Springfield manufacturer seeks to end incentives after job shortfall

A manufacturer has asked to end an incentive package with the city of Springfield after the company hasn’t met its job creation requirements, citing cuts in military spending, automation and market forces.

HDI Landing Gear USA, formerly known as Eagle Machine and Tool Co., had pledged to create as many as 50 new jobs and invest about $24.5 million in new equipment and its facility on Montgomery Avenue.

READ MORE: Boeing deal will land more jobs in Springfield

The original agreements called for a 60 percent property tax abatement on the improvements to the site from 2015 to 2022 and a 50 percent break off city income taxes for the new jobs.

However company leaders met with city staff members and requested to terminate both agreements, Deputy City Manager Bryan Heck said.

“Essentially on the tax abatement side, they made the level of investment they set out to do,” Heck said. “They’ve invested more than $18 million at the facility but most of that investment was in equipment so it did not materialize into a property value increase.”

HDI doesn’t have to repay any money to the city because the agreement called for the manufacturer to only receive the incentives after it created the jobs.

The company is a subsidiary of Heroux-Devtek Inc., a Canadian aerospace manufacturer. HDI had close to 100 employees in Springfield when the employee incentive agreement was approved and that number has remained about flat, Heck said.

MORE BUSINESS NEWS: Navistar, local leaders push others to buy trucks made in Springfield

Fred Gagne, plant manager at the company’s Springfield site, declined to go into detail about why the additional jobs didn’t materialize but said the company has invested millions at its facility.

“We’re following our plan and we didn’t create all the jobs we expected,” Gagne said. “But it’s also fair to say we invested heavily in automation and we made some changes to our business that are yielding good results. We just sat down with the city to say we didn’t create all the jobs we intended to create but we’ve made some major investment and we’re moving forward with our business plan.”

The company’s plan to create new jobs and investment was related to a contract to produce landing gear for Boeing’s 777 and 777X programs.

RELATED: Boeing deal could create 50 city jobs, $24M investment

“Due to current market conditions and the growing trend toward automation in their production to remain competitive, they were not able to achieve the proposed level of employment they originally thought they were going to be able to accomplish,” Heck said. “It was a mutual termination between both parties. We continue to have a great relationship with HDI and continue to work with them so they can be successful.”

Eagle Machine and Tool Co. was purchased by Heroux-Devtek, a Canadian aerospace manufacturer, in 2010.

Springfield city commissioners were expected to vote on rescinding the incentive agreements Tuesday night.

By the numbers

50: New jobs HDI Landing had pledged to create as part of an incentive agreement with the city

$24.5 million: Investment in new equipment and its facility on Montgomery Avenue HDI Landing had pledged to create as part of a tax abatement agreement.

$18 million: HDI Landing invested

Complete coverage

The Springfield News-Sun tracks government spending, including recent stories on payrolls for Clark and Champaign County public employees and school bond issues.

About the Author