Plasan Carbon Composites, a Vermont-based company specializing in the manufacturing of body panels primarily using patented carbon fibers for mass production, was awarded a tax abatement by the Wixom City Council on Tuesday, Feb. 8, following a round of public hearings.
“This is a huge catch for Wixom, as well as Michigan,” said City Manager Mike Dornan. “They are coming from Bennington, Vt. to be in the center of the Big 8 automotive companies.”
Dornan noted that Plasan is a leading automotive provider currently supplying parts for the Corvette, Viper and Mustang.
“They are looking to become a global supplier to automotive and other industries like alternative energy,” Dornan said.
Plasan will receive a 100-percent tax exemption on new personal property investment of almost $2.6 million related to manufacturing equipment over a three-year period.
Prior to the council’s action, city administration performed an analysis of Plasan’s request for both three- and five-year tax abatement scenarios. The analysis indicates that under a three-year abatement, the tax savings to Plasan would be $107,251, with a loss of $56,036 to the city. Under a five-year abatement, Plasan would save $185,420 and the city would lose out on $96,946.
The council required Plasan to obtain Michigan Economic Growth Authority (MEGA) credit approval from the Michigan Economic Development Corporation prior to forging an agreement. The state MEGA board approved the request for $1.2 million in December.
The agreement between the city and Plasan has a string of other requirements that must be met, including purchasing from Wixom suppliers first; hiring Wixom residents first; maintaining operations and a presence in the city for two years after the exemption expires or else Plasan must refund in full all exempted taxes; and actively participating in community events and activities.
Mayor Kevin Hinkley noted that Plasan was being recruited heavily by other states, but by working with the state MEGA board, the city was able to seal the deal with the company.
“The MEGA credit was driving the tax abatement and helped secure Plasan’s business here in Wixom,” Hinkley said.
The tax abatement aligns with Public Act (PA) 328 of 1998, established to spur economic development.
Under state law, personal property must be new; must be located in an eligible local assessing district; must be owned or leased by an eligible business; both the new personal property and the eligible business must be located in an eligible district on tax day; and the eligible local assessing district must adopt a resolution which provides for the exemption.
An “eligible” business means a business that proposes to create qualified jobs in this state in manufacturing, mining, research and development, wholesale and trade, or office operations. It does not include retail establishments, professional supports stadiums, or that portion of an eligible business used exclusively for retail sales.
Plasan, who is partnering with Oak Ridge Labs of Tennessee, currently occupies a small Southfield office and intends to relocate to the vacant 16,000-square-foot site at 47000 Liberty Drive in Wixom, to house their Michigan operations and conduct research and development (R&D) along with sales and marketing.
“Their type of manufacturing ties into the emerging sectors in the county,” Hinkley said. “The composite industry is in the infancy stages. As the auto industry continues to strive to reduce weight in vehicles, this company will grow since composites are lighter weight than steel.”
Included in the Plasan project will be the immediate creation of jobs.
“Job creation is also tied to the MEGA credits,” Hinkley said. “They must have a minimum of five jobs at all times for the first three years otherwise they can’t collect on them. These are very high end R&D, engineering jobs.”
By 2015, that number is expected to grow to over 30 jobs.
“The future is to put up a manufacturing facility employing 200 people. That meets one of Wixom’s dreams,” Dornan said.
Plasan is expected to be up and running in Wixom by March or April.