State gives $4.75M to closing Davenport Kraft plant

[cigaretteman]

The Iowa Economic Development Authority Board in a specially called meeting Thursday morning unanimously agreed to award nearly $5 million to Kraft Heinz, which plans to close its downtown Davenport meat processing facility and drastically cut jobs there.

The current plant employs about 1,400, while the company says a new, modernized facility will employ a minimum of 475. The shakeup is part of a national restructuring that will close seven plants and cut some 2,600 jobs.

Incentives from the Iowa Economic Development Authority include $1 million in tax refunds, $750,000 in research tax credits and a $3 million forgivable loan paid after the current factory is demolished. The company told IEDA that at least 261 of the 475 jobs it keeps will pay a qualifying wage of at least $17.84 per hour.

IEDA Director Debi Durham said the state moved swiftly once it learned of the merger of Kraft and Heinz and started working on a plan to keep the company in Iowa. She said the optics of investing in a downsizing facility aren't lost on her. But without these incentives, she said, Kraft Heinz would have likely left Iowa altogether.

And Iowa is the only state to get a new plant out of Kraft Heinz's countrywide shakeup.

"Will I take this deal any day? You bet," she said. "This is a future play. This is a legacy play. And I feel good about what we did here today."

Also on the table is another $10 million in local incentives from the City of Davenport, which received a preliminary nod from the city council Wednesday evening. Kraft Heinz is also seeking state and local assistance in making infrastructure improvements at the site of its new plant in the Eastern Iowa Industrial Center.

http://www.press-citizen.com/story/...-475m-closing-davenport-kraft-plant/75194882/

 

[The Tradition]

So they're going to pay $4.75 million to keep 475 jobs?

 

[NoleSoup4U]

So they're going to pay $4.75 million to keep 475 jobs?

Government efficiency at its finest.

 

[MitchL]

Thanks, Terry! My only question is which company from a neighboring State will you throw tax incentives at to get them to relocate to Iowa? You know... your favorite tactic to inflate your "new jobs" claims?

 

[markfromj]

Is the closing plant the old Oscar Mayer plant on River Drive?

 

[wneff]

Is the closing plant the old Oscar Mayer plant on River Drive?

yes

 

[cigaretteman]

Is the closing plant the old Oscar Mayer plant on River Drive?

Rockingham Road. Maybe the same one you're thinking of?

http://qctimes.com/business/iowa-aw...cle_cf997287-7a3f-58c2-ac29-4f3eb354e3a1.html

 

[86Hawkeye]

So they're going to pay $4.75 million to keep 475 jobs?

$10,000/job. One time.

 

[cigaretteman]

The Kraft Heinz Food Co. will close its 70-year-old meat processing plant in downtown Davenport, potentially cutting hundreds of jobs in the process, while also seeking nearly $15 million in state and local incentives.

In building a state-of-the-art plant at the Eastern Iowa Industrial Center, the company says it will retain at least 475 jobs. It currently employs about 1,400 workers in Davenport, the company said.

The Iowa Economic Development Authority Board will hold a specially called meeting at 8 a.m. Thursday to consider $4.75 million in state incentives, according to the meeting agenda. Those proposed incentives include $1 million in tax refunds, $750,000 in research tax credits and a $3 million forgivable loan paid after the current factory is demolished. The company told IEDA that at least 261 of the 475 jobs it keeps will pay a qualifying wage of at least $17.84 per hour.

The economic development authority has at times offered incentives to downsizing companies in order to retain some jobs, said Tina Hoffman, IEDA spokeswoman. But most incentive packages are awarded to companies who are expanding employment or maintaining current workforce levels.

"It wouldn't be commonplace, certainly," she said.

On Wednesday night, Davenport City Council unanimously passed a proposal to provide economic incentives on the project, as well as an application to a state program that could provide further assistance, City Clerk Jackie Holecek said. Wednesday night's vote stands as final approval, she said.

The city was considering up to $10 million in tax increment financing over 15 years, according to state documents. The city council was also considering pitching in on physical improvements to the potential factory site, according to the agenda.

Kraft Heinz announced on Wednesday that it would relocate its headquarters from Madison, Wisconsin, to Chicago and close seven factories in the U.S. and Canada. The company will close manufacturing facilities in Fullerton and San Leandro, California; Federalsburg, Maryland; St. Marys, Ontario, Canada; Campbell, New York; Lehigh Valley, Pennsylvania; and Madison, Wisconsin, the Associated Press reported.

"Our decision to consolidate manufacturing across the Kraft Heinz North American network is a critical step in our plan to eliminate excess capacity and reduce operational redundancies for the new combined company," said company spokesman Michael Mullen. "This will make Kraft Heinz more globally competitive and accelerate the company’s future growth."

In all, the closures will eliminate 2,600 jobs, he said.

"We have reached this difficult but necessary decision after thoroughly exploring extensive alternatives and options," Mullen said.

http://www.press-citizen.com/story/...-davenport-plant-but-workers-uneasy/75154660/

 

[LunchBox50]

Is the closing plant the old Oscar Mayer plant on River Drive?

They're moving the Oscar Mayer headquarters from her in Madison, Wisc. to Chicago and shutting down the production plant here. More than 1,000 jobs gone.

 

[dandh]

Excellent - I own some Kraft Heinz stock - every little bit helps. Thanks, Iowa.

 

[CarolinaHawkeye]

So they're going to pay $4.75 million to keep 475 jobs?

It's a much better deal than the fertilizer plant near Burlington.

 

[NoleSoup4U]

They're moving the Oscar Mayer headquarters from her in Madison, Wisc. to Chicago and shutting down the production plant here. More than 1,000 jobs gone.

Wow, how much are the Illinois taxpayers paying for that move? I can't imagine someone moving their business TO that state without some kind of deal.

 

[LunchBox50]

Wow, how much are the Illinois taxpayers paying for that move? I can't imagine someone moving their business TO that state without some kind of deal.

If you want a good laugh, look up the comments Gov. Walker had to say about the move today. Guy is constantly touting Wisconsin as “open for business,” but then things like the Oscar Mayer move happen and he's blaming Warren Buffett.

 

[Joes Place]

$10,000/job. One time.

...so long as they have an 'economic penalty' to Heinz, if they close the plant anytime within the next 10 or 20 years....

Or, if they were to significantly downsize from the 475 jobs. They should require Heinz or any inheriting merger/owner to pay back that money + penalty. If there is no downside incentive, then Heinz could close up shop in a few years and just pocket the incentives money...

 

[srams21]

The Madison plant closing to going to cost that area around 1200 jobs. That is a big time blow to Madison's east side and manufacturing sector. Granted, they have a year or so advance but even an economy in as good of shape as Madison's will have a tough time absorbing that punch.

 

[HawkFantastic]

I want a forgivable loan.

 

[LuckyNed]

Actually it's a good deal, Kraft could easily move and tell Iowa to stuff it. I've seen states pay a lot more that 5 million (which really isn't the case here) to attract an employer bringing in almost 500 jobs at close to $20 an hour plus benefits.

Not a bad deal at all.