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CTS tax abatement in doubt after Elkhart council learns of job cuts

Job cuts came just 11 days after council took first step toward granting tax breaks for the company.

Posted on July 25, 2014 at 11:44 p.m.

ELKHART — A well-received tax abatement request from one of the city’s oldest employers has quickly fallen apart in a matter of days.

A representative of CTS Corporation appeared before city council on July 7 to formally request tax breaks over a seven-year period in exchange for expansion of a new production line that would result in 14 jobs paying on average about $50,000 a year.

Reaction at the time was congratulatory as one city official called it one of the better requests the city has ever entertained.

But than two weeks later, city council’s outlook turned sour after officials learned the company was cutting 14 upper management jobs.

Council members were quick to take action after they learned the company had eliminated the positions from the Elkhart facility.

About ten of the positions are being eliminated while the other workers are being offered a chance to relocate to a facility in Illinois.

News of the job cuts came 11 days after council took the initial step in seeking tax abatement.

With the job cuts, paperwork submitted to the city is considered to be inaccurate and invalid, according to councilman David Henke.

Council had taken the first of three steps to approve the abatement request, but on Monday, July 21, reversed course amid concerns and used the rare move known as a “motion to reconsider.”

Council voted 6-2 to wipe out the first move at the request of Henke who two weeks earlier had praised the proposal.

"Why were we not given honest information when he stood in front of us and took the applause when he knew what was coming?“ Henke said Friday.

CTS makes sensors and actuators in Elkhart and a new production line at the heart of the abatement request is being created to manufacture a new electronic accelerator pedal.

The new product line will require a $2.2 million investment.

Council had planned on taking the second and third steps toward approving the abatement on July 21, but CTS officials contacted the administration and asked for a delay.

No representatives of CTS appeared at the July 21 meeting.

Calls to CTS on Friday were not returned.

Rod Roberson and Brent Curry voted against the move led by Henke. Roberson said he preferred to table the issue and allow CTS officials to provide an update before city council took action.

City attorney Vlado Vranjes also suggest the issue be tabled until CTS representatives could appear before council.

Council President Ron Troyer said he thinks the abatement request could very well be dead, but alluded to a sensitivity toward the company over the fallout, adding “we don’t need another big empty building.”

Barkley Garrett, the city’s director of economic development who handles tax abatement requests for the city, was not available for comment Friday.

According to paperwork submitted to the city, the seven-year abatement would have tax savings over that period of $266,868 while the company would have still pay $210,322 in new taxes over that same period.

The 14 new positions would have been hired by 2017, according to the paperwork.

The documents also recap salary information for all workers in several categories. The lowest average pay level listed was for $15.09 per hour for production workers.

The company employed 382 full-time workers in Elkhart as of April 4, 2014, according to the paperwork.

The company has been in Elkhart since 1902.

CTS has a global presence and has facilities in Illinois, New Mexico and Arizona as well as Mexico, Canada and Europe. 




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