Mitsubishi Electric Power Products Inc. has won a 15-year tax freeze from the Memphis-Shelby County Industrial Development Board for the manufacturing facility it’s developing at Rivergate Industrial Park.
The payment-in-lieu-of-taxes the IDB granted Mitsubishi Tuesday morning is a key piece of an incentive package that will help finance construction of the plant where Mitsubishi will manufacture large power transformers.
Mitsubishi Electric Power Products is under contract to buy the main parcel at Rivergate Industrial Park, with its plan calling for the construction of a 330,000-square-foot transformer manufacturing plant.
A 40,000-square-foot office structure will be built and connected to the production area via a pedestrian bridge. The project also includes building 4,100 feet of railroad track and a railroad bridge.
The state of Tennessee is contributing infrastructure grants totaling about $11 million to help finance the project. Shelby County plans to pony up $1 million for infrastructure expenses, and the city of Memphis also has agreed to relocate a major sewer line to smooth the way for the plant construction.
Mitsubishi Electric Power Products formally unveiled its Memphis plans in a splashy ceremony at The Peabody hotel Monday, with city and county leaders heralding it as another big step forward for the city’s economic development efforts.
It represented Tennessee Gov. Bill Haslam’s first major business recruitment announcement for the state under his tenure, which only began one month ago with his swearing-in.
Mitsubishi currently manufactures large power transformers at a factory in Japan and exports them to the U.S. The Japan plant is nearing its maximum capacity, so the company decided to build a new transformer plant in the U.S., where it’s spent the last year and a half researching potential sites.
Company officials visited the Memphis area several times. Brian Heery, president and CEO of Mitsubishi Electric Power Products, said he was in the city last summer and that Memphis Mayor A C Wharton Jr. personally assured him at that time the city would do whatever was needed to remove obstacles to developing a plant in Memphis.
Mitsubishi Electric Power Products is an indirect subsidiary of Tokyo-based Mitsubishi Electric Corp., one of the world’s largest heavy electrical manufacturers.
“This projects an image across America,” said Shelby County Mayor Mark Luttrell about the significance of the announcement.
The annual average wage for Mitsubishi’s newly created jobs in Memphis will be a little less than $50,000.
Memphis would be the headquarters for Mitsubishi’s heavy electrical equipment production in North America. Construction is planned to start this year, with production beginning in 2013.
Memphis emerged as the top-ranked city by Mitsubishi’s review team, which also considered several other cities. Because of the size and weight of the transformers, the company needed enough load-bearing capacity and direct rail access to the facility.
The value of the incentive package presented to Mitsubishi to woo them here was a little more than $41 million. The company, which will become one of Memphis Light, Gas and Water Division’s largest customers, is making an upfront cash investment of about $195 million.
The company also may decide to build its own onsite electrical substation.