Ephrata Company a Towering Business

By Mary Hopkin, Tri-City Herald, Kennewick, Wash.

Jul. 15–EPHRATA — One might expect a 12,000-pound steel sheet to creak or groan as it’s rolled into a cone.

But it’s surprisingly quiet, or maybe just drowned out by the welders soldering the edges of cones that are stacked together to become windmill towers.

Katana Summit began fabricating the towers in a vacant airplane hangar at the Port of Ephrata two years ago.

Since then, the company, a subsidiary of Anacortes-based T Bailey Inc., has seen steady growth. Its Ephrata work force has nearly tripled, from about 40 workers to nearly 120, and the company recently moved out of the old airplane hanger into a new steel building across the street.

And on the last day of May, 50 percent of Katana Industries was sold to Sumitomo Corp., a Tokyo-based corporation, for an undisclosed amount. It also changed its name from Katana Industries to Katana Summit, and is making plans to expand in the Midwest.

Darrell Lehmann, Katana’s president and CEO, said the expansion doesn’t mean Katana will leave Eastern Washington. When your business involves shaping and moving massive amounts of steel, location is everything.

Lehmann said trucking just one of the 262-foot, 200-ton towers costs about $100,000, about a quarter of the sales price of each.

“This is where the wind projects are — and that’s true for the Midwest, too — but it’s not competitive shipping-wise,” he said.

Katana began making the towers at its Ephrata facility in 2005 as windmill farms worked to get their projects completed before the end of the year, when a tax credit for wind power developers was scheduled to expire.

The tax credit’s extension to 2008 created even more demand. The company is filling orders for towers for projects in Goldendale and Arlington, Ore. And under new legislation proposed as part of the new Senate energy bill, it could be extended for another five, giving energy companies more incentive to build wind farms in Washington.

The current credit provides wind power developers a 1.9 cent per kilowatt-hour credit, which sounds like pennies but adds up to big bucks.

“Currently the credit is $20 per megawatt hour, which is significant because production costs today for the Northwest power markets are $60 to $70 per megawatt hour,” said Roger Thompson, a spokesman for Puget Sound Energy, which has developed wind projects in Kittitas and Columbia counties.

Thompson said his company would like the tax credits extended for longer periods of times for long-term planning of their projects.

“The production tax credit is a very important factor in the overall economics of wind power,” he said.

A surge in the wind power industry means steady work at the Ephrata plant, where Katana only builds towers under contract for wind farm projects that are permitted and ready to be built.

The company’s expansion has provided more than jobs to the community: It’s helped the Port of Ephrata obtain grants allowing it to create new roads and update rail lines.

Mike Wren, the Port of Ephrata’s manager, said when he took over in 2005, there were two main hurdles the port faced in trying to attract industrial businesses to the area.

All roads leading to the port’s property passed through the city’s residential areas and school zones — making it a hard sell to folks who were going to be doing a lot of trucking in and out of the area.

And the port’s rail spur, built in the 1940s by Burlington Northern, was in dire need of repair and updates.

With the addition of Katana at the port, Wren was able to obtain $1.4 million in state and federal grants to fix the rail spur and build the new road, which runs parallel to the airport runways and keeps semi-trucks out of town. It was completed last week, he said.

“You have to have one success to get to the next,” Wren said. “Katana put us in that position.”

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Copyright (c) 2007, Tri-City Herald, Kennewick, Wash.

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