Tool-And-Die Zones Expansion Proposed

February 17, 2008
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LANSING — Michigan's manufacturing industry may get a boost from a proposal to give tax-exempt status to more tool-and-die manufacturers, an industry struggling against international competition.

Michigan allows 25 tool-and-die Renaissance Recovery Zones where business growth is encouraged by allowing companies to forego paying many taxes. Currently, small companies are operating in 24 such zones, according to Chuck Hadden, vice president of government affairs for the Michigan Manufacturers Association.

The bill, proposed by Sen. Randy Richardville, R-Monroe, would allow up to 35 such areas and make larger companies eligible for participation.

Patrick Riley, president of Exceptional Mold & Engineering Inc., a plastic-injection mold manufacturer in Romeo, said becoming part of a Renaissance Recovery Zone has been a boon for his business.

“It’s definitely helping us,” he said.

Riley also said involving more companies would be a good move. He said he has struggled to compete against foreign companies that can produce products much more cheaply. His company has just seven employees and supplies products to manufacturers across the country, primarily in the auto industry.

Michigan is the nationwide leader in the tool-and-die industry, and home to more tool-and-die workers than any other state. However, the industry is in decline because of strong competition from nations such as India and China.

Hadden also said that the bill would help Michigan companies.

“It’s going to give them the break they need to succeed,” he said.

But not everyone is thrilled about the Renaissance Recovery Zones. For some cities and townships, the lost property tax revenue isn’t worth the promise of business growth.

Dane Nelson, city administrator in Adrian, said the city recently denied an application for Renaissance Recovery Zone status by Custom Machines Inc., a company specializing in robotics and laser systems.

“The consequence is that the city loses all of its taxes for that zone. The minute we do that for one tool-and-die manufacturer, all the companies in Adrian will want to not pay taxes,” Nelson said.

Under Michigan law, the state must reimburse schools, but not local governments, for tax revenue they would otherwise collect from nearby Renaissance Zones.

“The municipalities still have to provide services, but we don’t get any money in return,” Nelson said.

Nelson said that a lot of companies in Michigan are hurting and that he wasn’t convinced Custom Machines needed special treatment.

“We’ve listened to a lot of other businesses talk about hard times. We couldn’t tell if they were having more trouble than others.”

Michigan has more than 150 Renaissance Zones, including several specific to certain industries, such as agricultural processing and renewable energy.

Adrian has one Renaissance Zone, designated for a renewable energy producer.

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