Washington County, Tenn., wooing German HVAC manufacturer
Alicia Summers Photo by Scott Robertson
by Scott Robertson
Economic developers in Washington County, Tenn., are hoping to lure a German company that manufactures fans, motors and other components for the heating and air conditioning units in the automotive and other sectors. The county is competing with one other location in Tennessee and one site in Texas for the business, according to Alicia Summers of the Northeast Tennessee Regional Economic Partnership (NETREP), who first publicly revealed details of the project at a meeting of the county’s Commerce, Industry and Agricultural (CIA) Committee April 4. “The company has manufacturing facilities in the U.S. and worldwide,” Summers said. “It has around 14,000 employees worldwide.”
“In its first five years, the company plans to create 179 new manufacturing jobs,” Summers said. “The average salary of these positions is $37,193. By the end of the five-year window, their capital investment is projected to be at about $37.5 million.”
Even before benefits, the salary figure alone would represent an increase in the median income for the county. Per capita income in Washington County, according to 2017 US Census Bureau figures, is $27,334. Median income is $30,173, according to the US Department of Labor’s Bureau of Labor Statistics.
The company would be responsible for filing an annual job creation report tallying the total number of new jobs created and the average wage, because the county would be offering a payment-in-lieu-of-taxes (PILOT) agreement as an incentive. The company would be required to hire at least 161 of the projected 179 new employees within the five-year window or the PILOT would increase in proportion to the percentage of the missed employment level.
The full county commission must approve offering the PILOT incentive. The first step in that process was Summers’ report to the county’s CIA committee.
The company and NETREP have signed a nondisclosure agreement, so Summers referred to the project only as Project Starlight. Under terms negotiated between the company and NETREP, the project would begin with the company leasing an existing building in Washington County for the better part of three years. During the third year, it would begin construction of a new facility at the Washington County Industrial Park on Highway 11E in west Washington County.
The new building would initially be a 110,000-square-foot space, Summers said. The site in the industrial park the company would be occupying is 67 acres, but the company would only take 30 acres of that, leaving the rest for the county to continue marketing to other businesses.
The industrial park does have a smaller site that would have accommodated the original building, but, “this particular project is very interested in the larger site because it will accommodate at least three expansions for the company,” Summers said. “That was one of their major concerns,” Summers added. That’s good news because it implies a long-term commitment to the site.
The company plans to decide on a site late in April or early in May, Summers said. “Sometime in August or September, their plan is to create 60 to 68 new jobs and invest about $8 million in the machinery and equipment. Year two, they’ll continue with assembly and create a few more jobs, about 16, and then bring in some more equipment at about $1.4 million. And then in 2021, it’s kind of the transition year, so they’ll be doing a build out at the industrial park and then adding the new jobs and the capital investment. The same with year four. They anticipate occupying the building, creating more jobs and having over a $25 million investment in the building. In year five they’ll do another push for new jobs and then some more capital investment.”
Because the agreement would take away the county’s ability to sell the industrial park site to any other business during the two years the company leases another building, the company will, if it chooses to locate in Washington County, sign a 3.5-year option on the industrial park site. The price on that option will be $1.2 million, with $400,000 due at closing at another $100,000 per month for the first four months. The final $400,000 would be paid when the option is exercised.