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Top 10 East Texas business stories of year: Economy shows signs of improvement

By Ken Hedler
Dec. 30, 2017 at 11:11 p.m.

Nucor Steel Longview on Thursday June 29, 2017. (Michael Cavazos/News-Journal Photo)

The year 2017 saw the merger of Good Shepherd Health System with Christus Health, a deal for a Dollar General distribution center in Longview that will create hundreds of jobs, beginnings of recovery in the oil and gas industry, plans for more affordable housing and a decline in the area's jobless rate.

Here is a look at those and other top business stories of the year in East Texas, as selected by the editors of the News-Journal.

1. Hospital merger

The merger of Good Shepherd Health System — Longview's largest employer — with Irving-based Christus Health went into effect Feb. 1, ending an 18-month search for a larger system for Good Shepherd to join. Hoped-for results have come quicker than anticipated, leaders say, with Good Shepherd returning to profitability by August.

Long-struggling Good Shepherd sought such a merger to improve its financial health. The acquisition by Christus provided the resources of the 151-year-old entity that manages more than 40 hospitals in Texas, including Trinity Mother Frances health system in Tyler.

Like Good Shepherd, Christus is a Catholic, faith-based nonprofit health entity.

The merger led to changes in names and the management team.

Good Shepherd Health System was renamed Christus Good Shepherd Health System, and its two medical centers were renamed Christus Good Shepherd Medical Center-Longview and Christus Good Shepherd Medical Center-Marshall.

Todd Hancock took over as CEO of the Longview entity, and others assumed executive positions. Good Shepherd CEO Steve Altmiller immediately resigned.

As of August, Christus Good Shepherd Medical Center-Longview was operating in the black, Hancock said in an interview published Dec. 2. Reports showed it had been years since Good Shepherd had been profitable.

"You probably have to go back five or six years for the hospital to have a profit," Hancock said at the time.

According to the Longview Economic Development Corp. the health system employs 2,529 people.

2. Dollar General

The year ended with Dollar General confirming plans to build a distribution center at the North Business Park off George Richey and McCann roads.

In a news release Wednesday, Tennessee-based Dollar General said the distribution center would create about 400 jobs at full capacity and serves about 1,000 Dollar General retail locations in Texas and the Southeast.

It will become the company's 17th distribution center nationwide and the second in Texas. Dollar General plans to open the Longview warehouse by spring 2019.

Dollar General signed an agreement to invest more than $70 million to build a distribution center covering more than 1 million square feet on a 110-acre site.

The city and Gregg County offered Dollar General incentives that included paying no property taxes to the city or county for 10 years if the company meets its marks. Moreover, Dollar General will pay 25 percent of its inventory tax bill for 25 years.

LEDCO estimated an economic infusion reaching $700 million over the next 25 years from Dollar General.

3. Energy industry recovery

The oil and gas industry continued its slow recovery from the doldrums that arrived when oil prices collapsed in late 2014 amid a global glut.

Recent price increases were attributed by industry officials to OPEC's decision to cut oil production, expanding markets overseas for domestic energy production and a more friendly environment in the nation's capital with Donald Trump as president and Scott Pruitt heading the Environmental Protection Agency.

During a Dec. 5 coffee talk to the Longview Chamber of Commerce, Austin-based industry spokesman Luke Legate said the oil industry in Texas was faring better with a steady price increase instead of spiking.

Legate said that while most of the boom is occurring in the Permian Basin, the Eagle Ford area and elsewhere in the Lone Star state, East Texas could benefit because land is less expensive here.

Area industry representatives ended the year speculating oil prices could hit $60 a barrel by mid-2018.

4. Komatsu and Nucor

Two companies that announced plans to buy separate pieces of Joy Global during the summer of 2016, Komatsu and Nucor, spent 2017 expanding their labor forces and planning to build more facilities.

Japan-based Komatsu, which bought Joy Global's manufacturing plant off Estes Parkway in South Longview for $3.7 billion in April, hired more than 100 people during the year through late October.

The hiring brought the workforce back to 520 employees, and plans to add another 100 jobs which would return staffing to where it stood before Joy Global began layoffs in late 2015.

