Most companies receiving local tax breaks have met their job creation and investment goals this year, but Clark County staff members raised concerns about one local firm they said is well behind on its commitment.
Representatives at Sutphen Corp argued they are meeting their goals, but are doing so by hiring contract workers.
The Springfield News-Sun reviewed the tax abatements granted to businesses in Clark County, the city of Springfield and village of South Charleston as part of the Ohio Enterprise Zone program.
That review showed that most companies have created hundreds of jobs. Phygen Coatings, though, voluntarily terminated a tax abatement it had received with the city.
Clark County, the village of South Charleston and the city of Springfield each appoint members to separate Tax Incentive Review Councils that make recommendations on whether to continue those incentives annually.
In Clark County, council members reviewed agreements with several companies including Yamada North America Inc., Woeber Mustard Manufacturing Corp., Seepex Inc., MEVA Framework Systems Inc., Millard Refrigerated Services, Sutphen and Ritchie Brothers Auctioneers.
The Clark County review council voted to renew each of the agreements this year, although they raised concerns about Sutphen Corp.
The firm received a 10-year, 60 percent tax abatement for an expansion that was approved in 2008, and in return was expected to retain 74 positions and create 30 new jobs.
But county records show the company had only added three full-time jobs by the end of last year. Officials from Sutphen said Friday they disagreed with the county, and believe they have met the requirements.
Tom Hale, enterprise zone manager for the county, recommended continuing the agreement, which expires in 2018.
However, documents show Hale also wants to meet with Sutphen’s management to request more information, including a five-year business projection. A memo from Hale to the Clark County commissioners earlier this month shows he tried to contact Sutphen in June, but hasn’t had a response.
Hale didn’t return several calls seeking comment this week.
“There was major discussion concerning Sutphen Corporation,” the memo says. “They were not present at the meeting and council has asked several questions to which I couldn’t answer. The most important is that the company has failed to hit their target job creation in accordance with their application.”
Sutphen officials believe they have created the jobs, but the sticking point is how the jobs are counted, said Ken Creese, director of sales and marketing for Sutphen.
The company has added about 20 jobs, he said, despite a downturn in business due to the recession. But instead of hiring the workers directly, Sutphen brought on contract workers hired through Express Employment Professionals, a Springfield staffing firm.
“As we climbed out of the recession, my understanding is we did make all of our numbers,” Creese said. “But the rub is about half of them are full-time and the other half were contract labor.”
Those jobs should count even though they are not direct hires by the company, Creese said. He added the company has still provided jobs, despite losing as much as 40 percent of the company’s new business at the height of the recession.
The concerns can be resolved in the long term because the county voted to continue the abatement, Creese said.
“All in all 15 or 16 people went to work based on our expansion with wages and benefits, like (it was) in our application,” Creese said.
Other firms in Clark County also received extensions after the review council determined the companies met or exceeded their requirements.
Yamada North America, an auto parts manufacturer in South Charleston, pledged to create 30 jobs as part of a 100 percent, 10-year tax abatement for an expansion in 2004. County records show the company far exceeded those goals, creating 233 jobs by the end of 2013.
In a separate agreement, Yamada pledged to add 43 employees as part of a 2012 expansion. The company received a 100 percent, 15-year abatement for that expansion, and has since created 196 jobs.
The review council also continued the abatements for other companies, including Seepex. The Enon-based business was expected to create 18 jobs as part of a recent expansion, and had added 23 jobs by the end of last year.
The company faced slower business earlier this year due to bad weather, but has seen improvement in the past two months, said Mike Dillon, president of Seepex. The company manufactures pumps for customers in the food, petroleum and chemical industries.
The incentives help the company reinvest in a community, Dillon said, and several factors affect whether a company meets its goals, including how the economy is faring and whether a company can find an experienced workforce.
Seepex has expanded several times over the years. Dillon pointed to one past instance in which the company didn’t meet its job creation goals, but exceeded its expected payroll because the workers it hired earned higher wages.
A separate review board for the city of Springfield also agreed to continue with enterprise zone agreements with five companies — Konecranes, LexisNexis, US Express, Mills-Morgan and the National Trail Parks and Recreation District ice arena.
The city board also voted to move forward with several Community Reinvestment Area agreements that encourage businesses to reinvest in a specific portion of the city, said Josh Rauch, deputy economic development administrator for Springfield.
Phygen, a company that provides products for the auto industry, struggled during the recession and voluntarily terminated its CRA tax abatement with the city. Other firms, including Springfield Overhead Door, Schuler’s Bakery and Ameriprise were approved to continue.
Local officials try to be flexible while at the same time ensuring the company is striving to meet its expectations when reviewing the abatements, Rauch said.
“Generally speaking from a staff perspective, when we are evaluating these things we try to look at the overall picture, how is the company doing and if they’re making a good faith effort to meet their terms and conditions,” Rauch said. “And then we proceed from there.”
The Springfield News-Sun digs into jobs and the local economy in Clark County. For this story, the paper spoke to several area businesses, city and county officials and examined tax incentive review council reports.