New GWEDC chief Tim Chase versed in trials of creating jobs
02/05/2013 5:59 PM
02/05/2013 5:59 PM
Correction: An earlier version of this story incorrectly described financing for incentives for a Natura USA deal. Funds were authorized by the Wichita Falls Economic Development Corporation and selling Natura USA’s assets will mostly cover the failed deal. Also the amount supplied by the corporation in the Magic Aire deal was $1 million.
Wichita Falls is the city Texas forgot.
Wichita Falls has not grown since 2000, even as Texas added 5 million people, a 20 percent increase.
Yet those who have worked with the head of Wichita Falls’ economic development effort call him “very effective” and “solid.”
The reason that is important is that the Greater Wichita Economic Development Coalition just hired Tim Chase as its president.
Chase’s job in Wichita is to increase the number and diversity of jobs by recruiting new companies and helping existing ones expand. The coalition’s job creation goal is 7,500 new jobs over the next five years.
Chase, former executive director of the Wichita Falls Chamber of Commerce and Industry, said staying even in population and down slightly in jobs is a victory given traumatic events of the last five to seven years in his former Texas home.
A series of major plant closings slammed the city, with a loss of between 2,500 and 3,500 jobs, but he led the community’s aggressive – in one instance, too aggressive – counterattack.
Wichita Falls, 100 miles northwest of Fort Worth and a few miles from the Oklahoma border, sounds a lot like what Wichita would be if it hadn’t developed an aircraft industry.
It was founded on agriculture and grew with oil and, later, manufacturing. Today, it has a diversified economy with a large government component: Sheppard Air Force Base, the school district, a large state hospital and a prison are among its largest employers. About 150,000 people live in its metro area.
Metro Wichita has a population of about 620,000, a 10 percent increase since 2000.
In the last two decades, Wichita Falls hasn’t benefited much from factors that have buoyed other Texas cities, such as oil and gas production, transportation and refining, large-scale immigration and large universities, he said.
The unemployment rate has been relatively low, consistently lower than Wichita’s, but it also has significantly lower per capita income and lower education levels as well.
Starting in 2008, the city suffered a series of plant closings and layoffs.
The recession laid bare the fact that the plants were lagging technologically, so when a company consolidated or sold, Wichita Falls often lost out, Chase said.
For instance, he said, the city’s large Delphi plant made automobile oxygen sensors. When the technology switched to digital, the company discovered others could make them cheaper, so it sold the division and the plant closed.
In 2009, the chamber board, which consists of city business leaders, agreed on a risky new strategy: take a more entrepreneurial approach by growing their own jobs, as well as the more traditional attraction and retention functions.
Chase said the city had nearly 20 deals in the first two years, mostly with local companies seeking financing.
“Rather than being surprised or upset when a company ceases operations and then jumping on the accelerator and working harder to offset that, our strategy was to work hard 24/7 at trying to create wealth knowing that in the current environment that if we don’t do that the outlook is very bleak,” he said.
As ammunition, Chase could draw on Wichita Falls’ Economic Development Corp. fund, called the 4A fund, which contained $26 million at the time, said Wichita Falls Mayor Glenn Barham. The city has a one-quarter cent sales tax, equal to about $3.5 million per year, which goes directly into the pool. Another one-quarter cent, the 4B fund, is devoted more generally to capital projects.
One of those projects was helping local interests buy the local Magic Aire air conditioning plant after the parent company decided to sell it.
Ron Duncan, now president of the company, was the general manager at the time. When he heard of the plans to sell, he realized that the buyer would likely take the name and designs and shut down the plant.
He called Chase, who immediately connected him to investors and bankers in the community for financing. When they fell short of the amount needed, the 4A board extended them a $1 million loan.
The loan is forgivable if Magic Aire keeps the present number of workers for 20 years, and gets a few thousands dollars in cash for each additional worker, Duncan said.
Two and a half years later, Duncan’s company is still operating, making payments and has even added four or five people. He said that Chase was one of the keys to saving the plant and its 100 or so jobs.
“He seemed really solid to me,” Duncan said. “I never did this before and thought the chamber meetings were mainly for trying to sell me something, but I learned the chamber is very involved in economic development.”
One of the biggest of those deals was to bring in two associated companies, Natura USA and Gel Solutions, to make a brand new kind of mattress.
In return for a promise of 400 jobs, the 4A board gave the company a $5.5 million loan to license the technology and buy new equipment. It spent $2 million to renovate the vacant Delphi plant and promised a cash grant for each worker hired.
The mattresses never sold that well, few workers were hired and both companies shut down last year. The loans are secured by the equipment and some of the leftover mattresses, Chase said.
“There are folks who believe that in hindsight we made a mistake, that we partnered with a company that was too risky,” Chase said. “We did all of our homework and the leaders sat around the table – we were thousands of jobs down and faced with an opportunity to put 400 folks back to work – we weighed the risk and decided to go for it.”
With that one big exception, he said, the other 20-plus projects are thriving or surviving, he said.
He estimated that the city has gained back a net of 1,500 to 1,800 jobs since 2009, even counting the Natura USA mess. And he expects the benefits from the other projects to accelerate as the economy improves.
“In the last six to 12 months,” he said, “we aren’t setting any records, but we are moving forward with some momentum.”