Council grants abatement, training funds to Chiyoda

A tax abatement request by Chiyoda USA proved anything but routine when the Greencastle City Council considered the measure during lengthy discussion in two stages Thursday night at City Hall.

"This is not our usual tax abatement," Council President Adam Cohen said right off the top of the public hearing portion of the meeting.

"It's a little more unique request this time," agreed Greencastle/Putnam County Development Center Director Kristin Clary.

When the smoke cleared, the Council ultimately granted the abatement for a Chiyoda project scheduled to begin yet this month at the Greencastle plant at 2200 E. State Road 240. The measure passed by a 5-1 margin with Dave Murray casting the dissenting vote.

Not a physical plant expansion, the project will add an estimated $11 million in capital investment at the existing plant while creating 60 new jobs while and retaining 346 positions.

At issue Thursday night were $42,000 in training dollars Chiyoda saught to go along with the abatement request.

Instead of the typical sliding scale in which tax is abated at 100 percent in year one and drops by 10 percent each succeeding year until 100 percent of taxes are paid in year 11, Chiyoda requested 100 percent abatement each of the first three years in order to fund the training necessary for suppliers of products to Subaru at Lafayette.

Allowing those two extra years to be abated at 100 percent would result in $42,000 extra for Chiyoda to use for training as it plans to take 60 entry-level employees and train them to move up to higher-skilled positions. In turn current temporary workers would move into those entry-level jobs and become permanent employees.

"We've never had this situation before," Clary said. "Oftentimes training dollars will be given to the company by the State of Indiana through Indiana Economic Development Corporation (IEDC) training dollars. They give those when the project is competitive, if we were competing against another state (for the jobs)."

However, since Chiyoda only operates plants in Indiana, the proposed expansion is not a competing project against other states, Clary pointed out.

Dana Kyle, Chiyoda Human Resources manager, explained the need for training.

"Basically when Subaru launches a new project," she said, "it involves a lot of different training, a lot of different skills. Subaru has certain requirements, like three people being completely trained on each project, which takes a lot of manpower, and we need our more skilled associates at that point."

Mayor Bill Dory noted that the training would come in areas such as machine operations, assembly techniques and quality control.

The training would allow the entry-level workers to get a bump in their hourly wage, which for many is $12 per hour. Their pay would got to $15-$17 per hour with the training, Clary noted.

As a member of the public, Danny Mesecher used the hearing to ask how Chiyoda was going to fill 60 more positions when it already has 60 jobs that are unfilled. He also asked how many new employees will be coming from the local area.

Of course, that number is impossible to determine at present, although Councilman Tyler Wade noted that Chiyoda's information lists that 170 employees of the 629 (fulltime and temporary) at the Greencastle plant come from the 46135 zip code, while overall 220 are from Putnam County, making it more than one-third from the county.

It's not for the City Council to decide how Chiyoda fills its job needs, Mayor Dory advised Mesecher.

"That's for the company to pursue," Dory said. "Some cases in the past our companies have had to be pro-active about their recruiting ... That's really beyond the purview of the City Council.

"My guess is the company wouldn't make an investment in our community if they didn't think they could find the employees to support that investment."

Dory also advised that the community attracts workers from contiguous counties and beyond in some cases.

"The reality is," the mayor said, "we are an employment center for this part of the state. We ship out probably about 5,300 people to work out of the county and many of those actually go to Marion County surprisingly. So we've got kind of a reverse commute combination."

Getting down to specifics in considering Resolution 2018-3, Councilman Steve Fields noted that "by going the three years (at 100 percent), we're basically giving them $42,000 in training dollars."

"And that's on top of the abatement," Councilman Murray noted. "I want to say I'm really glad Chiyoda is here. I assume this expansion will make Chiyoda more profitable rather than less so ... is that a fair assumption?"

Tim Conrad, financial consultant for Chiyoda, said it was indeed.

"Certainly it's going to be growing revenue," he said.

Murray said that from the figures he's been given by Chiyoda, its profit margin is likely to be "several million dollars."

"I'm trying to avoid being very specific," the councilman said, "but it was a large figure."

That provided the foundation for Murray's argument against granting the training dollars on top of the abatement.

"I think the city needs the additional money more than Chiyoda does," he said, adding that creating a precedent concerns him as well as "other companies might come to us once we say yes to additional abatement from Chiyoda."

"I'm glad you're here," Murray told company officials. "I want you to stay here. I want you to continue to be profitable. I don't know if this becomes a slippery slope but I'm concerned about that as well."

Clary reminded the Council that "it is not money you already had that's being taken away, it's only money on new growth" that's involved in the added request.

Council President Cohen again brought up Chiyoda's health-care plan, asking if Putnam County Hospital is included.

"I have confirmed Putnam County Hospital is a preferred provider," Clary assured, noting that you can't tell an employee they have to go to a certain hospital "but that is giving them an option and making them at least as beneficial if not moreso than every other provider out there."

The Council also questioned Chiyoda's community involvement level.

"We know Heartland and Ascena and Crown are very involved in the community," Councilor Stacie Langdon noted. "I just don't know that much about Chiyoda and what you guys contribute and what you're doing within the city."

HR director Kyle said business has exploded so fast, growing from 84 employees when she arrived in 2014 to 350 fulltime plus temps, that "unfortunately we let the community part of it fall, I just have to be completely honest."

She said she hopes to form an associate committee to become more involved in community activities and endeavors.

"The only thing we've actually done at this point is when people have come to us on site and asked us for donations," Chiyoda has donated to Shop with a Cop, Friends of the Greencastle Fire Department and the Chamber of Commerce.

"It's important for you to step up to help make this a better city," Langdon said. "We're trying to buy a fire truck. We're trying to take care of potholes. We've got our own issues. We want to help you, but we need you to meet us halfway."

Councilman Wade said he believes language in the agreement with Chiyoda "helps assuage any concerns."

"I feel the expansion that continues to happen at Chiyoda is impressive and is something that is beneficial to the community.

"I would find it sad if we turned this down over $42,000."

Councilman Gary Lemon, a noted economist, said he wasn't as concerned about setting a precedent with approval of the Chiyoda plan.

"If another company comes who does not have any facilities outside the state and they ask for help on training, that's the precedent, right? If a company has something else outside the state, they can get training dollars from the state.

"So from my perspective, we're doing what we've always done. We're not setting any oh-my-god precedents."

One of the things Lemon said he's always been concerned about has been bringing better-paying jobs to the community.

"Here's a chance for getting better-paying jobs and we might say no? I find that hard to believe that we might do that. It's not like it's money we have, it's money we don't have, and after three years we'll get it.

"This is an opportunity to help 60 employees to better themselves and another 60 employees to move from temporary jobs to permanent jobs, and it's really not costing us anything. It's not like it's money we have to hand back."

Wade made the motion to approve Resolution 2018-3 with the three years of 100 percent abatement. Lemon seconded and the motion passed 5-1 with Cohen, Field and Langdon adding affirmative votes and Murray voting against. Councilman Mark Hammer was absent.

"For the record," Murray said, "I'm going to vote no, but I love my Subaru."