State to help Generac with multimillion dollar expansion plans, new jobs

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Frank Schultz
Tuesday, August 15, 2017

Whitewater is likely to benefit from new investment by Generac Power Systems in expansions and new jobs at its various facilities, with the help of state tax breaks, a spokesman said Monday.

Exactly how Generac’s manufacturing plant will be affected was not immediately known, however, Generac spokesman Art Aiello said in an email to The Gazette.

The Wisconsin Economic Development Corp. on Monday announced a five-year deal in which Generac would gain up to $10 million in tax breaks, in part for creating up to 400 jobs at its facilities.

Generac plans to spend $73 million at those facilities, according to a news release.

“Our Whitewater facility is where we manufacture our market-leading home standby generators and is thus critical to our business," Aiello wrote. "We continue to make significant investments in both the facility as well as its workforce.

"Regarding the WEDC grant, it’s not unreasonable to expect that it will have an impact on the Whitewater facility, but there are many details that we still need to work through," he wrote.

“The grant gives us flexibility in determining how and where the dollars are spent, and we’ll make those decisions over the course of the five-year time frame. The same can be said of jobs specific to Whitewater. Suffice it to say, though, that Generac’s Whitewater facility will benefit in some part from the WEDC grant.”

The agreement calls for Generac to meet yearly increases in jobs in exchange for breaks on its corporate income tax, said Mark Maley, WEDC spokesman.

The Enterprise Zone Tax Credits are intended to help Generac expand its Waukesha headquarters and also invest in plants in Whitewater, Oshkosh, Jefferson, Eagle and Berlin.

Maley said some of the incentives are based on how much Generac invests in capital expenses and training as well as jobs.

The Gazette asked Generac for information about wages of the new positions and what workers are paid in Whitewater. Aiello said the company does not reveal that information.

Maley said the tax credits will be awarded only for jobs that pay at least $30,000 a year.

Maley said Generac could start earning those tax credits this year. It could earn up to $66,000 in credits for creating between 62 and 78 jobs. Numbers of jobs and tax incentives could increase through 2021, earning Generac as much as $1.2 million.

Most of the tax credits could be earned by making capital investments—things such as new buildings, renovations or machinery. Those credits could go as high as $7.3 million.

The rest of the possible $10 million in credits would be granted for Generac employee-training costs.

The deal includes “clawback” provisions, so if Generac did not live up to the terms, the state could seek to recoup tax breaks it grants, Maley said.

Also, any of the jobs created must be maintained for at least two years after the initial five-year period, Maley said.

The state estimates the deal would yield $2.3 million per year in income tax revenues, if estimates of indirectly created jobs are included, which would more than pay off the $10 million loss to state tax coffers, Maley said.

“This company has been around a long time, and we’re banking on their future growth,“ Maley added.

In a news release, Generac said its plans include expansion of its corporate headquarters, research and development, and production operations in Wisconsin.

“As we’ve grown and added facilities throughout Wisconsin, it became clear that we needed to invest in a cutting-edge space at our corporate headquarters, allowing us to dramatically advance our key product development and engineering activities,” said Aaron Jagdfeld, president and CEO of Generac, as quoted in the news release.

Particular emphasis will be placed on advanced research and development capabilities, including the addition of equipment and technologies to enable faster prototyping and testing of products.

“These investments will allow us to quicken the pace of our product development cycles, which is critical to remaining at the forefront of the industries we serve,” Jagdfeld added.

Generac also has locations in Mexico, Brazil and Italy, according to its website.

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