Benteler gets another tax abatement in Wyoming

May 20, 2011
| By Pete Daly |
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German automotive supplier Benteler Automotive Corp. has received approval from the city of Wyoming on another tax abatement request in return for a $5 million investment there, which Benteler says will ultimately result in the addition of 30 new jobs.

Benteler also is making a commitment to retain its 583 existing jobs there, according to city officials.

Wyoming Deputy City Manager Barb VanDuren said Benteler’s investment is in “some computer programs so they can expand some of their lines.”

The Public Act 128 Industrial Facilities Tax Abatement approved by the city council May 16 is for a 12-year abatement of personal property tax, which VanDuren said will save Benteler $75,000 in its first year. She did not have a total amount for the 12 years.

The new personal property will be at Benteler’s facility at 3721 Hagen Drive SE.

“They continue to expand and grow, so we’re pleased with that. But there wasn’t anything extraordinary in regard to it,” said VanDuren. “I think they have several (tax abatements) with us. But we’re very pleased because they are growing in Wyoming and they continue at a stable rate of growth.”

According to state tax records, Benteler currently has six active tax exemption certificates in Wyoming on investments of more than $50 million, creating almost 250 jobs. The company also has other PA 198 tax exemptions in Grand Rapids at its Hall Street plant.

A press release issued by Wyoming notes that the city council has granted several businesses tax abatements in the last several months, including Gordon Foods, GM Components Holding, Keebler Co., Metal Components LLC, Weller Auto Parts and Undercar.

In January 2009, Wyoming granted Benteler a 12-year IFTA on a $19-plus million investment the company said would create 122 new jobs. VanDuren said last week that those jobs have materialized and that Benteler is “a pleasure to work with.”

She had no further information on Benteler’s plans at its Hagen Drive plant and referred the Business Journal to company representative Craig DeVries. DeVries said he had “no comment” and referred the Business Journal to Benteler Automotive’s North American headquarters in Auburn Hills,  but calls were not returned.

In February, Benteler received a state tax credit from the Michigan Economic Growth Authority worth $1.2 million over five years. A Feb. 15 MEGA news release states that Benteler plans to spend $3.9 million over the next five years to retain its headquarters in Auburn Hills and expand in Grand Rapids, Wyoming and Comstock Township near Kalamazoo. Benteler expects the project to create up to 250 direct new jobs, according to the news release, and Michigan was chosen over competing sites in Alabama and South Carolina.

According to the Benteler website, it employs 23,750 in 38 countries and is one of the world’s largest independent automotive suppliers, as well as a major steel tube manufacturer. Based in Paderborn, Germany, the privately held company was founded by the Benteler family in 1876 and is still owned by them. Benteler Automotive’s North American operations include one plant each in South Carolina, Alabama and Indiana, and additional facilities in Grand Rapids, Wyoming, Auburn Hills and Galesburg.

According to a May 15 article in the Westfalen-Blatt, a newspaper in Bielefeld, Germany, Benteler is “hurtling back on the winning track” with a profit of 80 million euros in fiscal 2010, compared to a loss of 8.2 million in 2009. Total sales were 6.1 billion euros, close to its record of 6.3 billion in 2008. (One euro was worth $1.42 last week.) Automotive parts accounted for 4.8 billion euros in sales in 2010.

The Wyoming facility is the division that produces exhaust systems for automobiles, according to Tracy Schneiter, vice president of forecasting at IRN Inc., an automotive market research firm in Walker.

Schneiter, who previously worked for Benteler in Michigan for almost 15 years, said the activity in Wyoming may reflect both an increased investment in technology and a resurgence in production of light vehicles in North America. She said Benteler’s exhaust systems group “always had a level of technology behind their products,” and that it is the type of product that is not easily outsourced overseas.

“A lot of the engineering capabilities are based in their Wyoming facility,” she added.

Benteler’s production programs tend to run from three to eight years, she said, so an increase in production here is probably going to last much longer than just a year or so. “It’s great news for the area,” she said.

According to Schneiter, Benteler, like many other suppliers in the last five to 10 years, has put a significant amount of effort in “leaning out” the organization. She said that means that any time additional employees are hired, it represents expanding business. An increase of 30 new employees reflects a significant addition for them, she added.

As for the auto industry in Michigan in general, “We’re definitely in a recovery period,” said Schneiter. She said all suppliers, especially in West Michigan, are starting to see an increase in their production levels, particularly over 2009, when the industry bottomed out. She said after that, many auto suppliers hesitated to add jobs until their capacity was utilized. “And now we’re really seeing lots of suppliers meet or exceed their in-house capabilities. So they’re starting to have to put expansion plans in place.”

“We don’t expect the market to recover to the pre-2008 levels of 17 or 17.5 million vehicles too quickly,” added Schneiter. The recovery is slow and steady but very solid for automotive suppliers, she said.

Schneiter said Ford and GM are enjoying improved sales in some models because of the market share lost by Toyota, first as a result of the Toyota quality issues in 2010, and more recently because of the major disruption caused in Japan by the earthquake and tsunami.

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