Ypsilanti manufacturer requests 6-year tax abatement amid $1.4M expansion
Daniel Brenner | AnnArbor.com
The Ypsilanti-based manufacturer American Broach is requesting a six-year tax abatement to assist in its ongoing $1.4 million expansion project, that will add 20 new jobs by 2015.
The Ypsilanti City Council will hold a public hearing and consider the abatement request at its Tuesday meeting at 7 p.m. in City Hall.
American Broach manufactures machines that create parts for the automotive, defense, train, aircraft and other industries. The company produces intricate cutting machines and was founded by Francis Lapointe in 1919 in Ann Arbor at the suggestion of Henry Ford.
Company president Ken Nemec previously told AnnArbor.com in addition to the $1.4 million to be invested at the new 42,800-square-foot facility at 535 S. Mansfield St., $200,000 will be spent to cover the cost of moving and buying new appliances.
The business is based at 575 S. Mansfield, but the company has outgrown the 22,580-square-foot facility. The company will still use the old facility, which it purchased in 2007 for $1.2 million from the Marsh Plating Corporation.
In 2011, the company requested a tax exemption to expand their building at 575 S. Mansfield with a 45,000-square-foot addition, but decided to purchase another location in the industrial park rather than build an addition.
In November of 2012, the company purchased 535 S. Mansfield to expand their manufacturing into this location, keeping the research and development and office area (as well as some production) at the 575 Mansfield address.
City staff estimates the total value of the exemption for six years is about $236,000. The amount of city taxes is estimated at $93,000.
If approved, this would not be the first time the company has received and applied an exemption. American Broach has received and applied for the following exemptions from Ypsilanti:
- In 2008, the company received an approval for an Industrial Facilities exemption for four years that provided a 50 percent exemption from personal property taxes related to the purchase of new equipment to expand the business. The expected savings to the company were about $450,000 over the four year period. The exemption has since expired.
- In 2011, the company received another approval of Industrial Facilities exemption for real property for a 45,000-square-foot addition to house the expansion of American Broach manufacturing as well as a research and development facility. This project was not pursued.
- In 2011, American Broach received approval for a PA 328 Personal Property Exemption for new personal property at 575 Mansfield as part of the expansion project. This exemption was approved for six years, and went into effect in 2012. The original estimate of the exemption was approximately $430,000.
Between 2011 and 2012, 14 full-time and two part-time positions were created. The company informed the city that additional jobs have been added since that time and an update will be provided at the June 18 council meeting.
Nemec told AnnArbor.com the average wages at American Broach are $20 per hour and $22 per hour for skilled trades. Employees receive full benefits.
"Today, we are a thriving corporation with a supportive board of directors and motivated employees with a sense of urgency driven by the excitement of our growth in the U.S. machine tool market," Nemec wrote in a letter to the Ypsilanti City Council.
According to Nemec, only 30 percent of the company's sales are outside of the U.S. and the auto industry accounts for nearly 65 percent of the company's sales. As the industry continues to post gains, the company does as well, Nemec previously said.
"That's why we bought the building," he said. "We're on an upward trend and the economy is going to build and people are going to be able to buy cars. I think over the next six or seven years, we're going to continue to see growth."