Dematic received 5 years of tax breaks from Michigan; created jobs to stay in Grand Rapids

Posted at 1:27 PM, Jan 06, 2016
and last updated 2016-01-06 13:27:31-05

GRAND RAPIDS, Mich. - From their 2010 tax break, Dematic Corporation on Grand Rapids' northeast side created 456 jobs by the end of 2014, according to the Michigan Economic Development Corporation. Dematic officials told FOX 17 those jobs are among the 900 or more company jobs that will stay in Grand Rapids, if the company moves its manufacturing plant to Monterrey, Mexico.

In October 2010, based on the MEDC's recommendation, the Michigan Economic Growth Authority approved a five-year state tax credit worth $3.2 million to Dematic.  In exchange, Dematic invested $10.9 million to expand its research and development, administrative services, sales, and in-house production in Grand Rapids, including to create a total of 910 high-paying jobs in engineering, sales, and research, 505 of which would be company jobs.

The Right Place's President and CEO Birgit Klohs told FOX 17 that day the investment was a "high-five," and "good news all the way around."

It was a tax break for an investment many city leaders were excited about.

“We definitely were excited back in 2010 and any time we can create jobs," said Walt Gutowski, former Grand Rapids First Ward City Commissioner. "That’s what it’s all about: jobs, and Grand Rapids has been extremely resilient.”

While the 456 company jobs created by the tax break will stay in Grand Rapids regardless if their plant moves to Mexico, at least 300 employees face potential lay offs.

“No decision has been made, but we wanted to let the Union know," said Rob Arguelles, Dematic executive vice president of global operations.

"So we notified the Union that we’re contemplating this decision, and we also extended to the UAW the ability for them to participate in decision bargaining with us, so that we can jointly with our partners in the UAW come to a decision of what do we want to do.”

Klohs told FOX 17 Wednesday that the expiration of Dematic's tax break in 2015 has nothing to do with the company's potential plant move. Klohs also believes if any Dematic employees are laid off, they would find nearby work quickly.

“The good news in this is Grand Rapids has an unemployment rate of three percent, and obviously these are highly skilled manufacturing people that in my opinion would be absolved very quickly by other manufacturing companies in West Michigan," said Klohs.

In the meantime, Klohs said The Right Place is collaborating with the City of Grand Rapids leaders, and talking with Dematic in hopes to influence the company's decision to keep their manufacturing plant in Grand Rapids.

Governor Jennifer Granholm made the October 2010 announcement along with other tax credits and investments in Michigan companies.  In Grand Rapids, Dynamic Captioning received a tax credit in that same announcement and they are currently operating on the southeast side of the city.

You can watch the October 2010 report below: