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VOL. 37 | NO. 26 | Friday, June 28, 2013

The Queen City plays its Ace

Hemlock would have been a disaster elsewhere. But Clarksville’s robust economy has Fort Campbell at its heart, helping it become one of the fastest-growing cities in the nation.

By Tim Ghianni

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The bluffs that lift much of Clarksville high above the Cumberland River could be some sort of literal fiscal cliff if those who predict the worst are to be believed.

City folks talk about the lost promise that was Hemlock Semiconductor, a billion-dollar-plus facility that was expected to employ at least 500 permanent workers. That planned production of polycrystalline silicon for the manufacture of solar cells and semiconductor devices was hailed by city and state officials as being a hub of high-tech development in Montgomery County. But it basically died before it got going, with 300 jobs eliminated earlier this year.

The site, with its skeleton staffing, is the elephant in the room when citizens talk about promise and disappointment.

“Moving forward … our Tennessee facility will focus on safely maintaining the site for eventual production,” according to a press release from Dow Corning and Hemlock Semiconductor public affairs.

Instead of an oasis of high-tech and high-pay employment, fewer than 100 employees are on staff this summer in this maintenance mode, company spokesman Jarrod Erpelding says.

If that was the uppercut to the chin of the city’s economic growth, the U.S. government followed with a quick left jab.

Ongoing confusion about the Washington funding crisis – the so-called fiscal cliff-turned-debt ceiling-turned sequestration – is having an uneasy affect at Fort Campbell, the massive Army post that’s tucked up against Clarksville as it straddles the Tennessee-Kentucky state line. Worries about the loss of building projects on post, as well as elimination of services and civil service jobs, added to the economic funk that settled in on some city residents.

Fort Campbell, the 101st Airborne Division – and the Clarksville-area economy – also dodged a figurative bullet this week when sweeping troop cuts of active-duty combat brigades and other force reshuffling moves were announced in Washington, D.C.

The impact at the post on the Tennessee-Kentucky border will be minimal, according to a Fort Campbell source, who said the post is going to lose the 4th Brigade Combat Team, but the troops themselves will be going nowhere.

The unit will be broken up and redistributed to other brigades, with “no real loss of personnel” at Fort Campbell, the source added.

The Montgomery County Courthouse stands high above the Cumberland River in Clarksville.  The city, Tennessee’s fifth-largest, continues to grow despite recent economic setbacks.

-- Lyle Graves | Nashville Ledger

Concern remains as to what Hemlock and the possibility of sequester-induced furloughs could do to the boom that is illustrated by U.S. Census Bureau figures. The Clarksville MSA (including Montgomery County in Tennessee and Christian and Trigg in Kentucky) was the second-fastest growing in the country, with a 3.7 percent population increase from July 2011 to July 2012.

During the same period, the city of Clarksville (population 142,519) itself was the fifth-fastest growing in the United States, with a 4.43 percent population growth rate, according to the Census.

Larry Schmidt, a lifelong Clarksvillian who spent decades as a journalist before going into the mortgage business at Legends Bank on Wilma Rudolph Boulevard, summarizes the impact of recent events as well as the concerns for the future in his hometown:

“The biggest impact I have felt has been from the Hemlock debacle,” he says. “I had several customers who I had pre-qualified for mortgage loans and who were looking for homes when the shoe dropped.

“I also have some Hemlock folks who had bought homes in the price range for their jobs, and then got the permanent layoffs,” he adds.

He doesn’t see as much impact from the sequester at the post, he says, pointing out that, as he understands it, the U.S. government is scaling back pay via furloughs rather than “a total elimination of wages.”

Then there’s Bill Orgain, president of the deeply rooted Orgain Building Supply near the foot of the bluffs, who truly laments what the scaling back at the post could mean in terms of dollars lost.

“They have been spending a ton of money out there,” he says of the construction at Fort Campbell. “They have been in a growth cycle for several years. It looks like a big city out there.

“I’m sure the billions they are cutting out of the military budget is bound to have an effect on the remodeling” – and, thus, the need for building supplies.

Orgain, who also was hit by the Hemlock snafu, says during the remodeling of family quarters at the post, “We supplied the insulation, doors, drywall, garage doors, things like that.”

Cutting back on such building “could definitely have an impact on our business,” he says. “Not to mention if they start cutting out the civil servants. That’s taking that many people out of the pool who would be losing money they might have [had] to buy homes and remodel.”

Not all predictions are dire. And anyone driving up Madison Street to downtown and then up Fort Campbell Boulevard to the post can see that it’s hardly a depressed economy. And that’s not even mentioning the growth in the St. Bethlehem and Sango communities and elsewhere.

“They have been spending a ton of money out there,” says Bill Orgain, president of Orgain Building Supply, referring to the boom in construction at Fort Campbell. “I’m sure the billions they are cutting out of the military budget is bound to have an effect on the remodeling.”

