Wacker taking long view on its $2.6 billion project in bradley county times free press a level physics electricity notes

Since announcing its plans to build a polysilicon production plant in northern Bradley County a decade ago, Wacker Chemical has faced trade barriers, shifting markets and, most recently, a piston failure that ignited a plant fire and shut down production for nearly eight months.

Although Wacker slowed down its initial construction plan when tariffs weakened one of its prime markets, the company ultimately decided to keep and even expand its chemical plant here, making a key element in solar panels and semi-conductors. By next year, the company will also make pyrogenic silica, an agent used in such products as toothpaste, cosmetics and paint.

"Dr. (Peter-Alexander) Wacker and other officials have told us they like to think in 100-year horizons and they made a very determined, long-term analysis and decided they were here to stay," said Doug Berry, vice president of economic development for the Cleveland/Bradley County Chamber of Commerce who has worked with Wacker since 2009. "I think it is a fundamental difference in the longer-term view taken by more closely held corporations that still have more family interests involved like we see in more European companies compared with the more short-term Wall Street-driven decision making in much of America."

In contrast to Wacker, one of America’s biggest polysilion makers, Hemlock decided in 2013 to abandon a $343 million plant built in Clarksville, Tenn., after the United States and China were unable to resolve trade differences over solar panels and their incredients. When China imposed a 57 percent tariff on U.S. polysilicon, Hemlock laid off roughly 500 workers before any product had even been produced.

In response to the Chinese tariffs, President Trump announced in January a 30 percent import tariff would be assessed on all imported cells and modules in 2018, with the tariff declining to 25 percent in 2019, 20 percent in 2020, and 15 percent in 2021.

The escalating trade war over solar panels presents a major challenge for the new Wacker plant here since the facility targeted China as one of its main markets to sell its polysilicon to where most solar panels are produced in China and other Asian countries. But even with the tariffs in place, Wacker moved ahead with its U.S. plant, the first ever outside of Germany for Wacker.

Wacker is resuming production here this spring of its ultra-refined and pure polysilicon here after a spending months rebuilding equipment and part of the plant that was damaged last September when a fire knocked out a key part of the production process, hydrogen recovery system where gas is recirculated. The explosion at the site shook the Bradley County community, led to several hospitalizations and temporarily shut down some area schools and roads.

Although there was ultimately no major risk to the general public from the incident, a state investigation of the Wacker fire found five serious violations and two "other-than-serious" violations ranging from failing to properly train employees to not following generally accepted good engineering practices. In full-page newspaper ads, Wacker apologized "for any confusion or anxiety the incident at our Wacker-Charleston plant may have caused."

Mary Beth Hudson, a chemist and engineer who has been with Wacker for 20 years and now heads the Charleston plant, said the company "has become stronger and better" after the fire and "the global Wacker organization has demonstrated tremendous support of the Charleston site."

Wacker Chief Financial Officer Tobias Ohler said the company expects polysilicon sales will be similar to last year despite the production slowdown this winter and the company expects to recover its losses from the Charleston fire and shutdown from its insurance, which has already paid 100 million euros, or nearly $117 million in U.S. dollars.

"Overall we expect to ship this year about as much as last year," he added. "We see sales in polysilicon being down by high single-digit percentage, EBITDA (earnings before interest, taxes and depreciation allowances) should come in above 2017."

Silicon is the second most abundant product in the country. Suppliers to Wacker take quartz and produce metallurgical grade silicon, which is roughly 97 to 98 percent pure. At the Charleston plant, Wacker purifies that to ultra-high purity level necessary for the product to be used in semiconductors and solar panels. Wacker’s process results in a ultra-high purity polysilicon product with imperfections measured in parts per trillion.