News on Keebler/Kellogg in the Business Courier: April 25th
Summary:Tax breaks woo Keebler in NKY
Avure Technologies Inc. and the Keebler Company each submitted project proposals for tax incentives to the Kentucky Economic Development Finance Authority and were approved on Thursday. Keebler Co. was approved to receive $2 million in tax incentives from KEDFA to purchase new equipment and add manufacturing lines at its Florence facility. The snack food manufacturer, which is owned by Kellogg, plans to invest about $19.2 million in the project as part of its corporate four-year global growth and efficiency program. It is expected to add 75 jobs in the next 10 years.
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In the Mayor’s April Bulletin he boasts that the “Kellogg’s Plant Manager does an Outstanding Job.” He goes on to say that “despite absurd rumors to the contrary, the Kellogg Snack Division in Mariemont is still going strong. When plant manager and village resident James Biro took over operations at the plant, there were approximately 450 employees at the Mariemont location. Mr. Biro raised that number to 560 workers. The company is laying off about 50 employees, but that leaves more than 500 working at the plant, which is more than were there when Mr. Biro took over the operation of the plant. Kellogg’s has a contract with their union employees that run through 2017, so the rumors of total shutdown of the plant at the end of this year are incorrect. We want to thank Mr. Biro and Kellogg’s for continuing to be one of the Village’s strongest supporters.”
Contrary to the Mayor’s opinion, a union contract offers no insurance that a company will not close one of its facilities. Indeed, the Business Courier article strongly suggests that Kellogg plans to consolidate its local operations into the Florence facility and close the Mariemont lines. The loss of revenue from the payroll tax from 500 hundred assembly line workers will be sizeable, possibly equaling or exceeding 10 percent of total Village revenue from payroll taxes.
One nagging question remains. If the Mayor or a Village Administrator proactively courted Kellogg with tax incentives and State support, would Kellogg have retained the Mariemont facility and even invested the $19.2 million in enlarging and upgrading the plant?