By Debby Woodin and Wally Kennedy
news@joplinglobe.com
A $33 million project to upgrade the Schaeffler Group USA Joplin FAG plant is nearing fruition.
The Joplin City Council has advanced a proposal to grant the company $33 million in industrial revenue bonds to buy and install new equipment that will allow it to manufacture large ring bearings for wind generators.
Greg Tinnell, vice president of human resources for the company’s North America division, in a telephone interview on Saturday, said, “The wind energy business is one of the fastest growing industrial businesses in North America.
“Schaeffler brands INA and FAG are the leading suppliers of all types of bearings and condition-monitoring systems for the wind energy business. This investment will ensure our continued future success in North America,’’ he said.
Under the terms of a proposed agreement between the city and Schaeffler, the city will own the equipment and lease it to the plant while the bond debt is being paid.
According to city documents, the equipment is exempt from personal property taxes because it will be owned by the city, a tax-exempt entity. The city is not liable for the debt, according to terms of the agreement. In addition, the agreement states the issuance of the bonds will not affect the bonding capacity of the city.
The agreement under consideration by the City Council calls for the equipment to be exempt from sales taxes and for personal property taxes on it to be abated by 50 percent for at least four years. However, because the equipment is to be installed in stages, the company may receive additional tax breaks if it adheres to job and wage guarantees it has made in conjunction with the project.
Initial estimates were that FAG would add about 70 jobs at the plant. Tinnell said 25 jobs already have been added.
“This investment adds jobs at the Joplin location and provides the opportunity to take full advantage of the highly trained and skilled employees in Joplin,’’ Tinnell said.
Under the terms of the agreement, FAG must maintain 299 jobs through 2013. From 2013 until 2016, it must have 350 jobs in order to receive those extended tax abatements. The plant is to pay a minimum average hourly wage of $17.50 during the term of the abatement.
Tinnell said, “The state of Missouri and the city of Joplin have offered to provide incentives including tax abatements and training assistance to assist the company with the expansion. These incentives will offset a small portion of the overall costs of the project.’’
The jobs and wage agreement will be checked each year. If the plant does not meet them, there are stipulations in the bond agreement that allow taxing entities to assess a larger portion of the tax bills.
The city began notifying the various taxing entities to be affected last week. A public hearing for representatives of those entities to speak on the proposal is to be held at the council’s next meeting Dec. 7. Final council action on the proposal will come after that hearing.
In addition to Joplin, the abatements would affect the Joplin R-8 School District, the Joplin Special Road District, and the Newton County Fair District, Health Department, Mental Health Board and Library.
Paul Barr, finance director for R-8, said he is reviewing the agreement and the numbers to determine how much the tax abatements will total. He said he had received the city’s documents on the agreement, but that he had questions that he is clarifying with the bond attorneys before he can determine a final amount.
The company plans to install a new, larger forge that will allow it to produce large bearings for the wind energy industry.
FAG work
The FAG plant, located at 3900 S. Range Line Road, currently manufacturers ball bearings for the automotive and railroad industries.