-- Lyle Graves | Nashville Ledger

Besides that, the city has come back before after the loss of industry and its money influx.

Historically, “The Queen City of the Cumberland” rose to glory as the world’s preeminent tobacco exporting port back when smoking was cool. And tobacco had an important spot in the economy up until the last decade or two.

Now the tobacco auction floors are long-closed and the smell of leaves being dark-fired in smoky barns surrounding the river valley is, for the most-part, “good-old-days” romantic memory.

The problem is not that the city and county has failed to rebound from economic setbacks. After all, Fort Campbell’s soldiers and families and the military retirees prop up the community’s economy, a luxury other cities lack.

But the status quo was prepared to explode when Hemlock, with its high-tech jobs and affiliated growth that would accompany it, opened.

Orgain says the pulling of the plug – at least for now – at Hemlock hurts those in the building industries.

No, he didn’t make much money off the actual plant and facilities construction.

“We sold them a little bit of stuff as far as the plant construction,” he says. “But it really wasn’t much. The majority of it was steel and concrete, and really on a project that size, most of those deals are worked before they ever come to town” and contractors already had their suppliers lined up.

The hopes were brightened by the gold rush of money being spent by workers when the plant was being constructed.

“When you are filling up the hotel rooms with the workers, it was helping the Clarksville economy,” says Orgain.

Local engineer David Smith – who has been involved with Hemlock – echoes Orgain in calling the temporary construction workers a great thing for the economy.

“Most of the workers were from out of town, most of the construction industry was from out of town, so we got a tremendous influx of cash for two or three years,” he says, pointing to the housing and dining needs of those temporary residents.

Orgain says “what would have helped is if they had continued on and started hiring people, those people moving into homes and others being built. That would have helped.

While about 65-70 percent of her clientele remains active and retired military, Realtor Valerie Hunter-Kelly notes that the loss of the Hemlock facility will have an impact. “In the last four years or so, there’ve been several communities built in the $300,000-and-up range. They may be affected because Hemlock didn’t come in.”

-- Lyle Graves | Nashville Ledger

“They were supposed to get 200 administrative, 200 engineers on staff and another 300-400 on the assembly line. And those were good-paying jobs.”

He just shakes his head at the notion the plant was shelved because of a volatile market and a glut of the material it was to have produced.

“You’d think that someone that is building a billion-dollar-plus plant would look at the market and see where the market is on those items they are manufacturing and say ‘Boy, this isn’t a good idea’ and give it some forethought.”

He says he believes eventually the plant will open. But he has questions.

“What I’d like to know is all the concessions that our state and local government has put in them: Are we ever going to be able to recoup the tax cost? Now we aren’t seeing any of the benefits of it.

“I know for a fact TVA put in the infrastructure, and they were going to be using more electricity than the whole city of Clarksville,” Orgain says.

He does not buy into the “second-fastest-growing” metro area moniker (or even “fifth-fastest” city) laid on Clarksville, either.

“I really don’t believe it,” he says. “But I know we’re a lot better off than some of the surrounding cities. Some of them are still in recession.”

His business began a three-year downward spiral in 2007, but last year he saw a 25 percent increase in sales. Still, he says, his company is “nowhere near” the level of business prior to 2007.

He’s cut his sales force and trimmed expenses.

“It’s been a tough row to hoe and a lot of people are in those circumstances,” he says.

That row became even tougher with the sequester.

Clarksville’s economy has greater stability than many others because of the housing for active-duty Army families, as well as for military retirees and their families who stay in the area.

The area also is seeing retired parents of active-duty soldiers moving to the area to be near and help with grandchildren.

The Maynard Mathematics and Computer Science Building is one of many new structures rising on the Austin Peay campus, which is being touted as the fastest-growing four-year university in the state.

-- Lyle Graves | Nashville Ledger

For example, during the last full deployment of the 101st Airborne Division (Air Assault) – Fort Campbell’s Screaming Eagles – many military spouses stayed in Clarksville and either maintained their homes or in many cases shopped for new ones for when their partners came home.

The economic collapse that can come from such deployments – historically spouses have “gone home” during long deployments – was thus pretty well averted.

Because of the military demographic – 30,000 active-duty soldiers and 55,000 family members – and their housing allowances, the city’s builders have focused on three-bedroom, two-bath homes with at least a one-car garage and price tag between $150,000 and $175,000.

The soldiers and their dependents, as well as military retirees, can find comfortable living in the many upper-middle-class developments that have sprung up around the city.

Valerie Hunter-Kelly targets this demographic from her Keller Williams Realty office, also on Wilma Rudolph Boulevard.

She knows the military mindset and needs because her husband, Mark, who handles the administrative end of things at the business, retired as a full colonel after 26 years in the Army.

When the agency was opened 23 years ago, Hunter-Kelly dubbed her staff and the agency “The Air Assault Team,” playing on the specialty of finding homes for the post’s rappelling-from-helicopters warriors and their families.

