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Alien Technology sought financial assistance before closing

Alien Technology

Alien Technology lifted off from Fargo in much the same way it landed, looking for a financial boost.

A few weeks before announcing plans in mid-May to shutter the Fargo plant, a closing that's final Monday, executives from the California-based maker of "smart tags" were still considering expanding the facility here and seeking financial assistance.

The company's wavering intentions and desire for further economic help were made clear in 11 pages of e-mails The Forum obtained in an open-records request from North Dakota State University.

Alien specifically sought reductions in its land and building rent and wanted to see if it could tap any of the federal stimulus money the state received, said Tony Grindberg, executive director of the NDSU Research and Technology Park, where Alien's 50,000-square-foot Fargo facility was located.

But without any assurance that the market would firm up for the microscopic chips, also known as radio-frequency identification tags, or RFID tags, officials weren't willing to offer any more help to the company once heralded as the cornerstone of the state's high-tech industry.

"It was really, fair to say, kind of cart before the horse," Grindberg said.

Victor Vega, marketing director for Alien, said in an e-mail response to questions that the lack of additional financial assistance wasn't a leading cause of the company's departure.

"There are many variables which were considered prior to making the final decision, but ultimately it was a function of market volume and volatility," Vega wrote.

Public agencies and private investors put together a $36 million incentive package when Alien picked Fargo as a manufacturing site in 2003, nearly $16 million of it in low-interest loans, Grindberg said. Only about 20 percent of the loans available were drawn down, he said, and Alien has pledged to pay back what was borrowed.

Vega said the key issue was the company's production process, designed for a consistently high demand that hasn't developed.

That also explains why Alien didn't do as much research and development in Fargo as initially expected, said Phillip Boudjouk, NDSU vice president of research, creative activities and technology transfer. Boudjouk wrote in an April 1 e-mail that NDSU tried "with less success than we liked" to engage Alien in military and other federal RFID research.

"They just basically had to focus on the market issues with little or no focus outside that, none that we saw," Boudjouk said this week.

Despite the market pressures, Alien thought about expanding its facility here instead of closing it. In an e-mail on Nov. 11, 2008, Grindberg wrote that Alien CEO George Everhart told him an assembly line at its Morgan Hill, Calif., headquarters could be moved to Fargo. Everhart estimated the cost of the move at $3 million and asked for help in defraying those costs.

That plan was still under consideration until early April, Vega said.

As late as April 1, Alien planned to keep a core group of workers on staff in Fargo, Grindberg wrote in an e-mail to NDSU President Joe Chapman and Boudjouk. This came after word in February that Alien was reviewing a shutdown here.

It wasn't until April 21 that Grindberg was informed by Everhart that the Fargo plant would close, he wrote in an e-mail to Chapman and others on April 25. He also warned in that message that the move was bound to attract public interest:

"Wishful thinking would produce no media interest..? Doubtful!" he wrote.

Vega and Grindberg said the week after that Alien was still considering keeping the Fargo facility open.

Grindberg said he told The Forum at that point that the option for Alien to stay was still on the table because he's an "eternal optimist" who thought the situation could change and because it wasn't his place to announce the closing.

Grindberg said that a few potential tenants have already toured the building. Boudjouk said the facility's power connections, clean room and chemical-handling section would make it an ideal fit for a range of electronics companies.