- change ups
JCI Nixes Move Plan
HOLLAND — The lakeshore business community won’t be saying adios to 747 local manufacturing jobs, thanks to efforts by state and local economic development officials.
Recently concluded talks between the Michigan Economic Development Corp. (MEDC) and Johnson Controls Inc. (JCI) will not only keep the endangered jobs in West Michigan, but also add approximately 525 new positions as the company invests $1.8 million to revamp operations in both Holland and Battle Creek.
Just over a year ago, JCI announced that it would move its long-standing sun visor manufacturing operations from Holland to Mexico. The decision resulted in a direct loss of almost 900 jobs over an 18-month period. The move also created a void in the company’s Southview manufacturing plant, located on Holland’s south side. Last week’s announcements have made some headway in counteracting both those problems.
Earlier this month, JCI began shifting floor-console and “garnish trim” production operations from its 295,000-square-foot Lakewood plant, located in Holland Charter Township, to the unutilized Southview facility. With the Lakewood plant becoming vacant, JCI saw an opportunity to add the manufacture of new, high-end seating components to its Holland production mix. To make that commitment, however, the price had to be right.
So over the past several months the MEDC, local governments and Lakeshore Advantage economic development group worked together to offer an incentive package that would make a reinvestment in Holland more attractive to JCI than a move to Mexico or to elsewhere in the United States. When completed, that package included over $17 million in state tax credits and a $4.8 million tax abatement from Holland Charter Township. For its part, the city of Battle Creek added a $5.4 million tax abatement.
According to Debra Lacey, a public relations agent with JCI, those “dollars and cents” incentives were enough to convince the company to invest in West Michigan.
But the issue goes beyond economics for Lakeshore Advantage President Randy Thelen. “I think it’s important to understand that (Johnson Controls) has always been looking to back-fill and find new work in this community,” he said.
In this case, that means adding not just new jobs, but a completely new category of business in the Holland area. Although JCI is the world’s largest manufacturer of automotive seating products and its highest concentration of employees and facilities is in Holland, the company has never built seats there.
“We have not had any production related to their seating business before,” Thelen said, “so, again, this opens up a new opportunity there.”
The new seating adjusters that JCI will manufacture in Holland also offer a new opportunity for area suppliers, said Thelen. Until now, JCI has primarily dealt in plastics in the Holland-area manufacture of its interior components. But the new seat adjusters are steel. How this affects the local supply chain is yet to be seen, but according to Thelen, it’s an encouraging development.
To prepare for the manufacture of the new components, JCI is investing $118 million in its West Michigan plants. That work will begin this month in the Holland-Lakewood plant, where workers will begin to move out unnecessary equipment and prepare for the installation of new systems related to the production of the seat adjusters. Production is expected to commence in December. Once the operation is fully up to speed, Lacey said, the company expects to have added 525 new jobs.
According to an analysis from Gov. Jennifer Granholm’s office, the deal struck between the MEDC and JCI will keep 1,754 jobs in the state (including 1,007 indirectly related to JCI). The Single Business Tax credits will result in a $17.4 million loss of revenue, but a nearly $87 billion net gain for the state over the lifespan of the cuts (14 years for the Holland plant, 20 years for Battle Creek). Furthermore, the total of personal income tax revenues resulting from the workers affected by the project is estimated at over $1.3 billion.
“This is great news for (Holland),” said MEDC President and CEO Don Jakeway. “Without this incentive package, these jobs would have left the state, never to return. I commend the leaders of these communities for partnering with the MEDC to present a savvy business case which ultimately won the projects.”