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Hypersonic still on hold


Fri, Feb 22nd, 2008
Posted in Government

RUSHFORD - It was ironic really, walking over to last Wednesday evening's February 20 special session of the Rushford City council under a clear sky, temperatures below 10-below, the snow pack blue as the Earth from space, a shadow drifted across the full moon.

Inside City Hall, members would discuss whether-or-not to approve a $500,000 start-up loan to a business whose idea had not even hatched before the great flood. That burning issue has briefly but completely eclipsed the full moon of disaster-recovery.

It's impossible to predict whether the Hypersonic LLC loan request reached totality the other night or not. Any council decision, for-or-against the nanotech company, was pushed back to the next regular session. But in analyzing the loan proposal, council members and staff succeeded in illuminating general community support for jobs-based manufacturing, as well as specific concerns about the proposed business model.

Our Nano Century

Kevin Klungtveldt, founder and, for 7-years, driving force behind the Rushford Institute of Nanotechnology, or Rintek, presented a slide show to illustrate the basics of nascent nano science, commercial applications today and the potential for future product development.

Explaining how 100-years ago Henry Ford developed industrial machinery capable of milling steel to tolerances down to one-thousandth-of-an-inch, making the 20th Century, "the Micrometer Century," Klungtveldt declared our elementary-school-age 21st Century will be "the Nanometer Century.

A nanometer equals one-billionth of an inch. It's the scale of atoms. Using powerful atomic force microscopes, nano-engineers are already able to manipulate the fundamental structure of materials to create entirely new products that boast unheard of strength, hardness, flexibility, smoothness, purity.

Klungtveldt plied the Rushford audience with a description of the "Small" New World we will all marvel at and benefit from after nano-science finally meshes with nano-manufacturing. Nano-cables the size of a mechanical pencil lead will be able to lift tons. Nano-manipulation of cells will put an end to cancer. Nano-drugs will lead to new and better medical treatment. Cheaper energy. Cleaner water. A technology for the "people", Klungtveldt predicts that the inevitable consumerization of nano products - across every sector - will be more-affordable, cost less to produce, produce less pollution and in general transform the world into a many-trillion-dollar commercial wonderland of microscopic gadgets, designer drugs and boutique building materials.

While Wonderland is down the road a piece, nano-applications are indeed available today. Klungtveldt, who has devoted considerable effort to opening a nanotech research lab and nano-business incubator in Rushford, dropped the names of mainstream drugs, cosmetics and chemical formulas that depend on nano materials and production techniques. While researchers around the world continue to look for new properties, new ways to make laboratory science practical outside the laboratory, innovators and visionaries will take the risks necessary to scale-up that science into producible and marketable widgets.

As a segue to presentation of the Hypersonic business plan, Klungtveldt said of the patented but never commercially mass-produced HPPD, or Hypersonic Plasma Particle Deposition, technique: "It is a major improvement in coatings."

Jobs

Dan Fox, president of Rushford Hypersonic, worked as an engineer for TRW Automotive in Rushford before TRW cut jobs like his, moved others out of town, out of state and out of the country, and closed its plant, taking hundreds of good jobs away from the struggling local economy.

"I was one of the ones who got dumped in the first round," Fox told the full-house at City Hall. "Yeah, it sucks what they did. We want to bring jobs back to Rushford, so they stay here."

What Fox and Klungtveldt propose works something like this: Hypersonic will rent 2,000-to-3,000-square-feet of manufacturing space locally and install a device that has never been built on an industrial scale. They're engineers. They will design and build it. Call it a nano-sprayer. The nano-sprayer will apply the material. Consider this description by U-of-M doctoral engineer Paolo Valentini, from one of many internet pages where HPPD is described: "nanoparticles of various materials (nucleated in a hot plasma) are deposited onto selected substrates. Experimental evidence suggests that the structures thus created are composed of grains whose size is in the nanometers length scale." Delivered at the speed of mach-8, that's 6,160-mph, the "hot plasma" will coat drill bits and saw blades. And that's HPPD. Then, to seal the coating, everything is heated to 2,400-degrees. And that's hot.

Klungtveldt noted that the "closed loop" system will be safe. "We'll exceed government [safety] standards," he stated, "because we don't think government standards are good enough. Rushford will be safe."

Where the science may strike some as risky or over-sold, the jobs - Hypersonic estimates there will be 67-of-them 5-years from now, if all goes well - the chance to create local jobs that pay above minimum wage and offer benefits strikes a chord of common sense to practically everyone who looks at Fox's plan.

