Published: June 30, 2009 09:40 pm         

Vigo council: Companies in tax abatement compliance

TERRE HAUTE — The Vigo County Council on Tuesday determined six companies were in compliance with granted tax abatements, concluding that employment numbers for some companies are down because of market reasons beyond the companies’ control.

The council earlier this month reviewed tax abatements that had been granted to companies on specific conditions of future numbers of jobs and salaries. The council set Tuesday for a hearing to review abatements that appeared not to be in compliance or had statement-of-benefits sections filled out incorrectly.

For two of the companies, Boral Brick Inc. and CertainTeed Corp., a national decline in new residential homes are the key factors in their lower-than-expected numbers.

Larry Gigerich, managing director of Ginovus, a site selection company that helped Australian-based Boral Bricks Inc. select Vigo County for construction of a new brick manufacturing plant, said a downturn in residential housing significantly affected the company’s market of bricks throughout fiscal year 2008 and into 2009.

“Fiscal year 2008 revenues were down 28 percent and earnings were weaker due to deteriorating demand throughout the year,” Gigerich said. “Housing starts in brick states fell by 29 percent in the year, which follows a 21 percent decline” in 2007.

“Turmoil in the financial markets has also had a significant impact on residential and commercial construction projects … We have experienced unprecedented economic conditions and also unprecedented unemployment conditions in the country as well,” he said.

The Vigo County plant suspended production in February, except for six salaried supervisors and three hourly operators. However, the company expects to resume production by the end of December.

“So approximately six months from now, barring any unforeseen severe economic condition change, that is when the facility will restart,” Gigerich said.

When it sought a tax abatement, the brick company estimated it would have 50 employees with a payroll of more than $1.4 million.

The plant services Indiana, Illinois, Michigan, Missouri, Wisconsin and Ohio.

Boral Bricks has invested more than $57 million, including more than $39.5 million in equipment, in the 295,000-square-foot brick manufacturing plant in Vigo County. The plant’s capacity is 120 million bricks per year, enough for 8,300 all-brick houses.

Jeffrey Heffner, plant manager for CertainTeed Corp.’s Vigo County plant, said the company incorrectly filled out its compliance forms. However, Heffner said, the company had almost doubled what it stated it would do for an abatement “with almost $100 million of investment within the county.”

The company at the end of 2008 had 104 employees, versus its stated goal of 99. The company currently has 81 employees.

“CertainTeed is currently facing the same crisis that Boral Bricks faces. The reason we are not at full capacity is due to the housing industry,” Heffner said. “Back in 2005 when we decided to work on this plant, there were 2.5 million new housing starts a year. The latest projections now are 530,000.”

Heffner said 85 percent of the plant’s business is targeted at new residential homes.

Heffner said the company is still investing in the Vigo County plant, now installing another production line, costing $1.5 million to $1.8 million, “that eventually create more jobs once the productivity of the plant picks up, which is dependent on market conditions.”

“We plan to have this plant here for a long time and 145-plus jobs once the economy turns around,” he said.

Futurex Industries Inc., the first company located in the Vigo County Industrial Park, south of Terre Haute, has invested $4 million in its facility, more than its projected $2.4 million.

Company spokesman Steve Prevo said the company had estimated 140 employees with an annual payroll of $2.6 million, but a slow economy and a 1999 fire caused setbacks. The company currently has 48 workers with a payroll of $1.4 million.

The council did not take action against the company’s abatement, which has just one year remaining. The council also determined Landstone Corp., Novelis Corp. and Wabash Valley Packaging Corp. were in compliance. The council removed Marion Tool & Die Inc. from consideration as its tax abatement is under the jurisdiction of the West Terre Haute Town Council.

Howard Greninger can be reached at (812) 231-4204 or howard.greninger@tribstar.com