You probably thought that federal stimulus money was all spent, didn't you? But one tends to underestimate the time it takes for shrewd business minds in the U.S. Government to pick winners and losers--or winners that turn into losers--and make a government business "investment" shovel ready.
In Iowa, eyebrows are being raised about a plan to construct a nitrogen fertilizer plant slated for 300 acres in rural Wever, near Fort Madison, on behalf of investors from Cairo, Egypt. The Iowa Fertilizer Co. is supposed to reach full production in 2015, with a budget of $1.3 billion dollars. Of that budget, the Egyptian investors are putting up all of $70 million of their own money (about 5.5 percent), while $1.2 billion is being provided through federal flood-relief funds (remember the big flood four years ago?).
Not content, the Egyptian company, Orascom Construction, writes Deborah D. Thornton in a paper for the Public Interest Institute at Iowa Wesleyan College in Mt. Pleasant, "is taking advantage of every economic development incentive they can wrangle out of the state of Iowa and local governments." These include $1.6 million in "forgivable and low interest loans from the state," $2 million "for road and rail improvements" and various local incentives, including job training assistance. President Obama probably will want to go out to the swing state of Iowa to witness the ground breaking.
In Iowa hog country, however, shovel ready doesn't always mean the same as it does in Washington, D.C. Ms. Thornton points out that Orascom project will commit one half of the the entire bonding authority available for economic development under the Midwest Area Disaster Relief program (the flood relief). Locals are wondering what happens if Orascom's Iowa Fertilizer Co.,"like Solyndra in California, goes bankrupt?"
They also must be wondering, if this is such a great business opportunity, why isn't there substantial private investment? Interest rates are rock bottom, so you'd think that private equity groups would be leaping at the chance to build the fertilizer plant. But they are not.
Fertilizer--especially good diesel exhaust fluid (DEF), plus ammonia nitrate and urea, perhaps supplied by the local Iowa livestock--is a good thing to produce in America. And, after all, the project supposedly will create thousands of temporary construction jobs and 165 permanent jobs. Wever is in Lee County, that has 8.3 percent unemployment, one whole tenth of a percent more than the national average. But don't bother to figure out how much federal money it will take to fund each permanent new job; it will hurt your head.
Well, shucks, I'm just a poor, barefoot country boy myself, having grown up in nearby Monmouth, Illinois, but it seems curious to me that with our trillion dollar national deficit we are borrowing from the Chinese to pay for 95 percent of a company owned by Egyptians. What exactly is the federal government fertilizing?