West Bend's $5M keeps Gehl at home
BYLINE: Rich Kirchen
City officials in West Bend, which still was hurting from Gehl Co.'s decision to close its hometown factory in March 2006, took the lead in a financial package that will keep the company's headquarters in the Washington County seat.
The city announced Aug. 23 it has committed $5 million toward a $20 million project that will include a new headquarters and a new research and development facility for Gehl. Gehl Co., which makes construction equipment, will add 90 professional-level jobs at the research center to the 190 already at the headquarters.
West Bend's tax incremental financing also will cover the city's acquisition of 12-plus acres from Gehl that will be redeveloped into housing and commercial uses as well as open space.
West Bend officials entered and won an incentive bidding war with an undisclosed, out-of-state community for the Gehl projects. So, rather than facing the prospect of 551,000 square feet of vacant and outdated office and factory space, and unused employee parking lots, city officials are looking forward to a more vibrant corporate citizen and a new, neighboring redevelopment zone.
"Our first motivation is to encourage development of the research and development center and new headquarters," said John Capelle, West Bend's community development director. "Secondarily, we want to redevelop that other property."
The city of West Bend will provide the largest incentives to Gehl, but the project also is receiving aid from the state and the group Economic Development/Washington County.
Doyle called execs
Gov. Jim Doyle personally called Gehl executives to encourage them to stay in Wisconsin and grow here. Doyle was to appear after Business Journal deadline at an Aug. 23 press conference on the Gehl developments.
The state's aid package to Gehl consists of a $1 million community development loan, a $700,000 grant for brownfields redevelopment and a $300,000 infrastructure grant.
Doyle said in a prepared statement that the Gehl package is an example of government and business working together to make Wisconsin's economy a stronger competitor.
"We're taking another step forward to create opportunities for business and hard-working families, and give our state the edge we need to compete, and win in the global marketplace," Doyle said.
The final piece of Gehl's financial package will be a $200,000 loan from Economic Development/Washington County's revolving loan fund to pay for new equipment.
Tom Rettler, who is Gehl's chief financial officer, said the combination of the incentive package and "business continuity" tilted the location decision in West Bend's favor. He declined to identify the other community and state that recruited Gehl.
"The final offers were strong from all parties, but we balance that with the business continuity of retaining key employees," he said.
New testing equipment
The research and development center will be built in an 85,000-square-foot section of a vacant Gehl plant. The company will install more than $2 million in new testing equipment and create an outdoor field-testing area on the property.
The company will be shifting some of its research and development operations from its Madison, S.D., facility to West Bend over the next two to three years, and plans to retain some engineering staff at the Madison facility.
The company spent about $2.8 million on research and development in 2006. Developing innovative products is crucial if Gehl is to compete against larger manufacturers, Rettler said.
"The key for us is to continue to grow, we need to make these kinds of investments," he said.
West Bend officials also pointed to plans by the University of Wisconsin-Washington County to start a four-year engineering degree program to provide a pipeline of new engineers, Capelle said.
Gehl will vacate its office building, which Rettler described as "a maze of cubicles" that hadn't been updated in decades. The company will build a 70,000-square-foot, two-story office building next to the research and development center.
Gehl has already begun work on the research and development center and plans to break ground on the new headquarters next spring, Rettler said. The entire project will be completed in 18 to 24 months, he said.
The project represents a turnaround for Gehl, which for more than a decade has been reducing -- and then eliminating -- factory employment in West Bend. The final blow was the company's decision in March 2006 to stop manufacturing and distributing agricultural implement products.
City to add a TIF
West Bend will create a tax incremental financing (TIF) district on the 14-acre Gehl property, which city officials view as part of downtown redevelopment efforts, Capelle said. The city will demolish the old headquarters and the remaining factory and warehouse space. Once the property is cleared, the city will retain a real estate broker who, in turn, will seek a developer for the site, Capelle said.
In the past decade, West Bend has created four TIF districts in its downtown area. The Gehl property is about two blocks from the city's Main Street.
Coordinating the financial package and acting as a go-between for Gehl and government officials was the staff of Milwaukee 7, an organization that is pursuing cooperative economic development for the seven counties of southeastern Wisconsin: Kenosha, Milwaukee, Ozaukee, Racine, Walworth, Waukesha and Washington.
Gehl officials this spring contacted M-7 to explore incentives for staying in West Bend. Gehl fits the goal the M-7 leadership established in May to attract and retain "next generation" advanced manufacturing in southeastern Wisconsin, said Jim Paetsch, vice president of Milwaukee Development Corp.
"These guys are just dead-center of the companies we're interested in," Paetsch said.
GEHL CO.
Headquarters: 143 Water St., West Bend Founded: 1859 Employment: 190 at West Bend headquarters; 600 at two plants in South Dakota Ticker symbol: (NASDAQ: GEHL) Projected 2007 revenue: $465 million to $485 million Projected 2007 earnings: $2.05 to $2.25 per share Products: Compact construction equipment including skid loaders and telescopic handlers Brand names: Gehl, Mustang and Edge