A Franklin board recommended tax breaks for two companies that plan to create about 60 new jobs and invest more than $8 million in the city.
The proposed tax breaks will save Hetsco Inc. and Pridgeon and Clay a total of more than $600,000 over the next 10 years.
Hetsco is relocating its headquarters from Greenwood to Franklin and will buy the shell building on Graham Road for $1.8 million, spend $2.2 million to renovate it and add $400,000 of equipment at the new location. The company, which primarily does service work on aluminum heat exchangers used in the energy industry, is consolidating from multiple offices in Greenwood.
Pridgeon and Clay is expanding its facility on Arvin Road to add office space and install new metal stamping lines to handle additional auto parts orders. The company will spend about $500,000 to expand its building and put in $3.3 million in new machinery.
Officials from both companies said they’ve been able to find loyal, hardworking employees in Johnson County and the locations in Indiana keep them near their customers.
Pridgeon and Clay should have its expansion built by December, while Hetsco anticipates moving into the shell building by the first quarter of 2015. Both deals were finalized within the last month and will bring new jobs and increase the city’s tax base, Mayor Joe McGuinness said.
“It’s been an awesome day for our community,” McGuinness said.
Both companies could have expanded at other locations, but the tax incentives and workforce in the county helped the city win both expansions, McGuinness said.
Hetsco was approved for a 10-year tax break on the $2.2 million the company will spend to build out the facility and five years for the new equipment. The breaks will save the company about $403,000 in taxes, or about half of what the company would pay without them.
Hetsco expanded in Greenwood in 2011 after the company outgrew its headquarters on Pushville Road, but then had to lease space in five different locations near the main office, president and chief operating officer Sam Willard said. The move to Franklin will allow the company to have all of its engineers, service workers and fabricators in one spot.
The price to buy and build out the shell building is more than purchasing land and building a new facility, Willard said. But having the structure already built will allow Hetsco to be up and running about six months faster, Willard said. The shell building also has features the company liked, including the opportunity to expand to 150,000 square feet in the future and higher ceilings so the company can use overhead cranes, he said.
Hetsco has a fabrication facility in Houston, but the company wanted to grow in Franklin because the office is centrally located in the U.S. Technicians drive across the country to make repairs on the aluminum heat exchangers, which are used in gas production or plastics manufacturing, Willard said.
“It wasn’t the low-cost option, but it was the right option,” Willard said.
Pridgeon and Clay also received a 10-year tax break for its building expansion, and a seven-year break for the new equipment. That will save $232,000, about 57 percent, on taxes.
Pridgeon and Clay also chose to expand in Franklin because its main facility in Grand Rapids, Michigan, is landlocked and can’t grow, Franklin plant manager Dan Todaro said. That means any future growth also will likely happen in Franklin, he said.
The company’s research and development staff in Michigan recently completed a multiyear development of new automotive heat shields, which has generated a large amount of new orders. The company previously produced about 100 parts that were being used in Chevy Silverado trucks and now makes about 30 to 40 pieces of Toyota vehicles, Todaro said.
The $3.3 million in equipment includes five new stamp presses and three robotic rolling machines to handle the new business, Todaro said.
“We’ve been awarded the business, so we’re continuing to grow with our customers,” Todaro said. “All the expansions will be in this region.”
The company first located in Franklin in 1997 primarily to serve the Arvin plant that was located nearby and expanded last in 2001. Pridgeon and Clay still fills a high amount of orders for ArvinMeritor but is also making parts for other regional customers including Cummins, Todaro said.
Members of the economic development commission had few questions for either company before approving the tax breaks. The tax breaks will need to be approved by the city council.