Monday, December 11, 2017

Mobile County, Alabama approves aerospace company incentives

Just in time for Christmas, hundreds of thousands of dollars in economic development incentives are being approved for two big Mobile aerospace projects announced earlier this year.

On Monday, the Mobile County Commission approved its part of incentives for Safran USA, which announced in August that it will open a new manufacturing operation in Mobile. Commissioners also approved the county share of an incentive package for Continental Motors, which announced in March that it was spending more than $60 million to build an entirely new facility to house its existing operations at the Mobile Aeroplex at Brookley.

The Mobile City Council's agenda for Tuesday includes sister measures related to the city's share of the two incentive packages. The council could approve both on Tuesday, although if it follows normal procedure with new resolutions, it will hold them over for a week's consideration before voting.

The county and the city each are giving Continental Motors $217,500, for a total of $435,000. Each is putting up $150,000 for the Safran, for a total of $300,000. That's aside from any other incentives, such as tax abatements.

The two projects are substantially different, as is the handling of the incentives.

Continental, which makes engines for small aircraft, has been based in Mobile for decades and has a workforce of more than 400 people in the area. Faced with a need to modernize, the company - and its parent, China-based AVIC Holding Company - also considered a move to one of several other locations in the United States, company officials said in March.

But it opted to remain in Mobile, and its "Project Blue Marlin" project has what Continental President and CEO Rhett Ross described as an aggressive three-year timetable. Officials hope to break ground this summer on a 225,000-square foot facility at the intersection of Broad Street and Michigan Avenue. They'll finalize the building's design by fall, install new manufacturing equipment in 2018 and be fully operational by the end of 2019, Ross said. Along the way it'll consolidate operations from 11 buildings into two. The economic development agreement pegs Continental's investment in the project at about $72 million.

County Attorney Jay Ross told the Commission that the incentive package was "more along the lines of a job retention agreement," since it helped keep the company in the area. Among other conditions, the company is required to employ at least 300 full-time employees with an average hours wage of at least $22.95, or face penalties.

Incentive payments will be paid directly to the company as reimbursement for "capital expenses incurred by the Company in developing, modernizing, expanding and equipping" the new site.

Safran, by comparison, is a smaller project but one that will be an all-new tenant at Brookley. The company will spend about $1 million to start up an operation that builds and installs jet engine nacelles, the components that wrap around a jet engine. It will hire about 20 employees.

The city and county money actually will be paid to the Mobile Airport Authority "to be applied towards tenant improvement credits, including parking lot improvements, or similar payments or incentives ... in support of the Project Site."

The company is obligated to maintain a workforce of 17 full-time employees for two years, within a larger agreement period of five years.

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