Recovery Loans

The recovery loan committee approved the Hypersonic proposal, clearing the way for the EDA to look at the plan. The EDA approved Hypersonic for a Category-2 loan and kicked the matter up to the council where a rubber stamp has been used - and not unwisely - to authorize some 44-Category-1 recovery loans to date.

Both C-1 and C-2 loans must meet the basic requirements laid out in the guidelines for disbursing State aid, including residency, history and financial information. And there is little doubt that the loan program was designed to assist businesses active in Rushford at the time of the flood. C-1 loans go to flood damaged businesses. C-2 loans go to businesses not damaged by the flood.

But there are 2-central problems facing the council as it considers the Hypersonic loan: First, 44-C-1 loans to existing businesses have been reviewed and approved. But the Hypersonic C-2 loan application is the first of its kind. As City attorney Terry Chiglo pointed out, C-1 applications come before the council as "complete packages" containing a punch list of property damages and economic losses that will be reconciled against actual receipts. The first C-2 loan application is a detailed business plan eclipsed by confidentiality; and Second, any way you slice it, Hypersonic was not in business at the time of the flood.

To City administrator Windy Block, Hypersonic is all about jobs. Block has admittedly courted Hypersonic since October with the expectation they would receive a financing boost of $500,000 from disaster recovery funds. As council members focus on the selective details of the business plan, limited to only those particulars Fox will agree to let them see because he doesn't want to let the nano-cat out of the bag fearing industrial competition, members are forced to ask the same questions over-and-over.

Risk

At now-the-fourth council session to consider the Hypersonic application, members want to know, among other things: Who are the investors? What is the real value of the patent and equipment offered as collateral? What guarantee do we have that your novel process will work? How will the product be distributed? And frankly, Fox tends to answer the questions incompletely, grudgingly, citing confidentiality or simply stating that he's already given his answer to the EDA.

Having failed to persuade the council to vote definitively for-or-against the Hypersonic loan at previous meetings, Wednesday night Block reframed the question before the council this way: "Will the council commit to job creation?"

Mayor Les Ladewig and councilmember Nancy Benson are ready. In fact, had it not been for member Laura Deering's preemption of voting up-or-down on Hypersonic by stating at the outset she was not prepared to vote at Wednesday's meeting, Benson would have probably made the motion to do so.

"Personally, I want to see us survive, see our community survive," said Benson in what would evolve into an impassioned speech.

"Every business is a risk," she said, referring to earlier discussion of loan security and default, "We need to trust what they will bring to this community. This will help every resident and every other business. We need to support this business and move on."

A circumspect quartet of City officials are asking most of the questions: members Larry Johnson, Laura Deering, Robert Dahl and attorney Chiglo. They want answers, and they want more time to study the business plan while businesses actually damaged by the flood are given time to respond to the 29-Feb last call for C-1 applications. Among other things, they demand that funds go first to qualified C-1-applicants.

Dahl addressed Benson. "Can we table this till Monday? [the regular council meeting scheduled for 25-Feb.]"

"How much longer do we have to wait?" Benson responded, echoing the exasperation that Fox himself at times has expressed. "Life is a risk," she said. "Early on after the flood, I said I hoped money was not going to tear us apart. Money is not what this community is made of. Never ever give up! This company means new business and jobs. We need to allocate each and every dollar [of the disaster aid] so it stays in our community."

Large audiences have become commonplace at City Hall. From the sound of it, most if not all in attendance applauded Benson's speech.

Deering explained that, in lieu of a new resolution, an earlier council resolution, 27-Dec, clearly supporting the Hypersonic proposal, should suffice as an official expression of the City's good faith. "Mr. Fox," she said, "All of these meetings, we're trying to work with you."

"All you're doing," responded Fox, exasperated, "you're just dragging it out."

Around 10-p.m., as the brownish-red shadow of the Earth slipped back down the full moon, Mayor Ladewig closed the special session, tabling any vote on the Hypersonic loan request until the next regular meeting. Chiglo, Block and Fox will work in the meantime to formulate and document proposed loan conditionality, 7-requirements, perhaps more.

• Hypersonic will be required to raise-and-deposit an amount equal to the loan amount before loan funds will be disbursed.

• Hypersonic will identify, verify adequate collateral.

• Hypersonic will formalize assurances that it will operate in Rushford.

• Hypersonic will provide proof of patent license.

• Hypersonic will provide an acceptable marketing plan.

• Hypersonic will submit an environmental-health statement to the State.

• Prior DEED approval of the Hypersonic application will be formalized.

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