For much of the past decade, one of the first things to greet people arriving in Sherman from the south has been a sign advertising the vacant MEMC building at 6800 U.S. Highway 75. But the availability of that building may soon change as Corning Inc., which specializes in glass, ceramics and optical physics, has emerged as a front-runner to purchase the property with a recent $21 million bid.
“Should they come here, they will be providing at least $1 billion in new investments and create north of 1,000 new primary jobs, which are high-skilled jobs in the areas of science and engineering,” Sherman Economic Development Corp. President John Plotnik said Thursday in an interview with the Herald Democrat.
Plotnik said there have recently been five offers made on the MEMC building, including Corning's, and SEDCO staff have met with four of the bidders to talk about blending federal, state, county and city incentives to give them an idea of what their cost of doing business would be.
“They're all very real,” Plotnik said of the bids, adding the companies discussed planned investments for the building ranging from $500 million to $1.2 billion. “They're not speculative investors; they're actual companies.”
He explained Corning's $21 million bid puts the company in the lead going into the final auction process of the late-October bankruptcy proceedings for SunEdison, which owns the MEMC building.
“On Oct. 23, if no one bids on the MEMC building, then they (Corning) buy the property at $21 million,” Plotnik said. “If there is another company that comes in and bids higher, then it becomes an auction. But the fact is Corning has now become the base bidder of $21 million and that is the base of which other companies would have to exceed if they were going to bid against Corning.”
Commercial real estate firm JLL helped find the Sherman location for Corning as part of an assessment of U.S. locations that would be suitable for the company's manufacturing operations.
“In evaluating all of the different considerations, we ultimately got to a shortlist of candidate locations,” JLL Managing Director Matt Jackson said of how Corning became aware of the MEMC building. “And then within the candidate locations, we're obviously also looking for suitable real estate product. So the intersection of the financial conditions, the nonfinancial conditions and the risk conditions kind of pointed us in that direction, so ultimately it became one of the finalists.”
Jackson said what Corning needs a location for is currently confidential, but he described it as advanced manufacturing that would include “very sophisticated manufacturing technology.”
Who is Corning?
Well known for its CorningWare cookware, Corning created Gorilla Glass, which has been incorporated into many smartphone designs, and is involved in the automotive, communications, aerospace and defense, and architecture industries.
“Corning has been in business for over 165 years, beginning with the first glass light bulb in conjunction with Thomas Edison,” SEDCO Executive Vice President Frank Gadek said. “They're in all sorts of products and technologies related to glass optics, ceramics — you name it, they're involved in it.”
Plotnik said Corning representatives met with community leadership in August, including SEDCO board Chairman Greg Kirkpatrick and Sherman City Manager Robby Hefton, to discuss various opportunities within the city. However, Plotnik said, that does not necessarily mean the company will bring a product line to the city.
“They have other locations in the United States,” Plotnik said. “But they do like this building a lot or they wouldn't be bidding that amount of money on it.”
Kirkpatrick said the MEMC building would likely represent only 1 or 2 percent of Corning's total real estate holdings worldwide.
“So even if they win that bid, it's still up to SEDCO, the state, county, city and school district — we have got to make it to the goal line with the incentive package because we're still going to be competing with another state or two out there that are going to be doing the same thing for similar locations,” the SEDCO board chairman said. “We see this as just the first part of it and then the real work begins if they indeed become the winning bidder.”
Plotnik said he believes Sherman is in the lead for Corning's business, in part because Texas is a favorable location to businesses of this kind.
“This is huge for the city of Sherman,” Plotnik said. “It's something that, two years ago when I became the new president of SEDCO, one of the requests of me was to see what we could do to bring a user into the MEMC building. And for two years, we've been working on that and marketing it, not only regionally but nationally. It's exciting that it looks like we're going to come to an end (of that) on Oct. 23.”
In September 2009, MEMC Electronic Materials Inc., which later changed its name to SunEdison, announced plans to close its Sherman facility in stages in 2010 and early 2011 and then sell the property. The closure of the Sherman plant, as well as portions of another MEMC plant in Missouri, resulted in the termination of 540 employees from the company.
The Sherman MEMC facility manufactured single crystal silicon ingots and wafers for semiconductor and solar photovoltaic applications and epitaxial wafers for advanced semiconductor applications. Built in 1997, the 693,404-square-foot building offers manufacturing, office, and shipping and receiving facilities on 76.8 acres.
“The property originally cost about $200 million to build,” Plotnik said. “After you moved out all the equipment and the specialization equipment to China, the building's value, probably if you were going to rebuild it, would be about $100 million. So if you can buy it at $21 million or something more than that, you bet (it's a good deal).”
The property hasn't changed owners since the Sherman facility was closed, but MEMC changed its name to SunEdison in 2013 after acquiring that company in 2009 and shifting its focus to developing technologies used in the production of solar panels. SunEdison first sought Chapter 11 bankruptcy protection in August 2016 and recently won final approval for a reorganization plan from U.S. Bankruptcy Judge Stuart Bernstein.
“SunEdison was spending approximately $1 million a year to keep the lights on in that building,” Plotnik said of the MEMC building. “And finally as a result with some other investments that were poorly performing, they had to go into bankruptcy. Then it went into the courts where they started marketing the building and that's why this procedure was put in place.”
In 2012, the Sherman City Council approved an increase to water and sewer rates for city residents to help make up for the loss of MEMC as a city water customer. Sherman city staff estimated the closings of the MEMC and Folgers Coffee plants meant the loss of over 1 million gallons of water usage a day for the city. The city estimated at the time that an average residence used approximately 250 gallons of water a day, so the loss of those industries was the equivalent of 4,000 families moving out of town.
If Corning is outbid
With four other bidders interested in the property, Plotnik acknowledged there's still a chance some other company could beat Corning's $21 million bid.
“If there's a bidder that outbids Corning, and they win it, that's still a win for Sherman,” Plotnik said. “Because this will be a company that will come in and create investments and jobs.”
Kirkpatrick agreed any company purchasing the MEMC building would be a plus for the city, though he noted another company likely would bring a different total of investment and jobs for the area.
“And some of these companies are actually looking at that they would expand the property as well as part of that capital budget that's being thrown around,” Kirkpatrick said.
No matter who ultimately acquires the MEMC building, Plotnik said every primary job created by the company will also create four to six secondary jobs.
“Those are the doctors and the lawyers and the folks in restaurants and whatnot that are a result of the developers of homes and apartments — those are the results of these primary jobs that come in,” he said.