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VOL. 126 | NO. 125 | Tuesday, June 28, 2011

Kruger Still Weighing Memphis Project, Wins Tax Freeze

By Andy Meek

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Canada-based manufacturer Kruger Inc. is still weighing several choices of locales where the company would like to pursue a major capital investment.

To help tilt that choice toward Memphis, the Memphis-Shelby County Industrial Development Board on Tuesday, June 28, approved a 15-year tax freeze for the company.

Kruger is considering the possibility of a more-than-$300 million investment at its current Memphis facility north of Downtown. The company would save more than $45 million in taxes because of that payment-in-lieu-of-taxes benefit.

The project’s applicant before the IDB was KTG (USA) LP – a subsidiary of Kruger, which is a major producer of publication papers, tissue, lumber and other wood products.

Tuesday’s decision is part of the fact-finding about what benefits will be available at each possible location, which the company needs before it comes to a decision. Dan Clarahan, vice president of business expansion, said details about that decision-making, including a timetable, are confidential.

IDB members met in Memphis Mayor A C Wharton Jr.’s seventh-floor conference room at City Hall to consider the tax incentive for KTG, and Wharton took the opportunity to extol the retention of a major corporate citizen.

Wharton said Kruger’s possible local expansion has been in the works for a few years now.

He said approving the retention PILOT “underscores we pay just as much attention to our existing employers as our new employers.”

“We can make this a model to how you can take an existing business and grow a neighborhood around it the way cities used to be built,” Wharton said.

In IDB documents, the company says its “major commitment to Memphis” will include constructing a new building and buying new equipment to make the manufacturing process cheaper and more energy efficient.

The company also said it’s considering numerous sites for the project, including Quebec, Canada, and “other U.S. locations which have offered generous incentives.”

“Tax incentives are very important to the comparison of choices and to keep the future business competitive in the marketplace,” the company wrote. “If the project happens in Memphis, Kruger will create 100 new jobs that will pay more than $67,000 per year, including benefits, and will retain 294 existing jobs.”

Both Memphis and Shelby County mayors, in addition to officials from the Greater Memphis Chamber, have worked hard to woo Kruger to the city, just as they did successfully with Swedish appliance maker Electrolux and Mitsubishi Electric Power Products Inc.

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