Electrolux Home Products Inc. was approved for a 15-year payment-in-lieu-of-taxes (PILOT) for its $195 million southwest Memphis manufacturing facility in a special Wednesday session of the Memphis-Shelby County Industrial Development Board.
The board unanimously approved the tax break – which becomes effective Feb. 1 – saving Electrolux about $38.7 million.
In December, Swedish appliance maker Electrolux announced its intention to will close its Montreal-area plant and build a 700,000-square-foot, LEED-certified facility on 800 acres of land at Frank C. Pidgeon Industrial Park.
Electrolux manufactures a variety of brands, including Frigidaire, wall ovens, specialty freestanding ranges and cook tops.
Starting in the summer of 2012, Memphis will gain 1,240 new manufacturing jobs initially, with an addition of 2,250 supplier jobs created either onsite or in very close proximity of the new Electrolux facility. About 1,000 temporary jobs will also be created during the construction phase, which will begin early this year.
Memphis Mayor A C Wharton Jr. Shelby County Mayor Mark Luttrell were both present at the special meeting, explaining how the negotiations with Electrolux unfolded from October to December.
Mark Herbison, senior vice president of economic development at the Greater Memphis Chamber explained how the Pidgeon site quickly became the manufacturer’s preferred site, and briefed the packed room about the “intense due diligence” involved.
“They have to have somewhere to manufacture ovens in 2013,” Herbison said.
Electrolux officials were unable to attend the meeting due to inclement weather in Atlanta and Charlotte, N.C., and were teleconferenced in. The project’s code name, Project Journey, was a self-fulfilling name, said Jacob Burroughs, Electrolux project director and controller.
Memphis competed for the facility along with Alabama, Mexico and the eastern part of North Carolina. Over the past four years, Shelby County has lost some 53,000 jobs and watched the unemployment rate hover around 10 percent.
Electrolux not only brings a brand name with an excellent reputation to the area, Luttrell said, but also serves a ripple effect on the community, in turn having a substantial impact on the global economy. Electrolux will serve as a catalyst for other opportunity in economic development, to leverage other industries to Memphis in the future.
“Given your help, we can and will compete with anybody in this state and not only that, within this region,” Wharton said.
Tennessee committed more than $100 million in incentives by bringing this project to Memphis and Shelby County. The state’s total commitment tramples the previous $3 million commitment to Nucor’s Pidgeon Park facility in 2007, and now marks the largest contribution made to a project in Memphis’ history.
In order to meet the Electrolux time-schedule, the City of Memphis and Shelby County will need to approve $20 million bond issue each by Jan. 31 for infrastructure improvements, including roads, design and construction of the industrial park.
The average wage for workers at the plant will be $14.65 an hour plus benefits. If the facility sees the maximum 3,500 employees, the economic impact is immense, including more than $17 million per year in new housing.
“The community is getting back more than they are giving up,” said Charles Gulotta, executive director of Memphis-Shelby County office of Economic Development.
After the 15 year period, Electrolux will take back the facility under its ownership, said Lodie Biggs, shareholder with Baker, Donelson, Bearman, Caldwell & Berkowitz PC. A four-lane road will also go into the parcel, creating a private road to a “mini-city and mini-supplier.”