Space is cramped at Kalt Manufacturing. The North Ridgeville manufacturer squeezed a semitruck-size horizontal boring mill, which produces gear boxes for wind turbines, into its 43,000-square-foot facility last June.
But that’s good news for Kalt. Business has been on the rise since the precision machining and engineering company branched out from supplying the auto industry to alternative energy three years ago. Alternative energy now makes up 35 percent of its sales.
“The way orders were last year, we saw the potential for adding one or two or three more of those machines down the road,” says Joseph Kalt, president of the 42-year-old company, which has undergone three expansions since locating to its current site in 1974.
“We were prepared to expand again and do it the hard way,” Kalt adds. But a bank loan meant an 8 or 9 percent interest rate.
So he worked with Team Lorain County, the economic development arm of the Lorain County Growth Partnership, and received an Ohio 166 Direct Loan for $1 million with a 1 percent interest rate for the first year and 3 percent interest for the remaining 10-year term.
Now Kalt is moving forward with a $3.3 million construction project that will increase the building footprint by 50 percent to make room for machines, orders and 22 potential new jobs (on top of the 42 positions that will be retained).
This type of business retention and expansion is news you just don’t hear about lately, says Mary Cierebiej, manager of attraction and expansion for Team Lorain County. “What’s important is keeping the businesses we have here and helping them grow,” she says. “But you don’t read in the headlines, ‘Fifty Jobs Saved.’ ”
Team Lorain County is one of the many organizations throughout the region that helps businesses navigate paperwork to get funding for development projects. They’re all throwing their hard hats into the ring to attract companies from out of state and across town, sparking construction at a time when the crane seems like an endangered species.
“In this day and age, it may not be about the home run as much as it is about hitting a single,” says Tracey Nichols, director of economic development for the city of Cleveland.
Big-money projects might be on hold, but smaller-scale development is bringing jobs and filling vacancies, she says.
For example, All Seasons Contracting, a concrete paving and landscaping business, relocated to the city of Cleveland from Brunswick, bringing 65 jobs with it. All Seasons used a grant from the Vacant Property Initiative and a low-interest Core Cities loan to buy a 3.8-acre property on Van Epps Road.
“We’ll take a lot of singles now and be very happy for them,” Nichols says.
“The cities play a critical role in attracting and retaining business in Northeast Ohio,” says Joseph Greenberg of Greenberg Real Estate Advisors in Solon. A pro-business attitude in Solon helped attract Sensical, an automotive component manufacturer that looked at more than 40 buildings in the region before settling on the former Chrysler building on Aurora Road.
That’s a 70-job win for Solon and $500,000 in improvements to a building that had been vacant for some time. Sensical was awarded $60,000 — half of its new income taxes — through Solon’s Growth and Revitalization Incentive Program. The one-time grant is given for industrial, office and retail/ commercial projects, following their completion.
Buildings that are at least 10 years old qualify for the program, says
Peggy Weil Dorfman, manager of economic development for Solon. “A lot of our buildings are starting to age, and we saw a need to prepare for the future,” she says. Seven grants have been awarded since the program launched in 2006. Vacancy rates are steady, but the incentive is an attractive push for businesses to continue developing in tough times, she says.
“Businesses need to watch their bottom lines. And if a community can offer some assistance to help with that,” Weil Dorfman says, “that makes the decision-making and ability to move that much easier.”
Greenberg has worked with Solon and surrounding communities, including the city of Cleveland, cobbling together funding packages from state and city offerings to make projects happen. One of those projects is Arisdyne Systems, a biofuels company now located near the airport on the Cleveland Parkway.
“They could have gone anywhere,” Greenberg says.
The Ohio Innovation Loan Fund and Cleveland’s Green Technologies Business Grant Program aided in relocating Arisdyne to an expanded facility, creating up to 24 engineering jobs.
Eight projects have been completed since Cleveland’s Vacant Property Initiative launched in July 2008. The one-year construction loan forgives between 30 and 45 percent of city funding, up to $1,250,000, depending on the project size.
“Suddenly, companies that never thought about Cleveland were saying, ‘That project works now because the bank will give us the loan,’ ” Nichols says.
Meanwhile, retail businesses have brought 72 new jobs and retained 324 existing jobs through the city’s Neighborhood Retail Assistance Program for face-lifts that cost $40,000 or less, Nichols adds.
Overall, Cleveland helped fund 54 building projects in 2008.
“We are planning for the future,” Nichols says. Using Cleveland’s Industrial-Commercial Land Bank, the city is pushing to develop “big, ready-to-go sites” with a $5 million grant from the Ohio Department of Development Job Ready Sites Program.
Keep an eye on the former coke plant on Independence Road, off I-77. The city plans to create a 54-acre industrial park. The project will take 18 months, and the city will start soliciting tenants a year before its completion.
Some cities are focused on assisting businesses with their current pains while better positioning them for an economic rebound.
The city of Painesville, for example, held a manufacturing forum with its largest employers to learn about issues affecting their businesses. Work force development and energy efficiency were top concerns, says Cathy Bieterman, Painesville’s economic development coordinator.
“We want to make sure companies in Painesville have the resources and mechanics in place to enable them to grow at a great speed once the economy picks back up,” Bieterman says.
Painesville can offer businesses low-cost utilities because of its city-owned electric, water and wastewater treatment plants. It is also in the process of implementing broadband wireless so companies can have T1 or greater connectivity. And four designated business zones offer real estate property tax exemptions for up to 100 percent for a maximum of 10 years.
Low-cost utilities and the Community Reinvestment Area Tax Incentive lured PCC Airfoils last year, creating 100 new jobs. “When we are competing against states like North Carolina or Maryland, it’s important for us to be competitive,” Bieterman says. “This means job creation, additional investment into our community and new opportunities for residents that live here.”
In an effort to supply trained workers for businesses’ expansion needs, Solon hosted a work force resources fair where businesses could network with Cuyahoga County’s Employment Connection, local universities and the Solon Chamber of Commerce. Solon also encourages companies to post job openings on the city Web site.
In Lorain County, Project Ten provides training dollars — up to 50 percent of the cost — for educating existing employees.
Cleveland offers a Working Capital Loan program to address another business pain: filling a credit line gap for successful businesses that need help financing inventory, for instance.
“I believe if we can be flexible and figure out ways to address issues that businesses are facing,” says Cleveland’s Nichols, “that is how we can be the biggest help to local business.”
The state is not going to sit back and watch companies just move.
Take Fairlawn-based TLT-Babcock Inc., which is actively seeking a property for a new 25,000-square-foot building. Though the company hasn’t decided on a location, the state is using the job creation tax credit as an incentive for TLT-Babcock to build in Ohio, says Steve Bowman, the company’s director of human resources. The company plans to create 12 jobs by December 2012.
“We have four phases of capital expenditures planned in this area,” Bowman continues.
In addition to the new facility, the company, which employs 175 in Medina and 80 in its Fairlawn offices, plans to expand its Medina operations with a 3,500-square-foot addition to the machine shop, a 2,500-square-foot expansion to its assembly plant and possibly even a 40,000-square-foot plant.
There’s potentially good news on the development horizon to wash down the doom-and-gloom headlines, according to Joseph Greenberg, of Greenberg Real Estate Advisors.
“It’s certainly not an easy time for anyone doing business today,” he says. “But on my desk I have six proposals for companies that want to be in Northeast Ohio. They are companies that are here and growing, and others are new to the region. Every day, we are busy talking to companies about growth and moving to this area.”