Fiat Chrysler - WKTV Journal

Grand Rapids Plastics, 4220 Roger B. Chaffee Blvd. SW., Wyoming, recently announced it was laying off 85 employees. — Grand Rapids Plastics, 4220 Roger B. Chaffee Blvd. SW., Wyoming, closed in April after Fiat Chrysler pulled its contracts.

A Wyoming business which was forced to close after Fiat Chrysler pulled its contract will have until Aug. 15 before the city will revoke its existing tax abatements.

Grand Rapids Plastic, with a home address of 4220 Roger B. Chaffee in Wyoming, closed its doors April 15. The decision came after Fiat Chrysler sent notice it would end its contracts with the company. Those contracts made up more than 50 percent of the company’s business. Chemical Bank took over the company’s buildings, equipment and other assets and is currently seeking a buyer.

“[Chemcial] Bank has control and is actively seeking a buyer for the business and is hoping that any buyer will qualify for the tax abatements that the city has for the business and property,” said Tim Hillegonds, from Warner, Norcess and Judd, the law firm representing Chemical Bank. The bank, Hillegonds said, believes in the economic development of the City of Wyoming, “which is why it is seeking a buyer that will actually reopen the business.”

By having the existing abatements revoked, both representatives of Chemical Bank and the former owners of Grand Rapids Plastics felt that it could chill any potential sale, Hillegonds said.

Grand Rapids Plastics had three abatements. One that was amended in 2007 for $1.2 million for personal property and another one that was for $1 million for personal property in 2008. Both of these were for 12 years. There also is a full abatement for $615,931 granted in 2011 for 10 years for personal property accusation. The total taxes owed to the city is about $212,000, $180,00 is the abatement taxes and around $33,000 is the personal property taxes for 2016.

Tax abatements have become a common tool for cities to attract and maintain businesses. Through a tax abatement, taxes for an industry can be forgiven or deferred depending what the business is requesting. Most businesses seek abatements for new plants, expanding existing plants, renovating aging plants or adding new machinery and equipment. The maximum length for an abatement is 12 years. There are specific guidelines for the business outlined in the abatement that can include the addition of employees and staying within the city for the length of the abatement.

City Manager Curtis Holt said the city, like many other municipalities, began to put clawback agreements in the abatements in the mid-2000s. A clawback allows the city to collect on taxes deferred from an abatement if a business did not meet what was outlined in the abatement agreement.

A municipality could forgive an abatement if there was an unforeseen circumstance which Hillegonds said they felt Fiat Chrysler pulling its contacts fit that criteria. However; Sandra Hamilton, from the law firm Clark Hill and who has worked with the city’s treasurer’s office and the state treasurer’s office on tax collection issues, said that an unforeseen circumstance is not necessarily a financial crisis but is often associated to something like a fire or natural disaster.

Hamilton said that as of the May council meeting, where the abatements were considered, there had been no indication or written interest in the business. She said the state treasurer’s office already has filed jeopardy assessments against the company for taxes. Her office recommended that the city revoke the current abatements and then if a new business does take over the facility, grant new abatements based on that business’s needs and requirements.

Holt said the city has not been contacted by anyone about the property. He also noted that a business has up to six months after starting to seek an abatement with the process taking a minimum of 45 days. Holt noted that the buildings are at a premium and the city has been quite liberal in working with businesses on abatements.

“The opportunity for a buyer here I think is rather high, but what they will do, I can’t tell you,” Holt said.

Mayor Jack Poll said the new business has to match the blueprint exactly to Grand Rapids Plastics. He added that the 16 years he has been on the council, the city has never turned down a business for an abatement once all the numbers came in.

After determining that that there was no time frame required for the city to revoke the abatement, several of council members expressed that they were not ready to vote on the matter and were willing to give Chemical Bank the 90 days. The motion to revoke the abatements was deferred until Aug. 15 with the city maintaining access to the buildings to check that the equipment remains in the facility.

Larry DeHaan from Chemical Bank said the bank is only asking for the 90 days. If a buyer is not found within that time, DeHaan acknowledged the bank realizes it would be in the same situation that it is now. If a buyer is not found, the bank probably will put the equipment up for auction and sell the buildings.

Joanne Bailey-Boorsma
joanne@wktv.org

Despite its announcement of layoffs earlier this week, Grand Rapids Plastics officials said they are planning to forge ahead and continue to make precision plastic injection molding components and products.

“While we are disappointed in the loss of the [Fiat Chrysler] contact, it’s important to note that Grand Rapids Plastics continues to produce parts for customers,” said Grand Rapids Plastics Chief Operating Officer Fred Cini in a statement to WKTV and media. “With a skilled team of 125, we are making automotive components, consumer goods and other products for customers in – and beyond – West Michigan.”

On Feb. 24, Grand Rapids Plastics sent a Worker Adjustment and Retraining Notification (WARN) Act notice to the Michigan Workforce Development Agency stating that “on or around February 24, Grand Rapids Inc. (Grand Rapids Plastics) will begin permanently laying off a number of its employees…” The number affected is 85. The letter went on to state that the layoffs were to occur in two waves with the first wave’s last date of employment Feb. 24 or within two weeks thereafter and the second wave, May 6 or within two weeks after.

The reason for the layoffs, according to the letter, was that Fiat Chrysler (FCA), had notified the company it “is canceling additional contracts with Grand Rapids Plastics.” The noticed said Grand Rapids Plastics reached out to FCA seeking clarification and was told all orders would cease immediately. WKTV reached out to FCA but the company has not responded at this time.

According to the notice, because FCA is the main customer for the Grand Rapids campus, with an official address of 4220 Roger B. Chaffee, Wyoming, “FCA’s actions result in the need for permanent layoffs that were previously announced as indefinite and temporary in nature.” Because of FCA’s short notice, Grand Rapids Plastics was unable to give 60 days advance notice of the layoffs, according to WARN act letter.

Company officials confirmed that 125 employees would remain at Grand Rapids Plastics. The focus now, according to Cini, is on diversifying the company’s portfolio.

“In the past six months, we have taken a number to steps designed dot forty operations,” Cini said in his statement, adding that those steps have included strengthening operating infrastructure, making significant investments in technology and safety, and expanding sales efforts to further diversity the company’s customer base.

“Our leadership team is focused on ensuring we have the tools to deliver results so that our production team can focus on what it does best: making precision plastic injection molding components and productions,” Cini said.

Wyoming City Manager Curtis Holt said the city has not had any formal communications with Grand Rapids Plastics other than the WARN Act letter that was filed. Holt said that the company does have a couple of tax abatements with the city and that city officials would be reviewing them to determine if Grand Rapids Plastics is meeting its obligations. If not, the city could revise or revoke the abatements.

This is the second setback in two years for Grand Rapids Plastics, which was started in 1976 by Arthur J. Bott Sr. In 2015, the Michigan Occupational Safety and Health Administration fined the company $558,000 for safety violations related to the death of a worker. MIOSHA issued 32 serious citations, nine willful-serious citations, and 14 other-than-serious citations as a rule of the investigations.

Bott sold the company and retired in 2001 but when the company went into bankruptcy, bought it back and re-launched it in 2003. In 2014, at the age of 80, Bott was honored as an Ernst & Young Entrepreneur of the Year. Bott still owns the company.