Economic Development Blog

Lyon Station, Pennsylvania-based battery maker East Penn Manufacturing Co., Inc. is planning for a major expansion of its operations in Berks County.

East Penn Manufacturing complex in Lyon Station, PA (photo – dekabatteries.com)

As part of the expansion, East Penn will be building a new 458,000-square-foot battery manufacturing plant to support growth.

East Penn Manufacturing operates one of the world’s largest single-site lead-acid battery manufacturing facilities, which already has more than two million square feet of roofed space in the 520-acre complex in Lyon Station (also known as Lyons), a borough in Berks County.

The new building’s construction alone is expected to cost more than $50 million, and the expansion will create 400 new jobs, in addition to the 6,000 employees the company already has in Pennsylvania.

East Penn will also be making additional investments for equipment purchase and workforce training.

Dan Langdon, president of East Penn, specifically mentioned the cooperation they had received from the commonwealth, and the positive impact the expansion would have on the community and the company’s suppliers.

East Penn has been offered a very attractive package of incentives for the expansion project, which was secured by the Greater Berks Development Fund (GBDF) in partnership with the Governor’s Action Team (GAT).

On behalf of East Penn, GBDF is getting a $6 million loan from Pennsylvania Industrial Development Authority (PIDA), to be repaid with a low 1.5 percent interest rate over a 15-year period. The company is also getting a $5 million loan from Machinery and Equipment Loan Fund (MELF), to be repaid over 10 years at 1.5 percent.

The Pennsylvania Department of Community and Economic Development (DCED) has approved East Penn for a $500,000 grant under the Pennsylvania First Program, along with job creation tax credits worth $800,000 and another $180,000 for workforce training.

Edward J. Swoyer Jr., president of GBDF, said that he could not think of a better investment than this East Penn expansion project that has similarly aligned the county and state’s goals on their economic development programs.

PA Gov. Tom Corbett said his administration was committed to enacting policies that encouraged employers such as East Penn Manufacturing to grow and create more jobs in Pennsylvania.

Back in 2007, local and state officials in Pennsylvania laid out the red carpet to land the $32 million US Airways Moon operations control center (OCC) near Pittsburgh International Airport that created and retained 600 jobs.

Photo – flypittsburgh.com

At that time, the US Airways OCC which coordinates 3,000 regional fights was moved to Pittsburgh from Phoenix, AZ due to the US Airways merger with America West.

Now the shoe is on the other foot, with Pittsburgh facing possible closure of the OCC as US Airways merges its operations with American Airlines, which has a much bigger OCC located near the company’s Dallas/Fort Worth headquarters in Texas.

As per this transcript (scroll down to pg. 5) filed with the SEC, US Airways CEO Doug Parker told the company’s employees that “if I was talking to people in the OCC what I’d tell them is that if we were betting right now it’s only fair to tell people that, you know, Dallas has a bigger center and is more likely than not that you’d move there.”

He also mentioned the process was a couple of years down the line, and even after that the transition would be phased. All unionized employees at the Pittsburgh OCC would be offered jobs in Dallas.

Half of the employees at the Moon center are not union members, and have been notified that they could be eligible for a severance package. These 300 are part of a total of 4,970 non-contract U.S. Airways workers, which has a total of 32, 213 employees.

But Allegheny County and its airport authority are already on the case, looking at agreements the company has signed to find some way to keep the jobs from being relocated or terminated.

US Airways was offered a $16.25 million incentives package in 2007, with the company committing to create retain and create 600 jobs at the Moon center for at least three years. However, they actually received only $3.25 million in grants and another $750,000 worth of performance-based tax credits.

Apart from the ripple impact of losing the Moon OCC and spending by the 600 employees on the local economy, Pittsburgh Airport also has to worry about further eliminations, such as the US Airways jet maintenance facility located at the airport.

The Pittsburgh Airport Area Chamber of Commerce, Allegheny County Airport Authority, Pennsylvania Governor’s Office, and the state’s elected representatives in the U.S. Congress are gearing up to launch a coordinated two-year campaign to preserve the Moon center, jet maintenance facility and other US Airways jobs.