About 65-70 percent of her clientele remains active and retired military, she says, noting that as a military spouse who knew the challenges of constant relocation and raising a family literally from pillar to post, gave her insight into those specific needs.

But she’s been in business long enough now to appeal to the civilian market, as well.

“We are a local business,” she says.

And, despite the economy’s partly cloudy forecast, her business has continued to thrive.

“The most active part of the market is still in the $150,000 price range and below, but on March 1, we started seeing $200,000 and above listed and, if they are priced right and in immaculate condition, we are seeing them selling.”

Since she deals in resales primarily, she doesn’t really speak to the impact of the sequester and the Hemlock woes on the many new construction subdivisions that were being hatched.

“In the last four years or so, there’ve been several communities built in the $300,000-and-up range. They may be affected because Hemlock didn’t come in.”

The Air Assault Team is now focused on whatever federal decisions – or lack of same – are made regarding spending at Fort Campbell.

Before the word “sequester” started getting tossed around, the post’s 8,000 civilian employees were confident enough to buy, build or upgrade their residences rather than renting.

“I talk to people who are involved in (civilian employees). They talk about the furlough. There’s a little worry, because it’s just up in the air and so unknown,” Hunter-Kelly says.

In an attempt to reassure those employees and others who could be affected, Col. David “Buck” Dellinger, garrison commander, has held a series of Town Hall meetings and media briefings at the post. He has had a noticeable lack of “news” to deliver as the squabbles in D.C. play out.

A press briefing scheduled for mid-May was canceled because there was no new information to share.

Meanwhile, engineer Smith, whose DBS & Associates was very involved in the first phase of Hemlock construction, says time has been on his side.

The work for Hemlock “came along just as the (national economic) crash started,” so his crew even added more temporary staff to deal with the demands of that massive project.

His company deals in residential subdivisions in addition to commercial and industrial construction, and he says “residential is better now than it has been.”

In fact, he maintains that the loss of the plant “realistically is having a very small impact. I think emotionally or mentally, there are some downtrodden thoughts.

“No, we are not getting the great benefits we would have gotten, but we haven’t lost anything,” he says.

Yes, he says, it would have been great if the plant had become a bustling concern rather than a ghost town.

“It would have had a very positive impact on our economy, but you can’t lose something you never had.”

As for the Fort Campbell situation, well, he’s not seeing sequester gloom and doom there, either.

“There are going to be some people negatively affected, especially those who are going to be losing their jobs one day a week, but it doesn’t seem to have a major effect on our economy.”

Judy Backlund, manager of Advance Till Payday cash advance store in Oak Grove, Ky. – just north of the Kentucky state line from Clarksville and across the highway from the post – says that while active-duty military can’t use her services, civil service workers and military retirees do.

She does expect to see an impact on the civil service workers if the furloughs go into effect.

“If they cut them one day, they’ll go down from 40 to 32 hours, and they may have to use check advances for awhile,” she says.

“But they still are going to be better off than Joe Schmoe down the street who doesn’t have that kind of job. A lot of them (civil servants) make $17 an hour or more.”

The worry is trickling down, she says: “We are opening up a lot of new accounts.”

Lifelong Clarksville businessman Freddy Wyatt of BFS Insurance Group on Madison Street says he, like most business people, embraces the military for what it has done for the local economy.

“I don’t know what the town would be like without the military base in our corner,” he says. “It’s helped sustain our growth.

“They are homeowners and automobile owners. They have children.”

Wyatt – who 40 years ago ran a string of Sack-N-Pack convenience stores in the city and offered up the best inch-thick bologna and hot sauce sandwiches to his blue-collar and tobacco-staking clientele – well remembers how the city was before the post growth exploded.

“Years ago, there was a handful of general contractors,” he says. That number expanded, largely thanks to the fact the Army personnel and retirees were buying houses. “That caused the framers and carpenters to become general contractors.”

He does fear the sequester and how it could slow some of those contractors, but he’s generally confident that things will not turn as bleakly as they are being painted in Washington.

There’s disappointment in his voice as he talks about the heady early days when Hemlock promised the moon and more to the Queen City’s residents and political leaders.

“I think everyone was real proud it was coming and there was some movement. Maybe some retail outlets decided to come.”

But he’s like engineer Smith in his views that you really can’t lament what you never had.

Sure there was a local glow at the announcement, but “because it never did happen like it was going to, there wasn’t a real backset.”

Watching all of the activity in Clarksville from just a few miles up U.S. 79 is Bill Longhurst, proprietor of Longhurst General Store on Ewing Street in downtown Guthrie, Ky.

A glass-half-full guy, he remains filled with hope regarding Hemlock’s lonely $1.2 billion facility.

“The people in Clarksville, like we are, are on hold still, hoping something is going to happen.

“There’s a lot of money out there and it’s just sitting there.”

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