Monday, July 16, 2012

Martifer Out of Hirschfeld Joint Venture

San Angelo's City Council will consider a $230,000 budget amendment for Martifer-Hirschfeld in tomorrow's meeting, only the Martifer-Hirschfeld of today bears little resemblance to the one garnering $3.5 million in tax credits from President Obama's White House in 2010.

After hearing a rumor and inquiring, a city official informed me:

Hirschfeld bought out Martifer’s stake in the Martifer Hirschfeld joint venture several months ago. There are two production lines that are still running three shifts at the Hirschfeld Wind Energy plant (formerly Martifer Hirschfeld), and one of the lines is still producing wind towers for Siemens. However, there are very few, if any, new orders for towers coming in. Lucky for San Angelo, oil is booming, and Hirschfeld Wind Energy can easily switch their second production line to oil tanks which are in high demand. 

While Martifer is out of the joint venture, its name remained in City Council documents.

As for Martifer's exit, my guess is capital got scarce for a Portuguese company in the European Debt Crisis and they sold out their interest for cheap.  Here's Martifer's stock chart:

The stock traded at 0.6 Euros, roughly 74 cents a share.  The debt crisis could've impacted Martifer's interest expense and exchange rates in a negative manner.

The end result is Hirschfeld Wind/Oil Tank continues to employ West Texans.  I do wonder what commitments came with the $3.5 million federal tax credit and how producing oil tanks might factor into any terms.  It seems the City's tax rebate for Hirschfeld is safe, given no council members proposed reducing such in last week's budget workshop.

Other funds were expended to get Martifer-Hirschfeld up and running:

For the Texas Pacifico Railroad rehabilitation project going east from San Angelo, including the bridge at Ballinger, to facilitate movement of wind energy components produced by Martifer-Hirschfeld Energy Systems, $14.1 million in stimulus funds were committed.
There were training dollars, as well

Texas Workforce Commission Skills Development Fund Grant is enabling Howard College to provide training to 133 employees at Martifer-Hirschfeld Energy Systems this year.

The grant, totaling nearly $600,000, will give employees the skills to perform several jobs, including logistics operators, production helpers and repair welding operators.

Additionally, Howard College, through a grant from the American Recovery and Reinvestment Act of 2009 stimulus package, will purchase hydraulic and electrical training systems this year.

This equipment will allow students to obtain the initial hands-on training and experience necessary to enter certification and/or degree programs that specialize in preparing graduates to work in the wind energy, wind turbine and associated renewable energy industries.

Martifer-Hirschfeld moves may be news for less than 24 hours, should City leaders update Council and the public on developments.  It will be interesting to see.

Update 7-17-12:  The Standard Times report doesn't indicate city leaders updated Council on Martifer's moves and the changing work at Hirschfeld Wind/Oil Tank.   It seems Council approved the budget amendment and moved on.

Update 7-18-12:  The Standard Times picked up the story

Update 7-20-12:  Nearly $100 million was paid out to Hirschfeld's PEU and family owners from 2006-2009  


Anonymous said...

I worked for Hirschfeld for 20 years, 40 of us was laid off a year and half ago. A lot of those people were hired at Martifer for lower pay. everyone at Hirschfeld knew that the windtower plant was a joke. How many wind towers was built, how many people worked at the plant over the years? And when you talk about the city. Look at Mr hirschfeld on the council is he and his family still receiving money from the company? This needs to be looked into and the paper here will not do that.

PEU Report/State of the Division said...

While Kendall's name is not to be found in any Hirschfeld SEC documents, the family pulled millions from the firm, via sale of 51% of the firm to Insight Equity and partnership distributions since that deal. Insight equity drew $50 million from the company and other partners $48 million.

Anonymous said...

Dear PEU Report/State of the Division: You obviously didn't read the documents closely - this business is a partnership not a corporation. Federal and state taxes are passed through to the partners and have to paid for by the partners just like a law firm or doctor firm or dentist firm.

PEU Report/State of the Division said...

I didn't mention taxes but will be happy to do a post on that topic. Thank you for your request.