Barnes awarded $10M incentive

0 Comments | Deseret News (Salt Lake City), Dec 16, 2006 | by Brice Wallace Deseret Morning News

An aerospace company was awarded a $10.1 million incentive Friday to entice it to move its current facility, relocate out-of-state manufacturing operations to Utah and add 900 new jobs over 20 years rather than move operations to Singapore.

The Governor's Office of Economic Development Board approved the incentives for Barnes Aerospace.

"They do high-end manufacturing of titanium and aerospace structures and making things for military aircraft," said board member Mark Howell. "These are really good-type jobs that bring good skills to the people who have those jobs."

The company would receive $1 million from the Industrial Assistance Fund -- half upon completing the move of its existing Ogden facility into the Business Depot Ogden and half upon completing a relocation to Utah of an out-of-state manufacturing operation. It also could receive a tax rebate of up to $2.1 million over the first 10 years of the deal, contingent on paying new employees at least 170 percent of the Weber County median wage.

The IAF money can be recovered by the state if the expansion is not open for business by the end of 2008 or if new state revenue over the life of the project is insufficient to justify the combined incentives provided by the state, board documents state.

Over the next five years, the company could get another rebate of up to $3 million based on the creation of 600 net new jobs, compared with the previous decade. The five years after that, it could get a rebate of up to $4 million based on 300 more new jobs.

"Their biggest problem is they're out of space" in Ogden, board Chairman David Simmons said. "They can't grow in their existing facility and they want to bring more work in here. ... This is right in the sweet spot of what we want to incent."

Barnes Aerospace had sought $3.2 million in IAF money to move to BDO and $7.5 million to expand the Ogden facility. Board documents say the relocations would result in Ogden retaining 145 existing jobs and that the company's capital investment is expected to be $12 million.

Business Depot Ogden/Ogden City has offered a $1.6 million incentive in the form of $100,000 in free rent in an existing building while the new facility is constructed, $500,000 in free land and $1 million in no-cost building improvements.

But Singapore has put out an offer for Barnes that features a seven-year tax-free structure and a 20 percent corporate tax incentive. Utah officials said the Singapore offer is estimated at $20 million to $30 million.

Barnes Aerospace, based in Windsor, Conn., produces machined and fabricated components and assemblies for aircraft engine and airframe builders and does component overhauls and repairs for commercial airlines and the military.

Barnes Aerospace is a primary business of Barnes Group Inc., which was founded in 1857 and is based in Bristol, Conn. It has three businesses with a total of about 4,000 workers at more than 40 locations worldwide. Under the Associated Spring Corp. name, the company went public in 1946, began being listed on the New York Stock Exchange in 1963 and switched to its current name in 1976.

Jeff Edwards, president and chief executive officer of the Economic Development Corp. of Utah, described the Barnes Aerospace incentive approved Friday as "a great use of the (incentive) program."

"I really think this is an outstanding example of how this incentive should be used," he said. "This is a post-performance rebate program that is helping to incent a specific employer to do a specific thing. I think the way that the structure of this is put together is very well thought-out."

The GOED board on Friday also approved an incentive of up to $300,000 in IAF money for Smith Sport Optics to upgrade its Clearfield facility, retain 201 jobs and create 64 new jobs. The manufacturer and distributor of ski goggles would receive half the money after the facility is upgraded and half after the jobs are added, at $2,500 per job. It must commit to stay in operation in Utah for 10 years and pay new workers 137 percent of the Davis County median.

Smith has a manufacturing agreement with DFG in Clearfield and is pursuing an acquisition of the company. It plans to move accounting and customer service positions to Clearfield. Without the incentive, Smith would probably close the Clearfield DFG facility and move out of Utah, board documents indicate, with Denver and Texas also trying to land the operations.

Smith Sports Optics was founded in 1970 and its current parent company is Safilo SpA.

E-mail: bwallace@desnews.com