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Legislative News and Views - Rep. Dale Lueck (R)

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LP Corp. considers building large siding plant

Wednesday, June 15, 2016

 

EVELETH, Minn. – The Iron Range Resources and Rehabilitation Board (IRRRB) authorized expenditures of up to $10 million for public infrastructure needed to support a $440 million Louisiana-Pacific (LP) Corp. project to build a large wood products manufacturing plant in the Laskin Energy Park at Hoyt Lakes.

The support package also includes a $20 million in investment by the Minnesota Department of Employment and Economic Development (DEED) and $6 million in potential sales tax relief.

The IRRRB and state of Minnesota have been in discussion with the company over the past 23 months. LP Vice President for Siding Operations Brian Luoma unveiled the first public details of the project at the IRRRB board meeting on Tuesday.

The Nashville-based company’s board of directors will take Minnesota’s support proposal under consideration at a July 29 meeting before making a decision whether to proceed further with the project. A final decision to build would likely not take place until early in 2017.

“LP Corp is a well-respected and experienced wood products manufacturer that is looking to directly employee up to 250 workers in our region,” Rep. Dale Lueck, R-Aitkin, and IRRRB member, said. “Of special significance is the annual 700,000 – 800,000 cords of wood stock the plant would eventually consume. Their intent is to manufacture engineered wood siding primarily from aspen which would will provide an important expansion of the market our area logging industry currently serves.”

Luoma provided a general outline of the companies plan to build a large two-line engineered siding manufacturing facility at the Hoyt Lakes site. Luoma indicated that northeastern Minnesota was selected for consideration because it has sufficient wood to supply to sustain a plant of the scale they are looking to build. The company anticipates an expansion of home building and general construction that will significantly increase demand for their wood products.

“With our decision to authorize the support package general negotiations are essentially complete, the company still must agree to the conditions of the package at their July 29 meeting before the process can move forward to a design and construction phase,” Lueck said. “The proposal includes a reimbursement provision should the project not be completed.”

Minnesota’s timber harvest peaked at about 4.2 million cords in the 1990s. The housing crash and accompanying severe recession caused Minnesota’s timber harvest to drop to around 2.6 million cords annually. It also forced a number of wood plants in the region to permanently close. Today’s 2.6 million cord harvest is less than half the sustainable harvest rate outlined in the state's comprehensive environmental assessment on logging.

IRRRB’s and DEED’s decision to commit to create a ready-to-build site includes roadway improvements, storm sewer, water and sanitary sewer, gas and electric service, and a rail spur extension. This project is in competition with other locations including Michigan and Canada.

There is also a $6 million sales tax relief proposal included in the tax bill Gov. Mark Dayton recently vetoed. IRRRB board members including Senate Leader Sen. Tom Bakk, D-Cook, and Senate Tax Committee Chairman Rod Skoe, D-Clearbrook, stressed the importance of that proposal remaining in the tax bill that could be part of any special legislative session yet this year.

LP Corp already operates nine other siding manufacturing plants and 13 oriented strand board (OSB) plants in the US, Canada and Chile. Those operations include a siding plant at Two Harbors, MN. Should this proposal continue forward on its current timeline actual construction could begin sometime in late 2017 or early 2018.

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