Construction, Economic Development, and Manufacturing

City manufacturers continue to invest

In 2012, industrial abatements alone led to $40 million in manufacturing investments.

December 29, 2012
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City manufacturers continue to invest
Even some of the smaller outfits like ABLE Manufacturing are taking advantage of the tax breaks. The ABLE Manufacturing crew is made up of, from left: Jeff Miller, Eric Kuipers, Nick Valle, Paul Jacobs, and Vicki and Doug Nyenhuis, co-owners. Photo by Johnny Quirin

(As seen on WZZM TV 13) In a recent issue of the Business Journal, Brian Long reported that manufacturers in the metro area are bucking the nation’s downward industrial trend. Long, who directs supply chain management research at GVSU’s Seidman College of Business, wrote that numerous firms are at full capacity and reporting all-time highs in sales.

His evaluation is backed by actions the Grand Rapids City Commission has taken over the past several years. Board members approved 18 industrial tax abatements in 2012 after ratifying 22 the prior year. Of the 18 in 2012, 16 were PA198s, meaning half of a firm’s real and personal property taxes would be exempted for up to a dozen years once an investment was made in expansion and equipment. The other two were for PA328s, which abates personal property taxes for purchases of machinery, equipment and other business items such as office furniture.

Those 18 abatements are worth $40 million in private investment and 477 new jobs. To get that investment, the city gave up about $98,000 in property tax income for the length of the abatements, which ranged this year from five to 12 years. But the city will gain roughly $157,000 in new income tax revenue if all the projects are completed as laid out.

City Economic Development Director Kara Wood, whose office handles all company requests and leads the firms through the incentive maze, said 2012 was a good year for investment and job growth. “A lot of the new investment was by manufacturers seeing growth in the auto industry again, and some was re-shoring from foreign countries or obtaining new contracts that were previously sourced out of state but within the United States,” she said.

“The industries that saw some growth were printing and packaging, food processing and advanced manufacturing.”

In 2011, the 22 abatements granted were worth $61.4 million in investments and 322 new manufacturing jobs. So Grand Rapids manufacturers are putting more than $100 million back into their businesses and adding 799 jobs over the next few years.

“This year we saw less projects and less investment than last year, but 2011 was a record-setting year for new projects and investment so it isn’t a good comparison for 2012. I would consider the volume of activity normal as compared to previous years,” said Wood.

Here are the tax abatements Grand Rapids city commissioners approved in 2012
 
Company New Investment New Jobs Retained Jobs Type
ABLE Manufacturing $110,000 0.5 6 PA198
ArcticAx U.S. Ltd. $1,322,000 28 0 PA328
Benteler $6,179,500 6 105 PA198
Benteler $1,165,000 6 100 PA198
Canal Street Brewing $6,123,665 20 77 PA198
Display Pack $2,149,262 10 180 PA198
Grand River Aseptic Manufacturing $3,426,072 63 19 PA198
Hanson-Balk $682,072 2 41 PA198
Jedco Inc. $1,500,000 5 154 PA198
Kent Manufacturing $1,527,000 4 50 PA198
Leedy Manufacturing $4,815,00 4 54 PA198
MedDirect Inc. $1,501,000 252 0 PA328
NK Manufacturing Co. $860,000 25 75 PA198
One Beer at a Time $189,954 1 45 PA198
Pearson Foods Corp. $1,363,478 5 190 PA198
Precision Ploy $1,625,181 12 16 PA198
Pridgeon & Clay $4,805,000 16 650 PA198
Specialty Glass Products $675,000 17 0 PA198
Totals $40,019,184 476.5 1,762  

Note: The PA198 abatement covers real and personal property taxes, while the PA328 is for personal property only.
Source: City of Grand Rapids Economic Development office, December 2012

Benteler Automotive and Canal Street Brewing made the largest investment pledges in 2012. Benteler, at 320 Hall St. SW, plans to spend $7.3 million on new machinery and equipment to increase its footing in the auto and defense industries. That investment came on the heels of $5.5 million in spending the company made a few years ago.

“They’ve been moving into the defense industry, and that has gone well,” said Deputy City Manager Eric DeLong.

Canal Street Brewing, which owns Founders Brewing Co., will invest $6.1 million into a 9,000-square-foot expansion at 235 Grandville Ave. SW and into new equipment to increase its brewing capacity over the next few years. The craft brewer will add 20 new jobs to its work force.

“Over the past five years, since relocating to their current facility on Grandville Avenue, the company has experienced significant growth and increased brand recognition,” said Wood. “Currently, (it’s) the 42nd largest craft brewery in the world.”

It wasn’t only larger companies that committed to investing this year. ABLE Manufacturing, likely the smallest industrial firm in the city with six employees at 601 Crosby St. NW, agreed to spend $110,000 to install a new horizontal machining center at its plant.

“This proves that exemptions are not just for the big players,” said Commissioner Walt Gutowski.

The investment was the second ABLE has made in the last two years, as it bought a vertical machining mill in 2011.

“We’ve definitely seen an insurgence of more business, more sales,” said Doug Nyenhuis, who owns and manages the company with his wife, Vicki.

Not all the investments promised in 2012 came from existing companies. ArticAx Inc., a Toronto-based life sciences firm, is moving into the American Seating Complex at 801 Broadway Ave. NW and will invest $1.1 million into its new location and create 28 new jobs over the next three years.

“This is the type of company that we’re trying to attract,” said DeLong.

Another newcomer is MedDirect, which relocated from Kentwood to 3855 Sparks Drive NE. The firm manages billings and account receivables for companies in the medical industry. It has pledged to invest $1.5 million and anticipates hiring more than 250 employees over the next three years.

A third newbie is Specialty Glass Products, which is moving from Walker to the city’s southeast side and investing $675,000 to further develop its glass painting process. Specialty Glass plans to bring 17 new jobs to Grand Rapids.

“I expect similar results in 2013, as manufacturers continue to re-shore and obtain new auto contracts, and food processing continues to grow in West Michigan,” said Wood. “Most investment has been and will continue to be in personal property (equipment) as few real property expansions are anticipated in the new year.”

Besides the industrial abatements they awarded, the commissioners also approved two PA146 obsolete property requests. One went to the Notawassepi Huron Band of the Potawatomi and the other to 616 Development during 2012. Together the two will invest $3.2 million and create 30 new jobs.

Commissioners also ratified eight PA381 brownfields that are expected to deliver nearly $34 million in total investments and add 183 new jobs and residents to the city.

Commissioners also gave tool-and-die companies their attention in 2012, allowing six firms to join the Tool and Die Recovery Zone. All are affiliated with the same tooling organization: Tooling Systems Group. Five are located at 555 Plymouth Ave. NE.  The sixth is on 42nd Street SE. The six are investing a total of $6.3 million into their businesses and hoping to create 132 new jobs.

“These tend to be very high-paying jobs,” said Mayor George Heartwell.

After everything is added up, the private investment pledged in the city this past year — overwhelmingly from manufacturers — reached $83.5 million and promises to create 822 new jobs.

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