Ypsilanti manufacturer requests 6-year tax abatement amid $1.4M expansion
American Broach has seen growth amid the economic downturn and the company is now seeking an abatement to assist its $1.4 million expansion project.
Daniel Brenner | AnnArbor.com
The Ypsilanti-based manufacturer American Broach is requesting a six-year tax abatement to assist in its ongoing $1.4 million expansion project, that will add 20 new jobs by 2015.
The Ypsilanti City Council will hold a public hearing and consider the abatement request at its Tuesday meeting at 7 p.m. in City Hall.
American Broach manufactures machines that create parts for the automotive, defense, train, aircraft and other industries. The company produces intricate cutting machines and was founded by Francis Lapointe in 1919 in Ann Arbor at the suggestion of Henry Ford.
Company president Ken Nemec previously told AnnArbor.com in addition to the $1.4 million to be invested at the new 42,800-square-foot facility at 535 S. Mansfield St., $200,000 will be spent to cover the cost of moving and buying new appliances.
The business is based at 575 S. Mansfield, but the company has outgrown the 22,580-square-foot facility. The company will still use the old facility, which it purchased in 2007 for $1.2 million from the Marsh Plating Corporation.
In 2011, the company requested a tax exemption to expand their building at 575 S. Mansfield with a 45,000-square-foot addition, but decided to purchase another location in the industrial park rather than build an addition.
In November of 2012, the company purchased 535 S. Mansfield to expand their manufacturing into this location, keeping the research and development and office area (as well as some production) at the 575 Mansfield address.
City staff estimates the total value of the exemption for six years is about $236,000. The amount of city taxes is estimated at $93,000.
If approved, this would not be the first time the company has received and applied an exemption. American Broach has received and applied for the following exemptions from Ypsilanti:
- In 2008, the company received an approval for an Industrial Facilities exemption for four years that provided a 50 percent exemption from personal property taxes related to the purchase of new equipment to expand the business. The expected savings to the company were about $450,000 over the four year period. The exemption has since expired.
- In 2011, the company received another approval of Industrial Facilities exemption for real property for a 45,000-square-foot addition to house the expansion of American Broach manufacturing as well as a research and development facility. This project was not pursued.
- In 2011, American Broach received approval for a PA 328 Personal Property Exemption for new personal property at 575 Mansfield as part of the expansion project. This exemption was approved for six years, and went into effect in 2012. The original estimate of the exemption was approximately $430,000.
Between 2011 and 2012, 14 full-time and two part-time positions were created. The company informed the city that additional jobs have been added since that time and an update will be provided at the June 18 council meeting.
Nemec told AnnArbor.com the average wages at American Broach are $20 per hour and $22 per hour for skilled trades. Employees receive full benefits.
"Today, we are a thriving corporation with a supportive board of directors and motivated employees with a sense of urgency driven by the excitement of our growth in the U.S. machine tool market," Nemec wrote in a letter to the Ypsilanti City Council.
According to Nemec, only 30 percent of the company's sales are outside of the U.S. and the auto industry accounts for nearly 65 percent of the company's sales. As the industry continues to post gains, the company does as well, Nemec previously said.
"That's why we bought the building," he said. "We're on an upward trend and the economy is going to build and people are going to be able to buy cars. I think over the next six or seven years, we're going to continue to see growth."
Katrease Stafford covers Ypsilanti for AnnArbor.com.Reach her at katreasestafford@annarbor.com or 734-623-2548 and follow her on twitter.
Comments
Judy
Tue, Jun 18, 2013 : 12:57 p.m.
Give American Broach the tax abatement after they "proof" they have added the 20 new jobs. Do not end up like Ann Arbor did with Google. Ann Arbor News.com March 20th, 2013 "Google expanded into downtown Ann Arbor in 2006, thanks in part to a MEGA tax credit from the Michigan Economic Development Corporation." "In 2010, a state audit found that the Michigan Strategic Fund, which was in charge of administering the tax breaks, had been negligent in ensuring that all taxpayers qualified for the credits they were receiving. However, a subsequent audit released in April of 2011 said the irregularities had been remedied." This is yet another case that highlights the problems with MEGA tax credits to companies and corporation, Tax credits should be handled like income tax, "pay first" than get the credit "after" the company/corporation does what they say they are going to do. It is time to "downsize" Michigan Economic Development Corporation from the top down, if they do this kind of job it is no wonder the state is in poor shape and this is only one company that received the MEGA tax credits.
ThinkingOne
Tue, Jun 18, 2013 : 3:04 p.m.
Judy & Nick I suggest that you two are saying the same thing. NICK: "Newsflash: google only received credit for the employees actually hired." This suggests that they received less than they had originally expected to get. JUDY: "My point is Google did not hire the amount of people in the Ann Arbor area they promised and still received tax abatements." Since you did not say that they got the full abatement, this suggests that they received something, but probably less than the amount they had originally expected. You seem to be on different sides of the same fence, one claiming fair and one claiming foul. If indeed the abatements were reduced because the number of hires was reduced, then the only fair questions are - who and how was this determined; and was it proportionate.
Judy
Tue, Jun 18, 2013 : 2:15 p.m.
My point is Google did not hire the amount of people in the Ann Arbor area they promised and still received tax abatements. They did not hire the amount of people they promised and recieve free parking spaces and bus passes from the City of Ann Arbor. So, why give companies and corporations tax abatements before they do what they promise to do? They did "kept the money after doing nothing, why should they receive the abatement "just because the the economy crashed." If I remember right "Google" made money in 2008, 2009, 2010.... Tax abatements should be handled like income tax, "pay first" than get the credit "after" the company/corporation does what they say they are going to do.
Nicholas Urfe
Tue, Jun 18, 2013 : 1:30 p.m.
Newsflash: google only received credit for the employees actually hired. Your post implies they got something for nothing and kept the "money" after wallstreet bankers crashed our economy, and google's local hiring slowed.
Ken
Tue, Jun 18, 2013 : 12:36 p.m.
Let's hear it for corporate welfare.
Cash
Tue, Jun 18, 2013 : 12:38 p.m.
Yes. I want a tax abatement because if I don't get it I will stop hiring the guy who cuts my grass.
Boo Radley
Tue, Jun 18, 2013 : 12:13 p.m.
They moved several years ago from Scio Twp. Do they still own the vacant building in Scio? It would be nice to know if they moved because of tax exemptions offered by Ypsi back then, and if Scio would not offer an equal deal. Are they moving around the county following tax breaks every few years? I did find that American Broach has an interesting and long history in this area, with one article I came across stating that the original WWII icon, "Rosie the Riveter" was employed at American Broach for a time.
RUKiddingMe
Tue, Jun 18, 2013 : 11:01 a.m.
How do these exemptions work? It's the city saying "well, the company would go out of business or not hiere more people if we didn't give them the break, so we'd lose that income tax, so let's give them the break to keep the income tax?" Do we ever look back and see if there was verifiably some payoff for this, or it's just "well, that business still exists, so that's why it was good to give them a break on taxes?" What's the difference between an abatement and an exemption? What would the downside of NOT approving this be?
15crown00
Tue, Jun 18, 2013 : 11:58 a.m.
they would probably look elsewhere to expand to.meaning another community from which they would get a tax brake.
Hugh Giariola
Tue, Jun 18, 2013 : 11:22 a.m.
The abatement and exemption seem to be used interchangeably here. The downside? The business could decide not to expand in Ypsi city and choose to relocate a stone's throw away in Ypsi Twp or Pittsfield Twp and remove another taxable entity from Ypsilanti.