Ford’s big break, Sterling’s big gain

Automaker receives abatements on millions in investments

By: Cortney Casey | Sterling Heights Sentry | Published October 24, 2012

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Tax abatement requests are no rarity for Sterling Heights, but the ones that came before City Council Oct. 16 had a few more zeros than usual tacked on.

By a 6-1 vote, council members approved industrial facilities tax exemption certificates for Ford Motor Co. on new investments totaling more than $170 million at the automaker’s two Sterling-based plants.

Together the measures entail abatements in excess of $2.1 million in city taxes, $632,000 in school taxes and $4.5 million in total taxes throughout their 12-year terms — and generate the identical amount in new tax revenue.

“We are very grateful that Ford Motor Co. sees Sterling Heights as a great location to invest, and we are eager to support the long-term health of these critical locations in our community,” said Economic Development Manager Kasey Green as she presented the cases to council.

The first abatement involves a nearly $86 million personal property investment at Ford’s Sterling Axle Plant at 17 Mile and Mound. The second was nearly as sizeable: a more than $84.7 million investment at the Van Dyke Transmission Plant on Van Dyke, near 18 Mile.

Green outlined a laundry list of equipment the investments cover — from machining, assembly, milling, welding and engineering tools for manufacturing new axles, to upgrades to the Powertrain and transaxle systems to boost capacity — all of which, she said, is crucial to keeping Ford’s plants modernized and attractive for future business and expansion. 

More than 680 jobs will be added and another 825 retained, thanks to the improvements, she added.

Nick Broggi, manager of the Sterling Axle Plant, told council that the upgrades are integral to the facility’s “transformation” and will help secure its future.

“Several years ago, the future was uncertain for that plant,” he said. “We were laying off people, we were reducing shifts and we were actually balancing out some of our previous products. Tonight I’m happy to say that we’re transforming the plant.”

The plant had 250 employees on temporary layoff at the end of last year; now they’ve been able to bring all of them back and add 250 more, said Broggi.

As has become the norm, most council members praised Ford for its continued presence in Sterling Heights and its status as a good corporate neighbor, but Councilman Paul Smith, the lone “no” vote on all of the abatement votes, chided plant representatives present for living outside of Sterling Heights and sarcastically asked if Alan Mulally, the company’s president and CEO, was in attendance.

“I really don’t think you’d leave town if you had to pay the tax,” he said, equating the abatement to “pennies” for the massive automaker.

Mayor Pro Tem Michael Taylor retorted that Ford didn’t “deserve to be berated.”

“Ford Motor Co. is paying so much money in taxes to this city — without Ford Motor Co. here, every one of our residents would be paying more or be getting less services,” he said. “When a company comes in and is investing $90 million in our community in one plant — a plant that’s one of the oldest in the country — this is something that I think should be universally celebrated.”

According to City Manager Mark Vanderpool, Ford currently pays Sterling Heights more than $2.5 million in taxes annually and is one of the community’s top taxpayers.

Later in the meeting, City Council greenlit Ford’s request for an 11-year extension on a tax abatement from 2010, which council members originally opted to abbreviate, due to tax disputes between the city and the automaker at the time.

Ford also asked to amend the amount of the investment, from the originally stated $42.8 million to almost $52 million. Over the 12-year term, the abatement represents nearly $650,000 in city taxes, more than $192,000 in school taxes and almost $1.4 million in total taxes.

The abatement involved investments facilitating electrification efforts at the Van Dyke Transmission Plant. Though Ford qualified for 12 years, council approved only a single year, citing the company’s appeals of personal property tax rates at the Michigan Tax Tribunal and the potential financial impact.

At the meeting, Green merely said that the appeals had been resolved; in an email later, Finance and Budget Director Brian Baker elaborated that the issues arose after the State Tax Commission nearly halved the personal property tax tables, which would have cut $1 million from what Ford owed Sterling Heights.

After forming a work group to hash out the issues, company and city officials “were able to reach a compromise of only a 20 percent decrease, or $400,000 loss to city revenues,” he said.

Oct. 16 was a busy night. Council also approved a six-year abatement on a $834,375 personal property investment by Acra Grinding Co. representing $10,452 in city taxes, $3,172 in school taxes and $22,109 in total taxes.

According to Green, the investment, which involves the Ford supplier’s acquisition of major equipment for its facility on Brentwood, is expected to add three new jobs and make a regional economic contribution of $240,000 annually.

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