Kellogg Unit Coming To State

May 18, 2004
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BATTLE CREEK — Accompanied by company representatives at an announcement event today, Gov. Jennifer M. Granholm applauded Kellogg Co.’s decision to move its U.S. Snacks business unit from Elmhurst, Ill., to Battle Creek, resulting in the addition of 300 Michigan jobs. The move was secured with assistance from the Michigan Economic Development Corp. (MEDC).

“This relocation fits perfectly with our vision to make Michigan a global economic powerhouse for the 21st century,” Granholm said. “Today’s decision will result in meaningful efficiencies for Kellogg, and add hundreds of jobs to Michigan’s work force.”

A Single Business Tax credit offered by the MEDC worth approximately $3.7 million over the next five years, combined with local assistance and the prospect of a Michigan Agricultural Renaissance Zone, made up the incentive package offered to encourage Kellogg to bring the headquarters and jobs to Michigan. Granholm was personally involved in the process, and had conversations about the potential relocation with Kellogg Chairman and Chief Executive Officer Carlos M. Gutierrez.

“This move is the logical next step in the transition of our U.S. Snacks business unit from an acquire-and-integrate strategy to one of sustainable, organic growth,” said Gutierrez. “After much discussion with the MEDC and Gov. Granholm, we were able to create a win-win situation for our employees and the state of Michigan.”

The benefits to Michigan are considerable. In addition to the 300 new jobs directly associated with the move, an economic analysis conducted by the University of Michigan estimates that an additional 238 new Michigan jobs would be created as a result of increased economic activity due to the project. The state is expected to gain more than $9.6 million in additional revenue through the year 2008, net of the Single Business Tax credit and adjusted for inflation, as a result of Kellogg locating the headquarters in Michigan.

“Kellogg is one of Michigan’s great companies, and everyone worked very hard to make the case that this would be a good move,” said MEDC President and CEO Don Jakeway. “I am glad that we were able to put together a solid proposal that is attractive and that really works well with the company’s ongoing plans in Michigan.”

In addition to the Single Business Tax credit, the MEDC and the city of Battle Creek support the creation of a five-year, tax-free Agricultural Renaissance Zone for the project. The company would receive two full years of Renaissance Zone benefits and would make a payment-in-lieu-of-taxes to refund the benefits in years three, four and five. The estimated value of the zone is approximately $16 million. Final approval for this zone is expected to be completed by the city of Battle Creek on May 24.

Battle Creek also has proposed 50 percent abatement of the company’s new real and personal property for 12 years. The estimated value of the abatement is $985,100, and it is expected to be finalized by July 6.

In addition, Battle Creek Unlimited will pool local resources to provide a $7 million, interest-free loan for 25 months. The total value of this incentive is estimated at $578,000.

The Kellogg project was one of nine major expansions and relocations announced by Granholm today. The projects are expected to create or retain a total of 8,683 jobs for Michigan workers, including 2,866 directly by the nine companies.

With 2003 sales of nearly $9 billion, Kellogg Company (NYSE:K) is the world’s leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles, meat alternatives, pie crusts and ice cream cones. The company’s brands include Kellogg’s, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, Murray, Austin, Morningstar Farms, Famous Amos, Carr’s, Plantation, Ready Crust, and Kashi. Kellogg products are manufactured in 17 countries and marketed in more than 180 countries around the world. 

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