OWEGO — On Jan. 10, Gov. Andrew Cuomo’s office announced an agreement between Crown Holdings and New York State to site a manufacturing facility in the Tioga County Industrial Park located in the town of Nichols, five miles west of Owego. Crown Holdings, Inc. (NYSE: CCK) is the parent company of Crown Cork & Seal […]
OWEGO — On Jan. 10, Gov. Andrew Cuomo’s office announced an agreement between Crown Holdings and New York State to site a manufacturing facility in the Tioga County Industrial Park located in the town of Nichols, five miles west of Owego.
Crown Holdings, Inc. (NYSE: CCK) is the parent company of Crown Cork & Seal USA, Inc., which will operate the facility. The 525,000-square-foot plant, situated on 40.66 acres, will produce metal beverage cans (two lines) for distribution to Northeast customers, according to Thomas T. Fischer, VP for investor relations and corporate affairs at Crown. The company, looking to increase its production capacity, projects investing $132.8 million in the project, its first new manufacturing facility built in the U.S. in the past 20 years.
The Crown announcement follows other announcements that have buoyed job prospects in the area. “Tioga County is moving dirt,” says LeeAnn Tinney, director of the county’s Economic Development & Planning (ED&P) office. “In addition to the jobs Crown will create, the recent FedEx cross-dock and Owego Gardens construction plus the Tioga Downs Casino [Racing & Entertainment] expansion will conservatively total 750 net, new jobs, helping to compensate for the jobs we’ve lost and giving the area a real boost. Also, the 750 jobs have a multiplier effect, because these jobs create additional area jobs to support the new employment. The sign outside my office promotes Tioga County as offering ‘greener pastures’ for economic development: these projects really support our claim.”
Fischer says Crown considered a number of sites and chose Nichols because it had the best location from a logistics and transportation standpoint. (The site is within a mile of the Lounsberry exit, number 63, on Interstate 86.) He declined to identify the other sites considered. Crown reached out to the Tioga ED&P office to begin discussions in June 2015, having already contacted Empire State Development (ESD). The new facility will include 150,000 square feet of warehouse space and another 375,000 square feet of manufacturing space. “Crown plans to run the plant three shifts a day, year-round,” notes Fischer.
Infrastructure improvements are needed to pave the way for manufacturing.
“The process for making cans consumes a lot of energy and water, requiring infrastructure build-out. The [Tioga County] Industrial Development Agency (IDA) has committed $3 million for sewer and water upgrades as well as other infrastructure needs,” Tinney says. “New York State Electric & Gas (NYSEG) is bringing in electrical and natural-gas upgrades to meet Crown’s energy needs. The project is on a fast track.”
Fischer says the plant is scheduled to start up operations in the first quarter of 2017. A visit on Jan. 7 by this reporter to the site confirmed that substantial site preparation and infrastructure build-out are underway.
Incentives
According to Gov. Cuomo’s office, New York was in competition with other states to attract the plant. As an inducement to Crown, the state offered up to $8.1 million in Excelsior Jobs Program tax credits and a capital grant of up to $6.9 million. The performance-based incentives are dependent on jobs created. The Tioga IDA authorized a sales-tax exemption on construction materials estimated at $1.344 million, of which the state absorbs half of the cost. There is no mortgage recording tax, because Crown doesn’t plan to take out a mortgage. The IDA also proposed a payment-in-lieu-of taxes (PILOT), based on the estimated real-property assessment. The original PILOT called for an annual payment of $300,000 over a 30-year period, at which point the company would pay the full assessment. In later negotiations with Crown, it was modified: The company will make an annual payment of $300,000 for the first 10 years with an annual increase of 1 percent for the remainder of the term. According to the estimated financial model, Crown would receive a cumulative property-tax abatement of $44.7 million. NYSEG is also committed to providing an economic-development Energy Infrastructure Grant. The governor’s office did not reveal the amount of the grant in its announcement.
The PILOT offered by the Tioga County IDA was not a standard PILOT. “Usually, a PILOT has a 10-year life with 10 percent incremental payments each year,” explains Tinney. “Crown’s financial projections indicated a longer period was required to warrant building the plant. The IDA, and ultimately, the [county] legislature agreed, unanimously, based on the substantial benefits the project would generate. First, Crown paid $1 million for the property, which had lain unused since 2002 when Best Buy built its distribution center next door. Second, the company is making a private investment of another $42 million to construct the building and nearly
$90 million in capital equipment, a strong sign of its commitment and financial strength. Third, the 166 jobs that will be created plus a multiplier of 1.68 (other county jobs created based on Crown employment) means the project will ultimately create a total of 279 jobs.
“The Crown positions pay, on average, $22 to $24 per hour, substantially higher than the average wages paid in the county, plus a comprehensive benefit package,” Tinney says. “The annual Crown payroll is projected in 2018 at approximately $7.7 million plus another $4.5 million from the multiplier effect. That adds up to more than $360 million over the term of the agreement. Add to this the sales-tax revenue generated from consumer purchases and the annual PILOT payment (approximately $10 million over the term) from land that had generated no tax revenue. Fourth, the project will create 550 construction jobs in Tioga County plus another 319 jobs in the county. The construction jobs alone will generate an estimated $25 million in payroll. And finally, Crown has a long track record of supporting communities in which it operates. That’s why the state and county were eager to work with Crown in bringing high-tech manufacturing jobs here.”
Crown Holdings is one of the largest packaging companies in the world with 150 manufacturing plants in 40 countries. The company’s 23,000-plus employees produce food cans, metal vacuum closures, aerosol cans, and beverage cans. Corporate and divisional headquarters are located in Philadelphia. The $9.1 billion in net sales (2014) is generated from the Americas ($3.4 billion), Europe ($4.5 million), and the Asia/Pacific region ($1.2 billion). The beverage products represent 58 percent of sales; food products 27 percent; and specialty packaging, aerosols, and other products 15 percent.
The Crown customer list includes S.C. Johnson, Dr. Pepper/Snapple Group, Bristol-Myers Squibb, Coca-Cola, Cott, ABInBev, Heineken, Heinz, and Carlsberg. The company serves a stable, mature market combined with growth in developing markets. The company was founded in 1892 by William Painter. Crown’s stock closed at $45 a share on Jan. 25, giving the company a $6.27 billion market capitalization.
No wonder Tinney is all smiles. “Growth brings growth,” she intones. “Projects such as Crown are putting Tioga County on [site-selectors’] radar screens. ED&P, the IDA, and ESD worked well together to respond quickly and affirmatively to the opportunity. The Crown project is confirmation that we can compete effectively for private investment when it comes to economic development. When it comes to agriculture, tourism, and technology, just think of Tioga County as greener pastures.”