Sunday, April 28, 2024

Kikkoman and Purina putting up big expansions in Jefferson County. Worth it?

Last week, we got a big jobs and plant investment announcement here in Wisconsin.
Japanese soy sauce maker Kikkoman Corp. announced on Wednesday that it will build a $560 million plant in Jefferson, which will be the company’s third plant in the U.S. to go along with nine production facilities overseas.

Gov. Tony Evers announced that the Wisconsin Economic Development Corp. pledged $15.5 million in tax credits to expand a plant in Walworth and build the new facility in Jefferson. It is expected to create 83 jobs in 12 years.

Kikkoman plans to build a 240,000-square-foot steel frame facility on a 100-acre site and make soy sauce and soy-based seasonings, according to plans. The sauce maker wants to start construction in June and expects to start shipments in fall of 2026. The company will invest in construction over 10 years.

Kikkoman Foods Inc., a subsidiary of Kikkoman Corp., bought the parcel on Industrial Avenue from Jefferson County, state records showed. The new plant will be 37 miles north of the Walworth facility, which was first established in 1973.
I'm generally skeptical of these incentive deals in general, and especially after the Foxconn debacle set up by the Walker/WisGOP folks in 2017, which gave very few benefits while costing state and local taxpayers hundreds of millions of dollars. So I took a look at WEDC's explanation of the expansion plans at Kikkoman. What I found most interesting about it is that most of the investment isn't in the size of factory itself, but in the equipment that's required to handle the extra business.

And it's the capital investments that the WEDC analysis says is the main "job generator" of the Kikkoman expansion. The are only expected to be 83 permanent jobs added at Kikkoman itself along with the 201 jobs that will stay in Wisconsin, but the work related to construction and equipment is expected to add a lot more.
Per the IMPLAN report, the capital investment for the Jefferson project could directly support 1,612 jobs, $131,561,461 of labor income and $148,450,488 in value added products and services upon project completion. Considering the multiplier effect, the project could support 2,593 jobs , $197,928,073 of labor income and $260,958,648 in value added projects and services through the end of the project.....

Per the IMPLAN report, the capital investment for the Walworth project could directly support 183 jobs, $16,121,747 of labor incokme and $18,955,640 in value added products and services upon project completion. Considering the multplier effect, the project could support 440 jobs, $34,508,980 of labor income and $47,182,358 in value added products and services in total through the end of the project.
Likewise, there would only be $1.1 million of the tax credits that would go to Kikkoman for adding jobs, and $14.4 million in tax credits set aside for the $800 million in capital expansion costs. In essence, this kicks most of the benefits to the construction and equipment businesses beyond Kikkoman, which seems to be a lot better than the direct giveaways that Foxconn got in 2017.

Also like Foxconn, Kikkoman is getting local tax breaks from the City of Jefferson, but it only adds up to around $10 million in infrastructure and another $5 million to other incentives as the plant opens and hires people. That's a lot less than the hundreds of millions of dollars in investment that was dumped down into the Foxconn region for a company that still isn't able to tell you much about what they are doing or what they are producing. Then two days later, we got news of more development at that Jefferson industrial park.

Oh? Tell us more about this one.
The Wisconsin Economic Development Corporation (WEDC) is supporting the project by authorizing up to $1.7 million in performance-based business development tax credits over the next five years. The actual amount of tax credits Purina will receive is contingent upon the number of jobs created and the amount of capital investment during that period.

Purina’s $195 million project will increase production of wet pet food brands in Jefferson by nearly 50 percent, including Pro Plan, Fancy Feast, and Beneful IncrediBites, and add 35,000 square feet to the facility. Purina has operated in Jefferson for nearly 115 years and today employs more than 250 local associates.
It also looks like the city of Jefferson is giving $2 million to Purina in TID incentives. That's quite a bit of debt for a city of less than 8,000 people, but I imagine it would give a big boost to the tax base once the expansions are complete. Just hope the local homeowners don't have to pay much more in the meantime.

But it is quite a bit of development and new jobs for a low-population part of the state, so it seems like a big deal. However, you wouldn't know that from the two Republicans that represent Jefferson today - Representative Scott Johnson and Senator Stephen Nass - or from the 2 Republicans who are hoping to represent the city of Jefferson after November 2024, Sen. John Jagler and Rep. William Penterman. None of them have released anything on last week's announcements of new jobs and expansions in their districts.

Wisconsin writer Dan Shafer found that and the "business as usual" reaction by the Evers Administration to the job announcements to be in major contrast with what happened with similar (and sketchier) jobs announcements from the previous Guv.

Also not hearing much on the developments in Jefferson from the "business leaders" at Wisconsin Manfacturers and Commerce. Isn't that wild?

On the whole, I'll take it, and if it comes to fruition, it's going to be good growth in a well-located area between Madison and Milwaukee. But like with all of these things, let's check back in 2-3 years to see what's actually happening (or not happening) in these places.

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