GOSHEN — Goshen City Council will decide whether to continue financial incentives on a $10 million investment by Lippert Components Inc., based on a report showing fewer new jobs than expected but nearly $5 million more in wages.
Council will vote Tuesday on a preliminary determination of whether LCI is complying with the terms of a 2013 tax abatement. The phase-in was granted for new manufacturing equipment valued at up to $10 million, to be installed in an economic revitalization area that includes plants at 2703 College Ave., 1701 Century Drive and 2475 Kercher Road.
The abatement is scheduled to continue until 2024. The company estimated that installing the new painting equipment and dust collectors would result in 1,078 employees being retained on a payroll of $35.3 million, and 376 positions being added with salaries totaling $10.2 million.
The company’s latest compliance report shows that no jobs were added in 2018 and only 1,026 employees were retained. Council will be asked to either allow the abatement to continue, or make a preliminary finding that LCI is not in substantial compliance and ask company representatives to explain the shortfall at a later hearing.
Past reports showed that LCI added 77 employees in 2017 but had ended 2016 with 240 fewer employees than it started with.
Because of such a large shortcoming, city council voted in 2017 to preliminarily find that the company was not in compliance. It reversed the decision in a split vote two weeks later, after company Controller Troy Wuthrich explained that the lower numbers reflected the company moving production lines and employees in response to changing needs in the RV industry, which was growing faster than expected at the time.
He told council that Lippert employed 279 more people citywide than when the phase-in began, bringing its Goshen jobs total to nearly 3,900 in 2017. In 2018, LCI reported employing 4,100 people citywide.
That year, council postponed its decision until Wuthrich could address the employment numbers, then allowed the abatement to continue on a 4-2 vote.
In a letter accompanying this year’s report, Assistant Treasurer and Tax Director Thomas Bauters told the city that while the company fell short on its total number of employees, its payroll exceeded expectations. He said the total salaries for the 1,026 employees was $50.2 million, exceeding the initial total estimate by $4.7 million.
He also noted that the total value of the project came to $24.6 million, more than twice the $10 million value cited in the abatement originally. The company spent an additional $15.3 million on equipment after the project was completed, for which it is paying personal property taxes, he said.
He said the company would be at 96 percent of the projected employee figure if 376 people who were moved to other locations in Goshen were still within the project area. Lippert now employs a total of 3,731 people in the city, according to Bauters.
Speaking of the larger picture of the recreational vehicle industry, Bauters pointed to a drop in wholesale shipments in late 2018 and early 2019. He said the RV Industry Association reported that shipments of travel trailers and fifth-wheels decreased 14 percent in the third and fourth quarters of 2018 and then by 28 percent in the first quarter of 2019.
“The company has invested substantially in the city of Goshen as it continues to play a vital role in our manufacturing operations,” he wrote. “Despite not reaching the overall employee goal, higher wages have allowed us to exceed the total salaries goal by $4.7 million. (T)he company contends that its investment has met the threshold of substantial compliance.”