Business projections resulting from new long-term client commitments of a foundry specializing in producing steel, stainless steel, and high alloy engineered castings revealed that, without a facility expansion, the company would run out of capacity to meet demand within a year. Plans called for a new $38 million, 93,000 square foot foundry and machining operation that would increase the pouring capacity by 50 percent and include a new office facility.
The volatility of the steel industry, and the business climate of their clients, demands the company deliver annual cost reductions. This challenge, coupled with the ongoing stringent lending requirements, meant they needed to minimize their overall costs to ensure the best chance of a successful expansion.
Due to the significant start-up costs, including hiring and training personnel, it was important for the foundry to reduce the upfront capital investment needed to offset higher logistical costs. Baker Tilly worked with them to identify the economic impact of the expansion, evaluate the business impact of the various types of local and state economic assistance available, and negotiate the terms of the incentives.
The company’s state income tax position meant nonrefundable Impact of Manufacturing and Agriculture tax credits would be of limited value.
Baker Tilly was able to help the foundry secure a $1 million incentive loan by demonstrating the expansion’s positive economic impact on the community—140 new jobs over four years, and a 50 percent increase in expenditures with local suppliers and vendors.
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