ANDERSON — The Nestlé plant in Anderson could invest $166 million to increase production and create another 104 jobs, but that hinges on two variables.
The Anderson City Council must give final approval of a $14 million tax abatement. And the leaders at Nestlé’s world headquarters in Switzerland must decide whether they want to expand in Anderson or in another American city.
During a Thursday meeting, the council voted 9-0 in its initial approval of the abatement, with several members saying it is worth it because of the job creation and $14 million in property taxes it would bring in over 20 years. The council will make its final vote on the issue in its September meeting, where the public can comment on the abatement and expansion.
Between 2006 and 2008, Nestlé built a $359 million plant in Anderson — Nestlé’s largest single capital investment in its history.
The facility produces from 3 million to 4 million bottles a day of Nestlé Coffee-mate Liquid, ready-to-drink Nesquik, and BOOST nutritional drinks, said Rachel Koelzer, the spokeswoman for Nestlé USA in Glendale, Calif.
To date, the company has invested $582 million in Anderson, said Greg Winkler, the city’s economic development director. The expansion would cost about $166 million, and that would be spent on equipment to furnish existing facility space.
A new production line would be the facility’s seventh, councilman David Eicks said. The existing facility is designed to hold up to eight lines, and there is room to construct other buildings if the company wants to continue expanding locally, he pointed out.
The plant currently employs 663, up from the original 300 jobs the company promised when it first located in Anderson. The proposed expansion includes 104 jobs that would add about $5.4 million to the annual payroll, excluding benefits.
Koelzer said details about the jobs would not be released until a final decision has been made on the expansion.
Currently, 30 percent of the local plant’s employees are from Anderson and another 20 percent from Madison County, he said. About 45 percent are from surrounding counties.
To help more local people gain the skills needed for the new jobs and other similar positions, Nestlé, Ivy Tech Community College and the city have agreed to partner to develop training programs in Anderson. The classes will be geared toward educating people to fit the requirements needed to work at Nestlé, but the classes will be open to anyone, Winkler said.
He noted that plant officials in Wisconsin and Kentucky want the proposed expansion to take place at their facilities, so Anderson has to remain competitive by offering an abatement to Nestlé.
If the expansion takes place here, the additional investment in equipment would mean the company would pay an extra $28 million in property taxes over 20 years.
The abatement Nestlé is requesting would cut that bill in half. The six-year tax abatement would save the company $14 million, but the city would still receive $14 million in payments from the company over 20 years.
If the expansion occurred at a different Nestlé plant, the local Nestle plant would pay $4.5 million in property taxes every year, and in 20 years that would add up to $90 million.
If the expansion takes place here, the average annual tax payments would rise to $5.6 million a year and $112 million over 20 years.
“We are $1.1 million (a year) better off cutting this deal, not counting the 104 jobs,” Winkler said.
Even if the city doesn’t get the full amount of taxes it could get from Nestlé, there are several benefits to this potential project, he noted.
As part of the negotiations between Nestlé and the city, the company has agreed to pay an abatement fee of $567,000 over the six-year period of the tax abatement. The money would go to the Anderson Redevelopment Commission, which would use it to redevelop the recently demolished Edgewood Plaza, Winkler said.
Eicks said this abatement fee is unprecedented in Anderson.
“They (Nestlé) didn’t have to agree to that, just like we don’t have to agree to the abatement,” he said. “It’s a win-win.”
The city would also get back $2 million in tax increment financing funds held in a debt reserve fund. Since the money isn’t being used, Nestlé would release that money back to the redevelopment commission for other use, Winkler said.
Nestle projects, such as the proposed expansion in Anderson, must be stamped by the headquarters in Switzerland for approval, said Michael McCrary, the company’s manager of property taxes.
“They look at each plant and presentation and pick one that is the best fit for Nestlé,” he said during Thursday’s meeting.
April Blackmore, the Anderson plant manager, said she is unsure about when Nestlé officials in Switzerland will make their decision on where to expand. They could take their time to make sure they pick the best option.
“We hope it’s in our favor,” she said.
Blackmore also spoke about how the local Nestlé plant and its employees are involved in the community, including donating time, money and other items to United Way, Coats for Caring, blood drives, schools and more. And she has further plans for more involvement.
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