Gentex Stays Home For New Plant
ZEELAND — Lures from the south and the current economic downturn, particularly within the hard-hit office furniture industry based in West Michigan, prompted the state to offer a “little more aggressive” incentive package for Gentex Corp. to expand locally.
The Michigan Economic Development Corp. last week provided a package valued at about $11 million for Gentex to build a new manufacturing facility in the Zeeland area. The package of tax breaks and workforce training and infrastructure grants convinced the firm to expand locally, rather than in southern Georgia, close to southern auto plants and where labor costs are lower.
While nothing in the assistance is unique, the MEDC did extend some of the terms for longer periods than what is typically offered in order to fend off overtures Gentex was receiving in Georgia. The MEDC, for example, usually offers expanding companies Single Business Tax credits for 10 to 12 years; Gentex received the full 20 years allowed under state law.
“This one’s probably a little more aggressive because of the competition from Georgia,” said Jim Donaldson, vice president of business development for the MEDC.
“Certainly we wanted to assure that as this company invests they do it all here in Michigan and not somewhere else,” Donaldson said. “We would like to encourage every job that we can at a time when West Michigan is suffering because of the economy.”
Gentex, a Zeeland-based producer of automatic-dimming mirrors and electronic components for the automotive industry, will now weigh two sites in the Zeeland area for a new mirror plant. The company plans to invest up to $97 million over the next five years to build a new 225,000-square-foot facility and purchase related equipment.
The project would create 1,499 new jobs in the area, 625 of them directly by the company, according to an economic analysis. The company presently employs about 1,750 people.
Gentex’s expansion will generate net state tax revenues of $86 million over the 20-year life of the tax credit, as well as personal income of nearly $1.2 billion, according to an analysis conducted for the MEDC.
Anne Query, executive director of the Zeeland Chamber of Commerce, said she was “relatively confident” Gentex, which has all of its production operations in Zeeland, would choose to expand locally rather than in Georgia. The company’s consideration of building a plant elsewhere illustrates the need for the region to maintain efforts to retain a healthy business climate, Query said.
“We are dealing definitely in a global economy. In order to be responsible, businesses have to look at every option,” she said. “I certainly hope that as an area we remain competitive so that we retain the good businesses here.”
Gentex needs to expand its present manufacturing capacity by 2005 and hopes to break ground on the new mirror plant within a year at one of the Zeeland-area locations under consideration, both of which are nearby its current corporate campus that consists of three plants and administrative offices.
A decision on where to build in Zeeland won’t come for about six months, spokesman Craig Piersma said.
The fast-growing Gentex last built a new plant in 1998 and needs more space to accommodate ambitious growth plans. Executives have repeatedly told brokerage analysts that they hope to grow sales and earnings by 20 percent annually.
“The new, highly automated facility will be instrumental in supporting the company’s growth over the next five years, benefiting our customers, the local community, the state, and current and future employees,” Gentex Executive Vice President Garth Deur said.
The third quarter saw Gentex surpass $100 million in quarterly revenues for the first time ever, as sales of the popular Night Vision Safety mirrors continue to soar and automakers buy more units with electronic features.
The company in October reported year-to-date sales of $287.9 million, up 25 percent from the $230.6 million during the first nine months of 2001.
“Gentex is one of West Michigan’s most outstanding corporate citizens and employers,” Gov. John Engler said in announcing the state incentive package last week. “This significant expansion in Michigan will extend Gentex’s growth potential and bring new employment opportunities to hundreds of families”
Overall, Gentex will receive a $9.2 million, 20-year Single Business Tax credit, job training grants worth up to $625,000, and $1.1 million to $1.3 million in grants to pay for site development and infrastructure improvements for the new facility.