SOUTH CHARLESTON, W.Va. -- A Spanish automotive company will re-open the South Charleston stamping plant, investing a minimum of $100 million and eventually creating an estimated 700 jobs, Gov. Earl Ray Tomblin announced.
Tomblin's announcement provoked a standing ovation from the approximately 75 state, county and local leaders gathered Tuesday afternoon in the stamping plant's parking lot for Tomblin's press conference.
Tomblin said the decision by Gestamp to locate in South Charleston "demonstrates what a willingness to work together" can accomplish. He said plant owner Ray Park, the state, county and local leaders and his economic development team "have taken what was once a prospect and made it a reality."
State Secretary of Commerce Keith Burdette said Park built a long-term relationship with Gestamp Chief Executive Officer Jeff Wilson and one day they were talking about some of the equipment in the plant.
Burdette said Gestamp's site selection consultant had already been talking to others about the Gestamp's need for a plant. "We were the last guys at the dance," he said.
South Charleston Mayor Frank Mullens said it is his understanding that Gestamp was originally looking at sites in five states. "Then it was West Virginia, Kentucky and Ohio," he said. "And then it was Ohio and West Virginia."
Burdette said the deal discussions developed over 30 days and came together quickly -- in about 10 days.
"I can tell you we wouldn't have been in this game without a facility like this," Burdette said.
The 922,000-square-foot building at 3100 MacCorkle Ave. SW has been vacant since 2006. Park has used the time to completely refurbish the 30-acre property inside and out.
But as recently as February, Park said he didn't expect auto body parts to be made there again. "We've talked to enough stamping companies around the country, we know the trend in stamping plants has gone the other way," he said then. "They're putting them next to assembly plants."
Burdette said the plant is in world-class condition. "You can eat off the floor," he said. "The equipment is virtually 'out of the box.'"
The plant's condition is important because Gestamp wants to begin stamping auto parts in South Charleston by late summer or early fall, Burdette said.
Kanawha Commission President Kent Carper said, "The difference between West Virginia and Ohio was they (Park and the state) invested and the company can start on day one."
Tomblin said he toured the plant with Park last Thursday. He said Park missed Tuesday's announcement because he already had planned a vacation.
Burdette said Wilson missed the announcement because he was in either Singapore or Beijing on Gestamp business. Tomblin said Gestamp already had workers inside the plant on Tuesday.
Mayor Mullens said the city business and occupation tax incentive he proposed -- and the South Charleston City Council approved on first reading Thursday -- "was huge, because municipalities in Ohio don't have a business and occupation tax."
The proposed South Charleston tax break would require large manufacturers to pay the city's business and occupation tax at the regular rate during the first four years they do business in the city. But manufacturers that meet gross sales and employment minimums would have the tax capped at $360,000 a year thereafter.
Mullens said Gestamp "wanted to know how much it would cost them to do business in this city and state vs. how much it would cost them to do business in that city and state."
Without a cap, the business and occupation tax could fluctuate. South Charleston's tax rate for manufacturers is 30 cents per $100 in gross sales.
To qualify for the incentive, a Gestamp or any other manufacturing business that moves to the city would have to post a minimum of $100 million in sales in years four through seven; a minimum of $200 million in year eight; a minimum of $250 million in years nine through eleven; and a minimum of $400 million in years 12 through 20.
The business also would have to employ 250 people at the end of year four; an average of 250 and not less than 200 at any time during years five through seven; 275 average at the conclusion of year eight; 300 average and not less than 250 during years nine through eleven; 400 average at the end of year 12 and 400 average and not less than 350 during years twelve through twenty.
Mullens said he wanted a higher cap, the company wanted a lower cap and a compromise was reached.
"It's a big day -- an historic day for us," he said.
Burdette said the state has offered Gestamp incentives that include assistance with training through WorkForce West Virginia and the region's community and technical colleges.
Also, the state will offer up to two forgivable loans to help the company defray the cost of moving equipment if Gestamp meets certain criteria, he said. "They'll start with a $20 million (production) line and their goal is to have five or six lines installed."
In addition, the state will offer to buy Gestamp's equipment and lease it back to the company so Gestamp doesn't have to pay property tax on it.
Also, the state has offered to screen job applicants through WorkForce West Virginia but details haven't been worked out yet.
The employee pay scale will be "at market with about a 35 percent benefit," Burdette said. In other words, if an employee were paid $100,000 a year, he or she would receive that amount plus benefits worth about $35,000.
"I think they'll ramp up employment to 175 to 200 within 12 to 18 months and they'll have 400 to 500 employees in three to five years," he said.
Burdette said original discussions were that Gestamp would lease the plant for 20 years but he believes the final deal calls for a 12-year lease with an option to renew for 12 additional years.
In May 2007 when now-Sen. Joe Manchin was governor, the state loaned $15 million to Park's company. Park invested that money in the plant along with more than $20 million of his own funds. He added a multi-million-dollar line of robots and had the plant refurbished inside and out.
In a prepared statement, Manchin said, "This was a total partnership between private enterprise, state and local government. As governor at the time, I knew we needed to make the investments in the site that would attract a quality employer like Gestamp to South Charleston, and that is exactly what has happened.
"I thank my dear friend, Ray Park, for his vision and belief in our state and its workforce. Ray came to me as governor with his plan to transform the South Charleston site into a world class, state-of-the-art facility -- the perfect marriage of technology and our skilled workforce.
"I made the decision the state would join in partnership by investing $15 million -- which I am happy to say has been paid back with interest -- and the result of this investment, Ray's investment, and his confidence in our state as a premier site that has attracted international investment and will put hundreds of people to work.
"These are the types of investments we must continue to make --and the partnerships we must continue to form -- to keep our state and our economy competitive," Manchin said. "I applaud the efforts of Gov. Earl Ray Tomblin, as well as the wisdom and courage of Mayor Frank Mullins and the South Charleston City Council in making today's announcement possible."
Sen. Jay Rockefeller said in a prepared statement, "Here we are again, seeing more good news for our manufacturing sector in West Virginia.
"I am so excited about this announcement and commend South Charleston Mayor Frank Mullens, South Charleston City Council, and my good friend Ray Park for their hard work aimed at attracting a large manufacturer back to the Kanawha Valley.
"I've been involved with this stamping plant since my days as governor and I have stood beside the workers through good and bad times during the Mayflower and Union Stamping days," Rockefeller said. "I couldn't be happier that it's on the way to re-opening and adding hundreds of jobs for the Kanawha Valley."
According to Gestamp's website, the company has three main lines of business: automobile components, steel service centers and renewable energy. The auto component group has a total of 95 production centers in western Europe, eastern Europe, North and South America and Asia; 13 research and development centers; and more than 25,000 employees.