November 22, 2004

The Muskegon Chronicle

Dave Alexander, Chronicle Business Editor

The “business welcome” sign is out in Whitehall Township, especially for the beleaguered tool and die industry.
Whitehall Township is one of a limited number of local governments in Michigan willing to give up critical property tax revenues to support the struggling tool and die industry with state-sponsored low-tax zones.
The township’s application for one of the state’s 20 available Tool & Die Recovery Zones should be seen as a signal to the tool and die industry that the northern Muskegon County community is a great place to do business, local economic development officials said.
The joint Recovery Zone application for Erdman Machine Co., 8529 Silver Creek, and Viking Tool & Engineering, 2780 Holton-Whitehall, is one of 13 received by the Michigan Economic Development Corp., and is expected to be decided by the state in mid-December.
The Whitehall Township board decision in late October to support the two small companies was unanimous. The decision could cost the township about $2,000 a year, officials said.
“Tool and die is an industry that is struggling that needs help to keep jobs here in Muskegon County,” Township Sup-ervisor Dennis Babcock said. “We are willing to do our part.”
Other communities have not been as willing to support Recovery Zone applications because of the financial loss to the local governments. For up to 15 years, the Recovery Zones would eliminate real and personal property taxes, state income taxes and state Single Business Taxes, among other levies.
Cities including Holland, Zeeland, Wyoming and Burton — near Flint — have voted against giving the tax breaks, which they say could force them to lay off police officers, firefighters and other city workers. At least one tooling firm, Schmald Tool & Die, has threatened to move its operation out of Burton after the city turned down a Recovery Zone application.
Muskegon Area First President Jim Edmonson said not every municipality in Muskegon County will be willing to forgo the taxes from an industrial operation for 15 years.
“With the diminishing resources, some communities are not in a position to be asked to give up more,” Edmonson said. “It’s a difficult situation because they are not just giving up revenue for today but up to 15 years.”
Muskegon Area First and Whitehall Township have put out the word that tool and die companies could receive township support for other Recovery Zone applications in the future. The township has five industrial lots available where Erdman and Viking are located along Holton-Whitehall Road, Babcock said.
The state’s Recovery Zone program may provide Erdman and Viking economic assistance that officials from both companies say would be directed toward new equipment to keep them competitive in a global market, company officials said. The program also has established a collaborative between the two that is a requirement for state assistance.
“The whole concept is to take small shops and make them compete like big shops,” Edmonson said.
That collaboration also will include five other small tool and die shops in West Michigan who will work on joint projects from time to time with Erdman and Viking but not directly share in the tax benefits.
“This effort will allow us to be able to handle bigger projects,” said Steve Seaver, vice president at Viking Tool.
With about 30 employees, Viking is a mold builder for plastics companies that serve the automotive, furniture, appliance, recreational and household products industries.
The Recovery Zone program application began when Viking Senior Partner and President Warren Hutchinson discussed the possibility with Scott Erdman, president of Erdman Machine, which provides tooling and machining services mainly for the aerospace industry and employs 18 full-time workers.
Michigan has lost 38,000 tooling jobs in the past five years as work heads to lower-cost competitors overseas, according to state figures.
“This is a good program for an industry that has taken a pretty big hit lately,” Erdman said. “The program will allow us to provide a bigger package of services to customers and it will allow us to invest in new equipment.”
The name of the tool and die game today is to work with advanced machinery that is faster and more precise than the competition. “It’s all about speed,” Seaver said.
Seaver and Erdman praised Whitehall Township and Muskegon Area First for their leadership on the Recovery Zone issue.
“We are glad to see the local response after seeing what happened in Zeeland and Holland,” Erdman said. “We are fortunate to have that kind of an attitude in Muskegon County.”