By Mary Lynn Beaver
From the July/August 2019 Issue
When Honda Manufacturing chose to locate in Indiana in 2008, the Japanese automaker settled on Greensburg as home for its new Civic sedan manufacturing facility. It proved to be a good investment. Now, more than 10 years later, Honda Manufacturing of Indiana LLC (HMIN) celebrated the company’s 2 millionth vehicle production milestone in Indiana.
Choosing to set down roots in the Hoosier state may have seemed counterintuitive when the Midwest and the rest of the nation were facing a recession. But for Honda and a host of other companies that followed, the choice was obvious.
With close proximity to major metropolitan areas—Cincinnati, Indianapolis, St. Louis and points beyond—the idyllic countryside offers more than just a pretty view. Southern Indiana’s attraction for commercial and industrial enterprises is due, in part, to a strategy that began decades ago at an electric cooperative based in Bloomington.
As a not-for-profit cooperative, Hoosier Energy is owned by its 18 electric distribution members. “Our number one goal is to safely provide reliable energy and services at least cost. This is priority one,” said Rob Horton, Chief Operations Officer for Hoosier Energy. “That’s what sets us apart from any other electric service provider.”
The numbers are impressive. Since 1989, partnerships with local communities and Hoosier Energy’s 18 member systems have resulted in more than $11.5 billion in new investments and 50,000 new jobs. The generation and transmission cooperative that was formed in 1949 to supply power to rural southern Indiana grew steadily and now ranks among the top 100 largest cooperatives in the United States in annual sales.
“When we sit down with a member system and their potential future member, we’re genuinely interested in what they are looking for, what they prefer and what they need. A lot of talented folks sit at that table. We’ll come back with multiple options to help them meet their needs,” Horton said.
Of the 55 new or expanded corporate facility investments the Hoosier Energy economic development team helped bring about in 2018, nearly half were expansions by companies already located in the territory of Hoosier Energy’s member cooperatives in central and southern Indiana and southeastern Illinois.
The $730 million in investment and projected 2,500 job growth created by those projects reflect the region’s commitment to community—a cooperative principle incorporated into every business decision, Horton said.
When NTN Driveshaft announced in October 2018 a $90 million expansion to its facility in the Woodside Industrial Park in Columbus, IN, Hoosier Energy and member system Bartholomew County REMC worked together to accommodate the additional power needs of the facility in Columbus.
“It was really a fairly simple process,” said Barry Parkhurst, Vice President of Administration / CFO for NTN Driveshaft, Inc. “We [explained] our electric needs for the new addition and new equipment. They went back, figured out the options and it came down to adding another transformer bank.” The project met its July 1 deadline with ease, he added.
Hoosier Energy’s market-driven strategic plan to help members succeed in a competitive environment began in the mid-1980s. In 1985, Hoosier Energy’s board of directors approved an economic development rider (EDR) special rate for member systems. Holding down costs to all members, more favorable system-wide load characteristics and additional employment opportunities were all cited by the Board in its decision to support the new rate.
The strategy, designed to encourage industrial development in the region in partnership with members, quickly began to pay off. By 1990, commercial and industrial customers were locating in southern Indiana. AK Steel built the Rockport Works plant in southwestern IN. Enter Toyota near Evansville in 1996 and Honda in Greensburg in 2008. The region now boasts automotive OEM plants, plastic injection molding operations, agricultural equipment manufacturers, food processing plants, computer software developers and distribution warehouses.
Today, what began as a single economic development rider has evolved into an innovative economic development program that can offer significant rate discounts on a commercial and or industrial consumer’s electric bill.
“Because Hoosier Energy is a cooperative, we can offer greater flexibility, creativity and responsiveness to meet the needs of today’s businesses,” Horton said. “The current EDR is a prime example. Our rate structure also includes a market-based rate option—all designed to help meet the needs of potential customers. That provides us and our member systems with a competitive advantage.”
The current EDR discounts the cost of electricity for the first six years of a new project. “That’s a powerful incentive for businesses to land here while creating jobs for our communities,” Horton said.
Hoosier Energy and its members have helped facilitate hundreds of companies in locating or expanding in the rolling hills of Southern Indiana. Speed to market is a skillset the cooperative has honed over the years, noted Chris Ware, Manager of Power Delivery Engineering for Hoosier Energy. “Being small and in control of our overall project schedule, we have the flexibility to meet the needs of our members,” he said.
For Honda, Hoosier Energy’s team designed and built two transmission-level stations as well as 10 miles of 138kV line in just 15 months, Ware said. “For others in the industry, that’s a two- or three-year process,” he added.
In 2015, two large food processing facilities came on line about the same time in east-central Indiana. The power engineering team built a planned substation and established a line to feed the needs of the 418,000-square-foot Sugar Creek Packing facility in an industrial park in Cambridge City, IN. Meanwhile, Boar’s Head Brand had announced it was locating a new facility near New Castle, IN; Henry County REMC and Hoosier Energy built a capacity upgrade to an existing distribution substation to supply lines to the facility.
RENEWABLE BY CHOICE
Increasingly, companies are looking to the utility to help them meet their renewable energy goals. Hoosier Energy is ready.
“Our fuel supply is not only diversified, it’s also flexible in terms of location and type. If a company comes to our area and has a renewable energy requirement, they are already at 7 percent—10 percent from the time they plug in,” Horton said.
Thrive Market Distribution Center in Batesville, IN is taking advantage of those options. Thrive, a California-based online retailer of food products, embraces sustainability as a business model.
Innovation and customer service are hallmarks of the joint economic development program of Hoosier Energy and its member electric distribution cooperatives. Business Facilities has named the utility among its Top Utilities picks for the last three consecutive years.
“Working together, our electric co-op members accomplish things that would be costly, difficult or even impossible to do alone,” Horton said. “That’s our legacy and the cooperative model today. We pride ourselves on being a solutions-focused partner. We listen, we share ideas and we solve challenges together—that’s how our communities grow.”