Komatsu, which manufactures equipment for the mining, forestry, industrial and construction industries, also broke ground Nov. 14 on a $6 million, 23,000-square-foot power lab facility.

Meanwhile, Nucor, which bought Joy Global's steel mill for $29 million, increased the workforce to 160 from 130 as of late June and planned to have 200 employees on board by year's end.

Nucor, based in Charlotte, North Carolina, has invested in employees and proposed buildings to accommodate growing production, executives said.

5. Affordable housing

An Austin-based developer obtained federal tax incentives this year to build two apartment complexes in Longview — one of which will redevelop a long-vacant downtown landmark.

Saigebrook Development in July received about $1.1 million a year in tax credits for 10 years from the Texas Department of Housing and Community Affairs.

The incentives are intended to make it financially feasible for Saigebrook to convert the 61-year-old Petroleum Building downtown at 202 E. Whaley St. into the 49-unit Alton Plaza and build the 74-unit Edgewood Place on Clinic Drive, reserving a majority of the units for affordable housing.

City officials lauded conversion plans for the long-vacant Petroleum Building, believing it could help revitalize downtown. The Clinic Drive site is close to Longview Regional Medical Center.

6. Jobless rate drops

The unemployment rate in the tri-county Longview Metropolitan Statistical Area fell through the year as the local economy improved.

The jobless rate for Gregg, Upshur and Rusk counties fell to 4.5 percent in September — the lowest since April 2015 — and to 4 percent in October, the lowest since December 2014.

Though the jobless rate inched up to 4.2 percent in November, that was still down from 6 percent a year earlier.

7. Kilgore College SBDC

The Small Business Development Center of the U.S. Small Business Administration has been in a state of flux since longtime director Brad Bunt left in January to accept a director job in the Dallas area and took most of his staff with him.

But the SBDC is ending the year with support from local governments and business organizations to move from the Austin Bank building on West Loop 281 to the University of Texas at Tyler Longview University Center on North Eastman Road.

Kilgore College severed its 27-year affiliation with the off-campus SBDC effective the start of the federal fiscal year Oct. 1 because the college administration sought to go in a new direction.

Tyler Community College immediately filled the breach at the center, which provides one-on-one counseling to small businesses and classes for entrepreneurs. The director of the SBDC in Tyler, Don Proudfoot, assumed oversight of the Longview center.

Within two months, Amanda Nobles, executive director of the a Kilgore Economic Development Corp., organized a news conference in which representatives from a six-county coalition expressed support for UT Tyler to operate the SBDC.

8. U.S. Steel restarts

Encouraged by improvement in the U.S. oil industry, U.S. Steel in late April reported plans to restart the No. 2 Welded Pipe Mill that it idled a year earlier at the Lone Star Tubular Operations.

"We expect production to resume in May, and we anticipate recalling 200 employees," U.S. Steel spokeswoman Meghan Cox said in an email.

Cox referred to her company's quarterly report, issued a day earlier, that cited a 112 percent increase in rig counts.

Citing weak conditions in the energy market, the Pittsburgh-based company announced in March 2016 that it would lay off 450 employees at Lone Star and idle the sprawling plant in Morris County and another plant in Alabama.

9. Downtown restaurant closures

Two longstanding downtown restaurants, the Tyler Street Bistro, with its adjoining Gerald's Martini Bar, and Osaka Sushi Bar & Grill on the other side of East Tyler Street, closed in May and June, respectively.

The bistro and martini bar closed indefinitely after owner Gerald Rodriguez died May 15. In business since 2000, Rodriguez was an active promoter of downtown.

Osaka followed suit June 26. Jaejung Kim, owner for four years, said he was unable and unwilling to cover $116,000 in delinquent sales taxes that he said the previous owner owed to the state.

10. Diagnostic Clinic

Longview Regional Medical Center and Diagnostic Clinic officially parted ways in November.

However, Casey Robertson, the hospital's CEO, said Longview Regional would would continue to work closely with the clinic despite their formal affiliations being terminated. He said some doctors at Diagnostic would join Regions Clinic, a new physician practice affiliated with LRMC.

The news of the split came about five months after the News-Journal began reporting doctors were exiting Diagnostic Clinic.



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