Goshen News, Goshen, IN

Business

October 25, 2012

Goshen, Elkhart County officials plan effort to save 450 Cequent jobs

GOSHEN — City of Goshen elected officials and employees say they will work their hardest to find a way the city can help Cequent Towing Products employees, but finding a solution might be difficult.

The company recently announced a preliminary recommendation to shut the Goshen facility, moving production lines to Reynosa, Mexico, according to a company statement. While it’s not a final decision, employees expect to hear the outcome by late November, according to the statement.

Mayor Allan Kauffman and Dorinda Heiden-Guss, director of the Elkhart Economic Development Corp., are working to schedule a meeting with Cequent officials.

“I don’t know if there is anything we can do,” Kauffman said Wednesday, adding he is certainly willing to try to help retain the jobs.

Heiden-Guss said it is a wage and benefits issues and as soon as she heard the news about the closure plans Friday she went to the plant to meet with company officials and was referred to other executives to arrange a future meeting. She believes that meeting will occur soon.

“Your heart does bleed for (Cequent employees),” Kauffman said. “These aren’t high-paying jobs anyway.”

He also expressed frustration with TriMas, the Bloomfield Hills, Mich. parent company of Cequent. He said the company had a good profit in 2011. He said of the planned move to Mexico, “I think it’s to drive the wages down and the profit up.”

The company reported in February that its 2011 profit was $131.3 million, up from $109.3 million in 2010.

Tax phase-ins

The city’s most likely way of reclaiming anything against Cequent is through property tax phase-ins, according to city attorney Larry Barkes, who spoke at Tuesday’s City Council meeting. The City Council approved two property tax phase-ins for the company over the past seven years, both for equipment improvements.

The first phase in was a seven-year, $9 million project to upgrade equipment at the Goshen facility approved June 8, 2005, according to the application. At the time, Cequent had average wages for employees of $17.49, which was above the county average in 2005, and proposed an additional 26 jobs at the plant.

“An (economic revitalization area) designation is warranted in light of the overall decline in Indiana employment, incentives offered by other competing states, the history of employment by Cequent in Goshen and the level of capital investment, which would lead to an increased tax base,” the company stated in its 2005 application. “Tax abatement support is necessary to also ensure the long-term viability of the Goshen plant operations as well as to ensure that other future capital projects are considered for Goshen in light of other competing Cequent plant operations both in the United States and other countries.”

The company’s 2005 application was not scored on the scale used in more recent applications. However, the second application, received by the council in early Oct. 2009, scored just 9 out of 132 possible points. The scale doesn’t suggest tax abatements be awarded to businesses with a score of less than 45, but a memo from city development director Mark Brinson explained the city government’s reasoning behind allowing the phase-in for Cequent.

“Given the current high unemployment rate in Goshen and due to the fact that published hourly rates may not reflect the recent changes in our local economy, it is recommended that Cequent be awarded a five-year tax phase-in,” Brinson wrote in the Oct. 2009 memo.

The 2009 project was estimated at $3,967,204 worth of equipment improvements, according to the application. The company estimated the creation of 47 new operator jobs, but at an average hourly starting wage with benefits at $17.65, lower than the Elkhart County average wage at the time.

Barkes said the City Council could move to stop any further benefits from the tax phase-ins for Cequent, but going back to reclaim past benefits would be more difficult.

“(The case would be measured) on a fraud standard,” Barkes said at the meeting. “We would see if the representation they made to the council was fraudulent.”

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