The best part of working in economic development is that every once in a while you find a project that is a win-win for everyone involved -- one that simply makes great sense. Over the past six months, Greater Bemidji has been working hard on one such project -- attracting a wood pellet manufacturer (NorthStar Pellets) to Bemidji.
Before diving into why this is such a win-win, let me share a quick “Economic Development 101” lesson. Think of our local economy (or the state’s for that matter) as a bucket. As economic developers, we want to fill the bucket with economic activity. One way we do that is to fill any holes in the bucket that allow economic activity to leak outside our local economy. “Buy Local” campaigns are an example of filling holes. Buying from a downtown Bemidji merchant matters more to our local economy than sending your dollars to Amazon in Seattle.
The second way we fill the bucket is by bringing in new economic investment, particularly from outside our state or country. Increasing manufacturing is especially effective at filling the bucket as the manufacturing sector typically has significant out-of-state and international markets. In other words, other regions sending their dollars here (the exact opposite of my Amazon analogy above).
As economic activity is captured locally, the bucket grows through increasing jobs, wages, local purchasing and base to support prosperity. That is what we like to call an economic multiplier or economic impact -- the accumulation of both direct and indirect impacts of development.
Why is the attracting NorthStar Pellets a win-win? Because it does both -- it fills holes in our bucket and brings in significant outside economic investment. Moreover, the development of NorthStar Pellets will benefit forest owners and improve forest health and the natural environment.
Consider the following positive impacts:
Increasing New Investment: NorthStar Pellets will create 45 new jobs and have an indirect impact on an additional 200 jobs throughout the region. They will generate nearly $15 million in new wages and have a total economic impact of $56 million annually. Most exciting, 100% of the pellets produced at the plant will be shipped overseas, bringing in $17 million in export revenue annually to our region.
Filling Leaking Holes: The proposed plant will use 100% residual wood fiber. When a sawmill produces lumber, about half the log becomes a lumber product. The other half becomes residuals in the form of sawdust and chips. The market for residuals has declined dramatically in the past decade. In fact, there has been a 1.2 million ton decline in wood fiber demand in Minnesota since 2009. The lack of a market for the residuals is a big hole in our bucket -- and the sawmills and loggers in the state are feeling the impact. NorthStar Pellets will utilize the existing residuals, adding more value to our economy and plugging a big hole in our bucket.
Value to Forest Owners: NorthStar Pellets will create additional revenue for forest owners. In Minnesota, a majority of the forests are owned by the county, state, and national governments -- in other words, by us. Revenues from forests help keep our taxes lower by supporting public services. The declining demand for wood fiber is clear. The Minnesota Department of Natural Resources says nearly 250,000 cords of timber sales went unsold last year. This is bad forest health, and even more for our own pocketbooks.
Forest Health and the Environment: By utilizing the residuals and providing a market for underutilized and diseased species, NorthStar Pellets will be improving forest health. Proper forest management is critical not only for economics, but for wildlife and recreation in the forest. Even more, wood pellets are carbon-beneficial and are making an increasingly significant impact globally.
The NorthStar Pellet development is on the fast track to breaking ground right here in Bemidji. The only remaining hurdle is passing a limited production incentive for 10 years (similar in nature to ethanol) at the state level to support the logistical challenge of getting locally produced pellets to port. The return on investment for Minnesota is 20 to 1. Would you invest $1 to make a guaranteed $20 in the next decade? Thankfully, the legislation has strong support from our region’s legislators, and is being authored and led by Rep. John Persell and Sen. Justin Eichorn. It has also received broad-based support from leaders and experts within Minnesota’s forest industry.
Want to know how you can support this important development here in Bemidji? Please contact me at email@example.com. Win-win projects like NorthStar Pellets don’t come along often. We need to do all we can to push it across the finish line.
Hengel is the executive director of Greater Bemidji.