Posted 1:37 am Tuesday, February 02, 2010
Tyler Pipe To Spend $20M On Plant Upgrades
By ADAM RUSSELL
Staff Writer
Staff Writer
Tyler Pipe plans to apply for the state's Enterprise Zone Project to enhance production capabilities and retain jobs.
The company expects to invest $20 million in the next five years to enhance its manufacturing capabilities and plan to apply for a State of Texas Enterprise Zone project designation, according to a Tyler Economic Development Council release. The benefit to the company lies in a refund of state sales tax on project expenditures.
The TEDC is leading the application process, which will be sponsored by the city of Tyler, Tyler spokeswoman Susan Guthrie said.
TEDC President/CEO Tom Mullins said the program adds a good incentive for Texas' manufacturing employers.
"It's probably the best business retention tool that exists in the state," he said. "It's primarily been used to encourage companies to keep investing and keep jobs in Texas."
If the application is approved, the company would get credit for taxable purchases invested to improve operations, such as manufacturing equipment. Of the 8.25 percent sales tax the business would expend toward investments, the company will be reimbursed a portion of the state's cut, Mullins said. He said the reimbursement, over five years, could be between $1 million and $2 million.
Local entities will not see a reduction in the tax base or be responsible for monitoring the program, Mullins said.
John Springer, Tyler Pipe comptroller, said the application has not been filed yet, and that details regarding the number of employees the company must retain or the amount of money it must invest are preliminary.
"We're excited that Texas has a program like this to help current employers. There are a lot of programs used to entice prospective employers into the area, so we're excited this is available," he said.
Springer said Mullins made the company aware of the program, and that the company is not in danger of reducing their production or employee status if the company is not approved for the incentive.
Statewide, over a two-year period, 103 projects are available. Mullins said.
Tyler can receive a total of six projects over the two-year period. About $40 million in reinvestment by Delek Corp. after the refinery fire was eligible under the project, Mullins said. Tyler Pipe would be the first applicant this two-year cycle.
"It's just an encouragement to keep their workforce steady and at the current level," Mullins said. "They're currently at around 400 employees and that's down considerably from a couple of years ago."
In December 2008 Tyler Pipe's South Plant shut down production. Mullins said several years ago the company employed more than 900. Tyler Pipe now employs 360.
Foreign competition and poor economic conditions in the construction sector led to those reductions in workforce, Mullins said.
There is a March 1 deadline for the application. Mullins said the enterprise program is much more competitive than it was a few years ago. Ms. Guthrie said the city will consider the request Feb. 10 during the regular city council meeting.
City Manager Mark McDaniel said the city is pleased one of the areas major employers plans to reinvest in its capabilities and is happy to sponsor the request.
The results should be known a few months after the request is filed, Mullins said.
"Our existing manufacturing base has really been slammed by the national recession, and I think the state is saying that these incentives or reimbursements for investments that we can provide to make some impact to help relieve the current cost of operating their business in Texas," he said. "You're encouraging them to upgrade facilities and you're hoping that if they do that it will encourage them to stay in Texas."
