Source: Sherman Publications

Leonard grants tax abatement

by CJ Carnacchio

May 23, 2012

Leonard’s village council took steps May 14 to ensure 55 new jobs would be created at an automotive supplier’s plant located in the small town as opposed to Mexico.

Council voted 5-0 to grant Cooper-Standard Automotive a seven-year, 50 percent abatement (or reduction) of the personal property taxes on the $3.378 million in new equipment the company plans to purchase and install at its Leonard plant (180 E. Elmwood St.) in order to manufacture a new product for automotive companies.

“We were very excited that they were willing to work with us and they trusted our role in the community,” said Eric Millay, plant controller for Cooper-Standard’s Leonard facility. “I think it shows that the village, the residents and Cooper-Standard can work together. We’re pretty excited about that.”

“I think given the current global (economic) climate and the way work is moving back and forth across borders, this is a win for not only the village, but for the state, too,” said Leonard Village President Mike McDonald. “I believe Cooper-Standard already has some operations in other countries, so we kept some of the work here that could have moved elsewhere.”

Headquartered in Novi, Cooper-Standard has locations throughout North America, Europe, South America, Asia and Australia.

Receiving the tax abatement will help Cooper-Standard be able to manufacture its new product in Leonard as opposed to doing it in Mexico, where labor costs are typically much cheaper.

“Without that, it would have been difficult for Cooper-Standard to make the business decision to keep that business here,” Millay said. “It was that or nothing, essentially. The business would have moved without the assistance.”

“This will allow us to . . . help increase the job base in Michigan,” he continued. “Without the support of the Village of Leonard, this would not have been possible.”

McDonald said council’s decision to grant the tax abatement “means more people working and more people working in our area, which will hopefully translate into income for our businesses throughout the community.”

“I think one of the things that (council was) worried about was they were going to lose tax revenue with no real benefit to the local community,” Millay noted. (But after council realized) that there were going to be 55 more employees here, spending their money (at) local businesses, I think that is what led them to approve the abatement.”

Council also approved the creation of an Industrial Development District (IDD) for Cooper-Standard’s property, a necessity in order to grant tax abatements.

Council held public hearings May 14 on both the abatement request and IDD creation, but no citizens spoke either for or against them, according to McDonald.

Receiving this abatement accomplishes half of what Cooper-Standard needs to happen in order to obtain $235,730 in funding from the Michigan Economic Development Corporation (MEDC).

“Before we can receive funding from them, we had to have cooperation from local government, which has happened with Leonard’s approvals,” Millay said. “Now, that application (with the MEDC) can move forward. It was a necessary precursor for that.”

Once it hires all 55 workers as promised, the state is expected to release the funding to Cooper-Standard.

This $235,730 would help offset a portion of the difference in labor costs between Michigan and Mexico, making it more competitive to keep that business here.

Cooper-Standard is planning to invest $3.378 million in new machinery and equipment, plus another $169,000 for plant renovations, according to the application submitted to the village. The abatement would only apply to the personal property taxes it would pay on the new machinery and equipment, not the renovations.

The abatement would effectively cut personal property taxes on this $3.378 million investment by 50 percent. The reduction applies not only to Leonard’s millages, but those levied by Addison Township and Oakland County along with Oxford Community Schools 7-mill tax to pay off its bond debt.

This $3.378 million investment would enable the company to manufacture a new type of high-tech valve designed to move fluids through a vehicle to heat and cool various parts such as the battery in a Chevy Volt (a hybrid electric vehicle) and the oil pan and transmission for a vehicle from another automotive company, the name of which is not being disclosed at this point.

Thanks to this new product, the 20,000-square-foot Leonard plant has already added five new jobs and expects to add another 55 positions over the next few years.

Of these jobs, 50 would be skilled and unskilled positions paying $24,960 to $25,688 annually between 2012 and 2014; three would be clerical/service positions paying $28,080 annually; and two would be management/professional positions paying $65,000 per year, according to the application Cooper-Standard submitted to the MEDC.

The Leonard facility currently employs about 70 Cooper-Standard workers, plus another 25-30 contract employees.