Jan 20, 2009Gerber Plans Expansion at Home-town Facility
At a ceremony in December, state and local officials and executives from Gerber Products-Nestlé Nutrition announced plans for Gerber’s $75 million investment in its 65-acre baby food production complex in Fremont, Mich.
The project creates an additional 200 jobs over the next 10 years, will retain 1,100 area jobs and will include facility upgrades and new production lines, according to information from the Michigan Economic Development Corp. (MEDC). The company won tax abatements in return for its promises to provide jobs.
Following recent approval by the Michigan Agriculture Commission, the Michigan Strategic Fund and State Administrative Board, the Gerber complex was designated an Agricultural Processing Renaissance Zone (APRZ), enabling it to qualify for tax benefits.
Facilities located in a renaissance zone do not pay the Michigan Business Tax (MBT), the state education tax, personal and real property taxes and local income taxes. According to the MEDC, taxes still due are those mandated by the federal government, local bond obligations, school sinking funds and special assessments.
Companies are not exempt from paying Michigan sales and use tax.
The state of Michigan reimburses intermediate school districts, local school districts, community college districts and public libraries when taxes are abated.
The Michigan State Administrative Board, upon recommendations from the Michigan Strategic Fund Board and the Michigan Agriculture Commission, approves APRZ designations. Taxes can be abated up to 15 years. In all cases, the tax relief is phased out in 25 percent increments over the last three years of the zone designation.
Gerber qualified for tax breaks for 15 years. In a briefing to the Michigan Strategic Fund by program analyst Sue Carlson, she estimated the value of the abatement at $667,000 in property taxes and approximately $285,891 in Michigan Business Taxes each year. The total value of the abatement was placed at $43 million over the 15 years.
The starting wage of the lowest paid new job would be $10.58 an hour. Average wage of all jobs at the Fremont campus is $23 an hour. Gerber offers a benefits package that includes medical, dental, vision and life insurance, retirement benefits and tuition and fitness reimbursements, she said.
Gerber’s project includes updating and modernizing its existing manufacturing facility, adding new production lines, converting production lines from glass to plastic, purchasing new equipment and building a new warehouse and distribution center, Carlson said.
“Michigan’s food and agriculture industry plays a key part in helping to grow and diversify our state’s economy,” said Gov. Jennifer Granholm at the ceremony Dec. 17. “Agricultural Processing Renaissance Zones are enhancing this important sector by attracting new investment and creating jobs in communities throughout the state. Gerber is an important job provider, and we look forward to their success for years to come.”
Gerber Products Co.’s roots in baby food go back to 1928, when a part of the production line of the Fremont Canning Co. was converted from canned fruits and vegetables to strained foods invented in Dan and Dorothy Gerber’s kitchen for their infant daughter, Sally. Today, Gerber produces nearly 190 different food products that are labeled in 16 languages and distributed in 80 countries around the world. Gerber has maintained one of the world’s largest private research facilities dedicated exclusively to infant nutrition. In 2007, Gerber Products was purchased by Nestlé, part of the Nestlé Nutrition division, which was already a global leader in early childhood nutrition.
“Michigan’s renaissance zones are designed to encourage the growth of industries that are key to our long-term fiscal health,” said Michigan Economic Development Corporation President and CEO James C. Epolito, who also chairs the Michigan Strategic Fund. “This expansion is important to advancing agriculture and diversifying our economy.”
This was the 22nd such zone created in Michigan since the Michigan Economic Development Corp. was created in 1984.
Gerber works with more than 200 Michigan growers and purchases more than 61,000 tons of produce valued at approximately $12 million, according to figures from Gerber. Also, they purchase $36 million in packing and raw materials from 11 key Michigan-based suppliers.
“We are excited by this great example of private-public partnership,” said Kurt Schmidt, CEO, Nestlé Nutrition, North America, speaking at the ceremony. “This announcement reflects our commitment to Gerber’s historical birthplace, Fremont, Michigan.”
“It’s this type of homegrown investment from the state’s agri-business sector that will further diversify Michigan’s economy and create more jobs,” said Don Koivisto, Michigan Department of Agriculture director. “The agri-food industry continues to grow in Michigan, and this expansion underscores what can be accomplished when government and private business work together.”
Gerber Products is the largest employer in Newaygo County and has a significant impact on the local economy through direct jobs as well as indirect jobs.
“We have been very proud of Gerber Products beginning here in Fremont and, noting Gerber’s strong economic ties to Fremont and West Michigan, our city council unanimously endorsed the application for the APRZ,” said James Rynberg, Fremont mayor. “We look forward to many more years of Gerber’s commitment to our community and welcome our new relationship with Nestlé Nutrition as well.”