplies last October caused a shortage for residential customers. Grooms says those residential customers were told to top off their tanks this summer.

She says farmers got the same advice from Ag Secretary Bill Northey. “He actually sent out a letter to the farm organizations back in July and was suggesting to them to make sure their propane supplies for grain drying and livestock facilities were full going into the fall season,” Grooms says.

Governor Branstad declared an energy disaster last fall when farmers throughout the Midwest used a record amount of the fuel to dry their corn so it could be properly stored. That depleted supplies for home owners who were forced to pay record high prices topping $5 a gallon.