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Salisbury OKs incentives for Henkel’s proposed $23 million expansion

By Mark Wineka
mwineka@salisburypost.com
Salisbury City Council praised Tuesday Henkel Corp.’s efforts to save and create new jobs here in a proposed $23 million expansion.
Councilman Bill Burgin said it was exciting that Henkel had people making such a strong effort to stay here and possibly bring 103 additional good-paying jobs to Salisbury.
Councilman Mark Lewis said he couldn’t argue with more jobs, increased tax base and maybe more citizens as the full council wasted little time Tuesday in approving tax incentives for the proposed expansion of the plant at 485 Cedar Springs Road.
The plant was annexed by Salisbury years ago.
The new jobs would pay an average of $54,000 a year for the company which specializes in adhesives used in circuit board assembly.
In essence, the city will be giving the company a 75 percent property tax break over five years on the new investment, which would include construction of a 70,000-square-foot addition.
The project also calls for a 3,000-square-foot office.
The new $20 million-plus investment normally would bring in $120,738 in extra city tax revenue in the first year.
With the 75 percent incentive, the company would receive a $90,554 tax break or “investment grant,” leaving the city with $30,185 in tax revenue above what the company normally would pay in taxes on its existing property.
Over the five-year life of the investment grant, Henkel Corp. would receive an expansion grant of $528,540, according to estimates. The city would collect $176,180 in tax revenues on the new investment over the same time.
But over 10 years, the city’s net revenue from Henkel’s expansion would be $1,048,187, while the expansion grant (ending in five years) would still be $528,540.
Henkel operates out of about half of the former National Starch and Chemical plant.
In January 2008, Akzo Nobel acquired the entire 500-acre site and all the facilities with an expectation that it would soon resell the electronics and adhesive business to Henkel.
In April 2008, Henkel bought 53 acres, about half the buildings and employed 81 of the existing employees.
Based in Germany, Henkel has about 55,000 employees in 125 countries.
Nancy Lee, director for Henkel Corp., said the company is shrinking six sites in North America to two ó one East Coast and one West Coast operation. Salisbury, if the various pieces come together, has a chance to be the East Coast site.
Lee said Salisbury’s being chosen for the East Coast operation would mean that 55 of the existing 81 positions that would be lost could stay.
Meanwhile, the 103 new jobs created would translate to $5.6 million in additional payroll.
Robert Van Geons, executive director of the Salisbury-Rowan Economic Development Commission, emphasized that without state incentives, yet to be approved, the expansion project won’t happen.
“This is a very competitive project,” he said.
For every $1 the city is providing in assistance to this project, it will be matched by $4.81 in support from other funding partners, Van Geons said.
Partners in trying to make the project happen have included the N.C. Department of Commerce, Duke Energy, the EDC and now the city and county, which have both approved tax incentives.
“All of us at the Henkel site want to thank the partners for making this a reality,” Lee said.
Mayor Susan Kluttz said the Cedar Springs plant, which dates back to Proctor Chemical’s purchase of the land in 1965, has always been an excellent corporate citizen, and she thanked the company officials for making efforts to stay here.
Lewis commended Van Geons for working with all the parties involved. Van Geons said the EDC tries to balance recruitment of new jobs with retention of existing ones.
He said it has been nice to partner with Henkel and possibly help them grow.
According to an impact analysis by the EDC, the new Henkel jobs would include 51 production operators, 15 shipping/receiving/traffic clerks, nine engineers, nine quality control technicians, six supervisors, three managers, two in administration, an IT analyst and three other positions.
Construction would create numerous temporary and contract jobs.
While the new facilities were under construction in 2009 and 2010, there would be no abatement of taxes, and estimated new revenues for the city over that period would be $47,752.

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