Proposed changes in the city's much-talked-about tax abatement policy soon will face an $18.5 million test.
Officials with Amarr Garage Doors announced Tuesday that they have plans to start an $18.5 million expansion that would add 80 jobs at their East Hills Business Park facility, if city commissioners approve a tax abatement.
Amarr today is expected to file with city officials a request for a 10-year, 55 percent tax abatement for the project.
"The possibility of a tax abatement is what the whole project is contingent upon," said Lynn Parman, vice president of economic development for the Lawrence Chamber of Commerce. "If they don't get the abatement it would completely jeopardize the project."
Delbert Phlipot, vice president of manufacturing for Amarr, said the company also had considered moving the work to a plant in Mexico and an undisclosed location in the Midwest that would be closer to its steel supplier.
"The abatement is very important in our decision," Phlipot said. "Our industry is very competitive and prices are very tight. For us to stay competitive we need to be able to be very cost-competitive. I would say we're basically keeping all our options open."
The project will be the first tax abatement request the city commission has heard since the last election, which created a majority on the panel that supported requiring companies that receive abatements to pay employees a living wage of at least $9.53 an hour plus benefits.
The living wage changes haven't yet been adopted, but Phlipot said the wage floor shouldn't be an issue because all of the 80 new jobs would pay above the $9.53 an hour level, though exact wage totals for the positions weren't immediately available.
The expansion, which would add 120,000 square feet to the existing 240,000-square-foot plant, is spurred mainly by the company's increasing market share in the residential garage door business, Phlipot said.
The company now considers itself to be the fourth-largest producer of residential garage doors in the country. When the company opened its Lawrence plant in 1989, it wasn't in the top 10, Phlipot said.
"We're just real aggressive in how we believe we can expand our business," Phlipot said. "The expansion is basically about our success in continuing to ratchet up our market share."
The majority of the 80 new jobs will be production positions, Phlipot said. All will be full time; hiring is expected to begin in the late fourth quarter and will be spread out over three years. The 80 new positions would bring the plant's work force to 518 people.
In addition to the tax abatement, Phlipot said the company's success in finding quality workers was a major reason it decided to award the expansion project to Lawrence.
"Basically Lawrence has been good to us since we moved here in '89," Phlipot said. "We basically have been able to acquire the skill level and the work force we need to grow our business."
Parman said area economic development officials had been working with Amarr for about nine months on the project. She said the size of the project made it one of the larger proposed expansions by an existing business in the city during the last 10 years.
"To put it in perspective, we think it is huge for the city," Parman said. "I think Amarr has proven to be a very good employer in the community. They have higher skilled positions and they have a highly automated plant. I think they're the type of jobs the city wants."
Amarr has been successful in receiving tax abatements previously. The company received a 10-year, 50 percent abatement on $3.8 million worth of equipment in 1992, and again on a $7 million expansion project in 1994. The most recent abatement the company received was in 1998 for $3.65 million in machinery and equipment.
According to statistics from the city clerk's office, the company during each abatement has produced more than the number of jobs it promised. The statistics also show the average salary for new jobs created at the company was $29,200, or about $14.03 an hour.
Parman said she hadn't yet discussed the project with city commissioners and said she was uncertain how they would respond to the abatement request.
"We just hope we can make it work because we think it is an important project," Parman said.