Supplier Expands Cascade Site
CASCADE — Automotive supplier Erwin Quarder Inc. has received an allocation of more than $2.6 million in bonds through the state's Private Equity Bonds Program to purchase machinery and equipment, as well as furnishings and fixtures, for its leased manufacturing facility in
Business Manager Jennifer Steward said the bond proceeds will help finance the company's expansion at its current location at
"We've had tremendous growth in this past year and a half," Steward noted. "Obviously, growing in the automotive market is a little bit difficult, especially here in
When Erwin Quarder moved into the facility in 2003, it was leasing 41,000 square feet of space. It now occupies 59,000 square feet, but that will be bumped up to 80,000 square feet by December of this year. Its employee base had doubled in the interim, from 40 to 82. The company will use proceeds from the private equity bonds to buy new manufacturing equipment, including new presses for its plastic injection molding operation.
Private equity bonds, formerly known as industrial development revenue bonds, are tax-exempt debt obligations. The Michigan Strategic Fund issues private equity bonds on behalf of the borrower and lends the bond proceeds to the borrower. This type of loan can be used to finance manufacturing projects, not-for-profit projects, and solid waste and hazardous waste facilities. In effect, the Michigan Strategic Fund serves as an intermediary between a borrowing company and the lender to lessen the cost of borrowing, because the interest paid to the bond buyer is exempt from federal, state and local taxes.
"The reason why we filed for that type of financing is because we're growing and we knew we would have so much equipment that we would have to purchase in the next two years," Steward said. "We took a look at our business plan and at what we foresaw we were going to need."
For manufacturing projects, 95 percent of the bond proceeds must be used to acquire land, buildings and equipment necessary to the manufacturing process, according to the Michigan Economic Development Corp. At least 70 percent of bond proceeds must be spent on core manufacturing costs. If an existing facility is purchased, at least 15 percent of the bond proceeds must be applied to facility renovation.
Steward said some of the equipment has already been purchased, and more purchases are planned.
"We have additional contracts; it's not just the plastic injection molded parts now. We have new technologies; we have insert-molded and two-shot — more complex programs than when the company first started in 1998."
Erwin Quarder generated $8.5 million in revenues last year.