Morgal Machine’s $2M, 42 job expansion receives tax credit

The Morgal Machine facility in southwest Springfield.

The Morgal Machine facility in southwest Springfield.

Press Release – opportunity for biz to get PR services from Chamber

The following is a press release sent out yesterday by me, with most of the text prepared by the Chamber’s own Tim Bucey, who used to work for the Springfield News-Sun.  Tim is Director of Communications and can also assist businesses with certain PR requests.  Simply contact Tim at 937.325.7625 or tbucey@greaterspringfield.com with any story ideas.  He also writes the majority of the article text for the RegionView publication.

The Job Creation Tax Credit itself

Yesterday in Columbus, VP and GM Rodney Hickman from Morgal Machine, Dan Landis the McGregor Companies Controller, and I were in Columbus appearing before the Ohio Tax Credit Authority to receive a tax credit for the project.  The process was painless, lasted about 20 minutes, and was “efficient” according to Rodney Hickman.

The company is committing to an investment of $2 million in new capital assets as well as the creation of 42 new jobs, raising their current count of 68 above 100 over the next three years.  In exchange for this, they will receive as a tax break on their Ohio CAT (Corporate Activities Tax) tax in the amount of 40% of the new state personal income tax withholding for the employees for a term of six years, starting January 1, 2010.  Since Morgal had laid off 17 from last year, the State only provides a credit on the 25 over and above the baseline established one year ago.  Based on the wages, the company expects to get a credit worth about $4600 per year for six years.  This will cut their Ohio CAT tax liability approximately in half — a great benefit.  Plus, if things go well and Morgal is able to hire more, then they will get credit on all of that withholding, so the estimated benefit amount can increase.  Check out http://bit.ly/sejctc for more details.

Morgal also expanded in 2002 (3 large machines), 2003 (fourth splitting machine), and 2006 (robotic automation).  Springfield was in competition with South Carolina for this particular project.

The Chamber/Company Press Release

Morgal Machine in Springfield diversifying, expanding & receiving support for growth

Springfield, Ohio (August 31, 2009) – Morgal Machine and Tool is diversifying its customer base as a way to counter future market downturns.

The metal forming and stamping company, located at 2100 S. Yellow Springs St., has been heavily reliant on the automotive industry. By expanding existing markets and generating new ones, Morgal Vice President and General Manager Rodney Hickman said it’s hoped that the percentage of work generated by each of its four market segments will be more equal.

>> David Zak commentary – It’s interesting to note that the company in the 1990s was a key supplier to Huffy.  After all of Huffy’s manufacturing was moved offshore, it diversified and became a Honda supplier.   

In addition to automotive, the company currently serves the transportation (locomotive), agriculture and lawn and garden industries with stamped sprockets, metal stampings, related assemblies and steel pulleys.

“Through intense marketing diversification efforts, we have been working diligently the last three to four years to diversify,” Hickman said.

Morgal officials said they hope the new markets will allow for eventually recalling laid off workers and hiring additional ones as needed in coming years. The company currently has 68 employees.

Today, the company received a 40 percent, six-year Job Creation Tax Credit for their project, which is estimated to be worth over $27,000 to the company.  Capital expenditures by the company are expected to be more than $2 million over a three-year period to accommodate their diversification program.

Their first new market will be treadmill frames for the fitness industry. Plans are to go into production on that product before the end of the year.

Hickman said there’s also potential for new work in the lawn and garden segment for consumer riding lawnmowers and in the longer term for sub assembly and stamping work in the agricultural industry.

Treadmill frames should be on the market next year and the new lawn and garden product in 2011. Production and redesign of the tractor components are scheduled for 2011 with the product hitting the market in 2012.

Hickman said the company, one of the McGregor Metalworking Companies, hit the agricultural, recreational vehicle and fitness equipment industries aggressively in seeking additional contracts with both current and new customers.

“Those markets have seen some reductions but not nearly the magnitude of the automotive industry,” he said.

Changes in emission standards for off-road vehicles are driving the new work related to the agricultural sector.

Initial steps in the process will be to work with customers to design components that are cost effective. The final phase of the project will be the training and recalls or hiring of production operators to staff the equipment.

Darlene Carpenter, McGregor Human Resources Director, said a recruiting effort for new hires could take place in 2010 or 2011 after those on layoff have been recalled.

“It also gives us the versatility to go out and market to different industries we haven’t previously,” Carpenter said.

As an example, she said entering the fitness equipment sector could lead to additional work in that industry.

Hickman said the company has worked the past few years in identifying potential customers, working with them in engineering designs and removing cost from those designs.

“Now they are coming to fruition and we are launching the production phase,” he said.

Company officials said the additional contracts should provide steadier work throughout the year, thus avoiding seasonal downturns. It also could lead to additional work for other McGregor companies in Springfield.

Another benefit could be in capturing work that has gone overseas by making the company more competitive globally.

“We have invested heavily in improving our manufacturing processes and efficiencies. We are optimistic that some of the work we lost over the last four to five years may be coming back,” Hickman said.

The company also foresees an opportunity to pick up contracts from competitors who haven’t survived the economic downturn. Hickman said a number of potential customers looking for a new supplier have contacted Morgal.

“They are looking for healthier suppliers. We think we can take advantage of that,” he said.

>> Springfield News-Sun Article – http://bit.ly/44MY9v

>> Dayton Business Journal Article – http://bit.ly/R9Gej

>> Manufacturing & Technology eJournal – http://bit.ly/ZTvjw

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