By Josh Weinhold, Truth Staff
jweinhold@etruth.com
ELKHART -- A deal loaded with tax incentives to bring a refrigerator manufacturing operation, complete with 241 new jobs, to Elkhart developed very quickly, city and company officials said.
A mere two months will have elapsed from the first meeting between the city and Dometic Corp. and an upcoming City Council vote on a 10-year tax phase-in plan for the company.
"When they came to us, we took a hold of the ball and ran with it," Mayor Dick Moore said.
If the abatement is approved, Dometic will move a refrigeration manufacturing plant here from Sweden. The company, which supplies the recreational vehicle and boat industries, also makes awnings, air conditioners and other products.
Dometic set up a June 2 meeting with city officials and presented its plans to move the Sweden facility, said Elkhart economic development director Brian Gildea. The company announced the European plant closing July 10 and was considering Elkhart, Mexico and China for the operation.
Dometic officials said Elkhart was an ideal location logistically, as 70 percent of its customer base is within 50 miles of a plant here. The area also had a work force that could handle the job, company officials said.
But the company would need an incentive package from the city to sell the move to its board of directors, Gildea said.
Company officials laid out a series of requests and negotiated back and forth with the city, Gildea said. Elkhart wasn't able to offer everything the company wanted, but the two sides eventually reached an agreement.
"We want to do what's best for the company," Gildea said, "but we also want what's best for the taxpayer."
Elkhart is already to home to Dometic's Americas division, which includes about 60 employees in sales, marketing, financial and warehouse operations.
Dometic President Douglas Whyte said the company initially will hire 180 employees -- in "fairly skilled" welding, engineering and maintenance positions -- and 241 total by 2012. The jobs will pay an average of $11.70 per hour. While the hourly rate may seem low, Gildea and Whyte said Dometic's fringe benefits package has a higher value than companies employing similar workers.
Whyte said the company already has the building to house the operation, a 150,000-square-foot facility at 2320 Industrial Parkway. The company will invest an estimated $3 million to $5 million in building improvements, he said, and $5 million to $7 million for equipment.
Through the phase-in, Dometic will save about $66,000 in real property taxes and $689,680 in personal property taxes. The company will pay $102,000 in real property taxes and $787,580 in personal property taxes over the life of the abatement. City officials estimate the jobs created will produce about $675,000 in local income taxes over the 10-year period.
The city has agreed to 10-year phase-ins before, but it's the first since Gildea took over his position in 2004. Three-, five- or seven-year phase-ins are typical, but given the number of jobs created, a longer agreement was appropriate, he said.
The city contacted the Economic Development Corp. of Elkhart County, which worked with the state EDC to secure additional incentives.
A state grant will pay 50 percent of Dometic's employee training costs over two years -- up to $170,000, according to a letter from the Indiana Economic Development Corporation to the company. Dometic also will receive $500,000 in tax credits over seven years for creating the new jobs.
The City Council unanimously approved an initial resolution on the abatement at its Monday meeting. It must vote on a confirming resolution at the Aug. 3 meeting to grant the final go-ahead.
If the abatement passes, Dometic will sign a memorandum of agreement with the city, a type of contract listing the company's and the city's commitments. As with all tax phase-ins, Gildea said, the agreement allows the city the right to recoup the tax savings if the company closes or moves the plant during the 10-year period.
Moore admitted that, in prosperous times, the city might not offer such incentives to companies. But now, Elkhart will do whatever is necessary to bring in employers.
"I understand the times we're living in, and how important another 241 jobs is to this community," Moore said. "And I think the council reacted in the same way."