More incentives may be offered to convince the new merged American Airlines to close its OCC in Dallas and consolidate operations control in Pittsburgh.

Pennsylvania Gov. Tom Corbett introduced a budget proposal which includes broad-based tax reform to create jobs, $5 million in additional funding for economic development activities, and various other proposals to create jobs and attract new businesses to the Commonwealth.

Pennsylvania budget jobs (photo – revenue.state.pa.us)

The tax reforms proposed include:-

-          Eliminating the capital stock/foreign franchise tax in January 2014;

-          Reducing the corporate net income tax from 9.99 percent down to 6.99 percent in stages;

-          Raising the cap on net operating loss deductions from $3 million, or 20 percent of income, to $5 million, or 30 percent of income;

-          Allowing for like-kind exchanges and start-up business deductions;

-          Repealing the corporate loans tax; and

-          Simplifying the tax code and repealing nuisance taxes.

“Economic modeling shows that these initiatives will create more than 18,000 jobs over the next 10 years, as well as increase the state gross domestic product by $2.8 billion and grow personal income by $1.9 billion by 2030,” Department of Revenue Secretary Dan Meuser said. “These positive economic effects also increase state tax revenue, creating more than $1 billion in new tax revenue through 2030.”

The proposed budget for the Department of Community and Economic Development (DCED) places an emphasis on public/private partnerships, international business development, and deploying state resources to support private sector job creation and business growth.

It expands Pennsylvania’s ability to market itself to growing businesses through a $5 million increase to the Marketing to Attract Business program.

The Pennsylvania Business Development Authority (PBDA) will consolidate business financing programs to form a public/private partnership to support a number of business growth needs, including site development, infrastructure improvements, machinery and equipment acquisition, and capital for small businesses and entrepreneurs.

The Governor also proposes to launch the Small Business Champion Network, a team of business experts within DCED created to help employers navigate permitting processes, identify public and private resources, and connect with Pennsylvania’s vast small business support network through the state.

The budget also implements PA BIZ Online, an upgrade of the Open for Business website, to guide potential entrepreneurs in establishing new business in Pennsylvania.

Pennsylvania Governor Tom Corbett announced that Ahold USA will invest at least $63 million to build a new meat processing facility in the Harrisburg region in Cumberland County, PA.

Photo – Ahold USA

Ahold has entered into an operating agreement with Vantage Foods to run the new 162,000 sq ft facility in Lower Allen Township. They will hire at least 850 new employees.

“As governor, I am committed to ushering in an economic environment that encourages private sector job growth,” said Gov. Corbett. “These are jobs that could have gone to another state if not for our improved business climate and economic development efforts.”

Several states were apparently considered during the site selection process for the USDA certified meat processing and packaging facility.

“Central Pennsylvania is an ideal location for our newest U.S. facility,” said Leonal Kilgore, president and COO, Vantage U.S. “The Lower Allen Township community is well-resourced with strategic access to major distribution arteries and a vital local labor force. It is our full intention to earn our place as a good corporate citizen and to generate strong economic spin off for the community and surrounding area.”

“This is a real win for the Commonwealth of Pennsylvania and Lower Allen Township,” said H. Edward Black, president of the Lower Allen Township Commissioners. “This facility will create family-sustaining jobs, contribute to a healthier local economy and is expected to attract additional industrial development to the township.”

For Pennsylvania, the project was coordinated by the Governor’s Action Team, a group of economic development professionals that work directly with businesses that are considering locating or expanding in Pennsylvania.

Pennsylvania sealed the deal with a $1.275 million grant from the Department of Community and Economic Development (DCED). The $1.275 million will be provided in the form of a PA First grant, to be used towards the cost of the project.

Vantage Foods was also offered and is eligible to apply for $360,000 in job training assistance and up to $1.7 million in Job Creation Tax Credits.

“Ahold USA is proud to be part of the economic engine of Central Pennsylvania, bringing new jobs to the region and a new business, Vantage Foods, to the state,” said Mark McGowan, executive vice president, Supply Chain, Ahold USA. “This meat packaging facility is a significant investment in the future and these incentives will help us ensure its long-term success.”