Dietool Engineering Joins Tool Die Recovery Zone

May 18, 2008
| By Pete Daly |
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WALKER — The Michigan Economic Development Corp. has announced that Dietool Engineering Co. Inc. was recently admitted to the Tool Makers Alliance Tool & Die Recovery Zone. Admission to the 10-company alliance permits Dietool Engineering to operate virtually free of almost all state and local taxes for 12 years.

Dietool Engineering, located on Three Mile Road, is the 16th Walker company admitted to one of the 24 Tool & Die Recovery Zones authorized by the Michigan Strategic Fund board since 1996. About 218 tool and die companies in 31 Michigan counties are now members of the state program designed to bolster the tool and die industry, which has suffered a loss of business since the decline of the Michigan-based auto industry.

"There are more companies in the city of Walker in Tool & Die Recovery Zones than any other small city in Michigan," said Bridget Beckman, public information officer of the MEDC.

On April 23, the MSF Board approved Dietool Engineering's request to join the Tool Makers Alliance. Dietool's Recovery Zone designation becomes effective next Jan. 1.

According to Walker City Manager Cathy Vander Meulen, Dietool Engineering will save about $270,000 in real property and personal property taxes assessed by Walker over 12 years, starting with 2009. Under the law, a company seeking Recovery Zone membership has to obtain the approval of its local government. A company can be granted up to 15 years of tax-free status, with the approval of local government officials.

Ingo L. Gottschalk, president of Dietool, applied for Recovery Zone membership last November. In his application letter to Vander Meulen, he said that the company, founded in 1970, previously had from 26 to 28 employees, making small to medium-sized progressive dies primarily for the automotive industry.

"However, with the challenges that the Tool & Die industry has encountered, it has become increasingly difficult to maintain that level (of employment). Currently, we have 22 employees," wrote Gottschalk, adding that membership in a Recovery Zone alliance "will allow us to continue to maintain our current level of employment, with a more positive outlook for employment growth in the future."

Dietool currently makes sheet metal tooling for the automotive, furniture and appliance industries, according to the MEDC.

To be considered for Recovery Zone designation, a company must have a collaborative agreement with other tool & die companies that "demonstrates synergistic opportunities among the companies," according to a MEDC announcement. One way it would do that is by sharing large contracts among several members of an alliance. Other "synergistic opportunities" include shared training programs for employees.

Members of each tool and die alliances tend to be located in one general area, although there are some with members spread across the state. The Tool Makers Alliance has 10 members, three of which are in Walker. The rest are in the Greater Grand Rapids area. The Tool Makers Alliance was organized in 2006 and is headed by Michael Hartley, the president and owner of Apollo Tool and Engineering in Walker.

The 16 Walker companies that are in a Recovery Zone are represented by six different alliances. In addition to the Tool Makers Alliance, the others are the Global Tooling Alliance, Michigan Tooling Group, Tooling Systems Group, United Tooling Coalition and West Coast Tooling Coalition.

According to the U.S. Bureau of Labor Statistics, Michigan in 2006 had 1,780 tool and die establishments with 35,708 employees, representing almost 20 percent of the U.S. total.

Tool and die jobs are among the most skilled in American industry and have traditionally paid up to $26 an hour, according to the Bureau of Labor Statistics.

The Michigan Economic Development Corp., a partnership between the state government and local communities, promotes economic growth by developing strategies and providing services to create and retain jobs.

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