Saturday, 18 December 2010 16:10

A $217 million present: Four companies expanding

Decatur Daily
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Morgan County received a valuable Christmas gift Friday with expansions of 3M Co., Ineos Nova LLC, Ascend Performance Materials LLC and Bunge North America Inc.

Combined, the planned expansions will total $217 million in capital expenditures.

Some were delayed projects, revived due to corporate expectations of an improved economy.

News of the expansions — several approved previously, but delayed during the recession — came during a meeting of the Industrial Development Board, which unanimously granted tax abatements for each project.

Jeremy Nails, president of the Morgan County Economic Development Association, saw the projects as confirmation that the sluggish economy of the past three years is picking up.

“I think in 2011 and 2012 you’ll see more growth,” Nails said after the meeting.

“Manufacturers are feeling more comfortable spending their money. They see signs of increasing demand.”

The expansions are good news for the economy, said Bill Wilkes, economics professor at Athens State University, but not necessarily in the short term.

Manufacturers are great at predicting consumer demand, he said, but companies like those expanding — unlike retailers — are looking at the long term.

“The common denominator in these companies is they are capital intensive,” Wilkes said. “They’re putting a lot of money into upgrading their facilities. We have to assume they’ve done some pretty good market research,” he said, suggesting they predict an eventual upswing in consumer demand. “But these projects take two or three years,” Wilkes said, before they result in products purchased by consumers.

The point, he said, is the expansions are good news in the long term, but they should not create much economic optimism in the short term.

Bunge

Bunge North America announced plans for an expansion in 2008, at which time IDB granted it a tax abatement.

The company delayed the project because of the recession. Bunge pegged the capital outlay for the original expansion at $72 million. On Friday, it had upped the expected cost to $85 million.

Facility Manager Gene Moore said the company plans to begin buying $4 million in land for the project next week.

The project includes expansion of refinery facilities to include palm oil and cotton seed. It will also improve packaging facilities for customers that include Cisco, Kentucky Fried Chicken, Frito Lay and Kellogg’s.

It estimates construction will be complete in June 2013.

Bunge estimates the project will add 45 employees with an estimated annual payroll of $1.8 million. Currently, Bunge has 132 employees with a payroll of $5.36 million.

IDB approved $2.6 million in non-educational tax abatements, spread over 10 years, for the project. Bunge estimates school taxes created by the machinery and personal property investments will total about $2.1 million, shared by school districts in Morgan County.

Ascend

Ascend Performance Materials, which bought Solutia’s nylon-production facilities out of bankruptcy, is investing $6.5 million in machinery and equipment for its facility, which produces a precursor ingredient for nylon 6,6. The heat-resistant material is under increased demand, primarily because it works well in under-the-hood components of fuel-efficient vehicles. Such vehicles create more heat than other vehicles, so Ascend’s product has new value.

The Ascend expansion will produce more of the intermediate, which it transports to downstream manufacturers that create the plastic used for automobile components and carpet fiber.

IDB approved a tax abatement of $16,000 a year for 10 years in non-educational Morgan County and state taxes. The company is not within Decatur city limits. The company estimated the project would create new school taxes of about $18,700 per year.

While the project does not create new jobs, General Manager Al Faulkner said the company is hiring and plans to hire at least six engineers in 2011.

Ascend has 233 employees and 145 in-house contract employees with an annual payroll of $30.4 milion.

3M

Like Bunge, 3M delayed a previously approved project due to economic conditions. Originally planned in 2006, 3M now projects completion in September 2011 of a facility to increase its manufacturing capacity for resin. The company projects the cost of the expansion to be about $120 million.

3M estimates the expansion will add 20 employees with an annual payroll of $1.6 million.

Ineos Nova

A planned expansion by Ineos Nova will not add new employees, but is good news for a plant battered by the recession.

The 52-employee plant makes plastic foam used in drinking cups and to insulate appliances. The $5.5 million project will reduce the residual monomer level in its products, meeting safety concerns and making it more competitive.

IDB agreed to abate $13,600 a year in state and Morgan County taxes. The company estimates the expansion will generate $15,800 a year in educational taxes for schools in Morgan County.

Originally a part of Monsanto, Nova Chemicals bought the plant. Last year, a joint venture between Nova and Ineos bought the plant. Last month, England-based Ineos purchased Nova’s interest in the Decatur plant and others.

Tonya Jones, controller, said the plant will erect signs reflecting the change in ownership in early 2011.

Ray Long, newly elected Morgan County Commission chairman, said the expansions were a good sign.

“It’s good to see people investing in the county,” said Long, who attended the meeting. “It’s a sign the economy is picking up, and it’s about time.”

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