Economic Development, Government, and Manufacturing

Manufacturing investment down, but jobs are up

Thierica and Firstronic look to increase their work forces the most.

January 3, 2014
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Even though the monetary investment pledged by manufacturers this past year was quite a bit less than the previous year’s figure, the local companies that received industrial tax exemptions in 2013 from the Grand Rapids City Commission have promised to create more jobs than they did in 2012.

In 2012, commissioners awarded 16 PA 198s, which exempt half of a real and personal property bill for up to a dozen years in return for investments and job creation. Those 16 came with nearly $37.2 million in private investments from manufacturers in the city and with a pledge of 197 new jobs.

Commissioners only awarded eight PA 198s last year. While the investment was less than a third of the previous year at $11.1 million, the new job pledge in 2013 totaled 240, or 43 more than were promised in 2012.

“We did about a third of what we did in 2012, so it was a substantially lower number of projects and a lower amount of private investment,” said Kara Wood, city economic development director. “But this year we actually exceeded the job creation from last year.”

Not included in the 2013 total are two amended PA 198s. Both Firstronic and Kent Manufacturing increased their investments after gaining the tax-exemption certificates from the city, and both returned to the commission to have their awards amended to reflect the higher amount they were planning to spend.

Firstronic initially told the city it would invest $2.2 million and shortly thereafter decided to increase that number by $652,000. Kent Manufacturing’s PA 198 was approved in 2012 for a $1.5 million investment; the company returned to the city last October with an additional investment of $729,946.

“We approved Kent Manufacturing back in 2012. They did a relocation to a new facility to be able to expand, so that was remarkable,” said Wood of the additional investment.

“Firstronic was a big one for us because it was a substantial amount of investment and planned job creation,” she said of the firm’s intention to add another 115 jobs to its work force over the next two years.

Firstronic primarily serves the automotive, medical and industrial sectors by producing advanced electronics at its facility at 1655 Michigan St. NE. The company first approached the city in October 2011 and told commissioners it would invest $252,500 into its operations. Two years later, that investment grew to more than $1.1 million, which led the firm to add 13 new jobs rather than the eight it had promised.

Firstronic also got a major contract with Consumers Energy to produce the utility’s Smart Reader, which will allow the company to remotely read its customers’ electrical and natural gas usage. Consumers plans to install 1.8 million electric meters and 600,000 natural gas communication modules over the next year or so.

“They have a lot of unique electrical technology, primarily in autos, but they have other applications,” said Wood.

Adding the Kent Manufacturing and Firstronic amendments to the year raises the 2013 total investment to $12.4 million and 244 jobs.

Another big job pledge last year came from Thierica Inc. The company told the city in June it planned to invest more than $4.5 million into its operations and pledged to create 91 new jobs.

Thierica is putting that investment into new machinery and equipment, along with expanding its plant at 900 Clancy Ave. NE by another 9,400 square feet. Thierica makes molds and decorates dashboard display components for the automotive and aerospace industries.

“Part of that is work is coming back from overseas. Thierica and Firstronic are getting work that was previously done overseas. That’s been occurring for the last couple of years. But these are pretty substantial investments and job creations because of that,” said Wood.

The two companies have proposed to create 209 of the 244 manufacturing jobs that were pledged last year.

Another growing manufacturer is Grand River Aseptic Manufacturing, which produces drugs for clinical trials. The company is investing $946,000 and adding a second location by leasing 837 Godfrey Ave. SW. What’s important about that location to the city is the Grand Rapids Chair Co. left it in June when it went to Byron Township.

“Although their application was under $1 million, the previous year it was over $3 million. So they’re in a major growth mode right now,” said Wood of GRAM. “Hopefully, they will secure additional contracts in the New Year for commercial drug manufacturing.”

The jobs reportedly coming from the tax exemptions issued last year are the most since 2011, which was a record year for PA 198s in Grand Rapids. Twenty-two were awarded that year totaling $61.4 million in investments and 322 manufacturing jobs. Over the last three years, local manufacturers have announced combined investments of $111 million and 763 new jobs through the PA 198 tax-exemption program.

Wood and her staff will update commissioners on how much actual manufacturing investment and job creation have been made over the past two years in relation to what has been promised at a special luncheon briefing this week.

As for this year, Wood thought the city would continue to see more growth coming from manufacturers.

“A lot of the companies that are planning to make investments are growing their existing contracts, so their relationships with their existing customers, as opposed to new customers, probably means more activity out there to be obtained by these contractors,” said Wood.

“A lot of it is local, too, which means a lot of our local companies are doing better than they were, say, two years ago. They are in a position to buy more work from these contractors.”

Here are the industrial tax exemptions the city of Grand Rapids approved in 2013 under Public Act 198 of the state of Michigan.

Company Private Investment Jobs Retained New Jobs City Taxes Abated* Total New City Taxes**
Thierica Inc. $4,565,072 59 91 $9,419 $39,003
Paulstra CRC $850,000 210 0 $1,650 $1,650
Van's Pattern Corp. $175,000 29 4 $361 $1,401
GR Label Co. $920,199 65 6 $1,899 $4,395
Firstronic $2,245,000 54 115 $4,632 $52,950
Grand River Aseptic $946,000 0 18 $1,952 $10,949
Hansen-Balk Steel $1,060,000 47 5 $2,187 $3,643
Swift Printing $400,000 9 1 $825 $1,241
Firstronic $652,000 0 4 $1,855 $5,087
Kent Manufacturing $729,946 0 0 $1,591 $1,591
Totals $12,543,217 473 244 $26,371 $121,910

Note: The second Firstronic and Kent Manufacturing listings are amendments to previously approved exemptions, meaning the companies decided to increase their investments above the amounts pledged in their original applications. The Kent Manufacturing exemption was approved in 2012.
*Denotes annual property tax revenue only.
**Denotes annual property and income tax revenues.
Source: City of Grand Rapids Economic Development Office, December 2013

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