Freund-Vector Corp. will hold off on building a new research-and-development center in Marion, an expansion it had announced in January, and opt instead for a scaled-down project.
Earlier this year, the equipment maker said it was “evaluating the opportunity” to construct a new 17,000-square-foot lab in the Marion Enterprise Center, a project that would add five jobs.
The Iowa Economic Development Authority Board then approved providing Freund-Vector with $121,920 in tax refunds and $54,390 in research activities tax credits for the expansion.
Late last month, though, the company told the board it had reviewed its needs since January and now planned a smaller project.
“Over the past six months our leadership team has continued our evaluation process, reviewing (and) predicting the growth of our customer base over the next five years, research and development of new products, and predicting global economic, political and regulatory conditions,” Freund-Vector President and Chief Operating Officer Masaaki Kubota wrote in a letter to the authority.
Freund-Vector now plans to remodel its existing lab space and add 2,000 square feet at its current location on 44th Street, which is not in the Enterprise Center.
The smaller project would cost about $6.5 million instead of the original $10.1 million, according to state documents.
The company said it still plans to hire five additional people.
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Kubota told The Gazette Friday the company may pursue a larger project later, but it wants “to evaluate correctly for the future.”
“We want to wait for the big investment until we know clearly our business direction,” Kubota said.
In exchange for the smaller project, the Economic Development Authority Board approved a smaller tax refund — $24,000 — to Freund-Vector on Friday. The company will receive the same amount of research activities tax credits.
A local incentive match for Freund-Vector’s project also will be scaled down and transferred from Marion Economic Development Co., which runs the Marion Enterprise Center, to the city of Marion, MEDCO President Nick Glew said.
“That’s the piece in the coming weeks that we’ll will work to amend what that local match looks like because just like the project itself and the IEDA award will be lesser, the local match will be much lesser as well,” Glew said.
MEDCO initially had said it would provide Freund-Vector with a $330,000 forgivable loan.
A Pennsylvania company that recently opened an expanded facility in Oelwein also asked the authority to reduce an incentive request.
East Penn Manufacturing Co. opened a 345,000-square-foot expansion to its battery manufacturing plant in Oelwein in February, the Waterloo-Cedar Falls Courier reported.
The board had awarded East Penn $1.75 million in loans and $3.1 million in tax credits for the project in 2015. In return, East Penn had to commit to creating 350 jobs at the plant, in addition to the 80 already employed there.
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On Friday, however, the authority approved a request from East Penn to lower its job commitment at the plant to 270. The authority also reduced the loan award to $1.35 million, but not the tax credit award.
East Penn had told the authority the reduction in its job commitment “would properly align human resources with facility needs at this point in its operation” and that it wanted to keep on the about 80 employees already working in Oelwein.
“With the design of this facility, the company has integrated numerous growth strategies and paths toward expansion. With these measures implemented, there still is the very likely potential to reach the 350 job creation number in the future,” East Penn Chief Operating Officer Robert Flicker wrote to the authority.
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