MEDC Pitches LifeSavers Plan

March 19, 2002
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HOLLAND – The state has offered its best pitch to keep the LifeSavers plant in Holland, offering parent company Kraft Foods North America up to $36.6 million in financial and tax incentives to reverse its decision to move production to Canada.

Whether Kraft executives will bite is another matter. As of late last week, they had yet to even respond to Michigan Economic Development Commission overtures to discuss what the state can do to save the plant.

“The fact that they haven’t been returning our phone calls isn’t a positive sign, but we want to give it our best shot,” MEDC spokeswoman Jennifer Kopp said.

The agency last week offered Kraft two proposals designed save the company millions of dollars in operating expenses for the LifeSavers plant, which employs about 600 people who will lose their jobs. The state forwarded the proposal forwarded Jan. 15 in a letter from Gov. John Engler to Kraft Foods CEO Betsy Holden.

Under one scenario, the Chicago-based Kraft would receive $25.5 million in tax breaks through the establishment of a Renaissance Zone that exempts the plant from paying local and state property taxes. The proposal would require Kraft make any new investment in the plant. Kraft would only have to preserve the jobs of workers, many of whom have been with the company for several years and are well paid.

A second scenario requires Kraft to make $20 million investment in the plant to receive additional tax breaks and incentives that would bring the total value of the package to $36.6 million. The investments would involve Kraft relocating 200 jobs that pay a wage of $17 per hour from the Mount Royal, Quebec, plant where the company now intends to relocate the Holland production by mid-2003.

The state also remains committed to investing $400,000 in a eastern Michigan sugar company so it can make the liquefied sugar LifeSavers needs in Holland, saving the company $1.8 annually in transportation costs.

Kraft, in announcing the closing of the Holland, cited a need to reduce the facility’s operating costs as the basis for its decision to move production to Canada, where labor and raw materials costs, particularly sugar, are significantly lower.

A Kraft executive previously indicated that the company wasn’t interested in making any investment in the Holland, although it would at least listen to what the state had to say.

The MEDC proposal to keep LifeSavers in Holland, where it’s operated for 36 years, is more than what the state typically offers new companies moving into Michigan, Kopp said. The offer reflects the gravity of the situation and sizeable loss of existing, well-paying jobs in the community, she said.

“We get very creative when companies are pulling up stakes,” Kopp said. “Since we know this is a dire circumstance, we need to get as creative as we can and pull out as many tools as we can.”

Despite the lack of contact thus far, Kopp expects that Kraft executives will give the state’s offer consideration. Kraft responded positively last year when the MEDC, after being approached by the company for assistance, offered a $20 million incentive package to lower costs of operating its Battle Creek Post its Battle Creek Post cereal plant, Kopp said.

The package to save the Holland LifeSavers plant is patterned after the Battle Creek proposal.

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