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Local businesses disappointed in Broadcom's decision to pull plug on Hynix project

Under the company name “Broadcom,” Avago planned to manufacture transmission chips at the former Hynix facility in West Eugene. SBG photo

EUGENE, Ore. - A year ago, Broadcom had acquired Avago and the rehabilitation of the vacant Hynix plant to make cell phone parts looked like a done deal from the barstools at the Keg Pub in West Eugene.

Now the news that Avago won't puruse the project has left the bar's owner pretty peeved.

"That's another trickle down effect is that I would have had a lot of people that were working up on the hill that would have been potential customers for me," Chris Coleman said.

Kimberly Fizznoglia at a nearby Great Clips had hoped for an uptick in business, too.

"It's kind of sad because we were probably hoping we would get more of that flow from that building," she said.

Tim Duy with the University of Oregon economics department suspects Broadcom's about-face doesn't have anything to do with Eugene and enterprise zone tax breaks.

"My initial read is that circumstances changed in the industry," Duy said.

Duy said the move probably is "much more about the fundamental issues that they might be facing within their industry and the possibility of slowing sales."

For example, even as the chip maker drops plans for the Eugene facility, the company has moved to purchase Brocade, a maker of networking equipment, for $5.5 billion.

Duy feels the lesson for local government is not to bank on multi-million dollar tax breaks to seal the deal on large manufacturing projects.

And he adds: It's better the bad news came now instead of later.

"Had Broadcom's fortunes changed in 2 years from now, we would have handed them an enormous amount of tax credits," he said, "and they would have been gone."

Hynix closed in 2008, laying off 1,100 employees.

The closure also hurt the local tax base: Hynix paid $4.6 million in property taxes in 2007. Of that, $2 million went to the City of Eugene; $1.46 million supported the Eugene 4J School District.

Putting the plant back to useful work remains a goal for the local business community.

"As soon as we know a little bit more about their plans, we'll do everything we can to support them in finding another hopefully great user for that facility," said David Hauser with the Eugene Chamber of Commerce.

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