The Virginian-Pilot
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VIRGINIA BEACH
Virginia Beach officials voted Tuesday to give $160,000 in economic development funds to Hermes Abrasives Ltd. in a bid to persuade the firm to remain in the city.
Earlier this year, the company, which makes abrasive tapes used in the industrial sector, raised the specter of closing its plant, said Warren Harris, the city's economic development director.
He told the Virginia Beach Development Authority on Tuesday morning that the grant will help save 140 jobs Hermes would have shed if it had closed the plant.
In May, city economic development officials offered Hermes the incentive grant to stay, Harris said. The company decided in June to close a plant in Hamburg, Germany, and to consolidate those operations in Virginia Beach, he said.
"So that strategy worked to our benefit," Harris told the authority.
The grant, which will be given to the company upfront, requires Hermes to hire 30 additional workers and to invest $5 million at its local site.
The Development Authority included a requirement in the grant that the funds be returned if Hermes does not hire the 30 workers and make the investment in the plant within 30 months.
"The global recession required the Hermes Group to realign its manufacturing capacity across the world," Randy Stickley, Hermes' president, said in a news release. "We are pleased that the city of Virginia Beach offered these incentives to bolster support for retaining and growing our operations as a key hub of the group's worldwide manufacturing activities."
The company has been based in Virginia Beach since 1981 and occupies a 160,000-square-foot building in Oceana West Corporate Park. Employees at the plant earn an average salary of $45,000 an year.
Josh Brown, (757) 446-2318, josh.brown@pilotonline.com
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Incentives
Gee...how many millions did you give the Sandlers and 31st street hotel. Just a tad more than $160,000.00. C'mon...get serious. If you want to save 140 jobs, do a better job!
Still seems a loss...
It seems a trivial amount $160K that requires the company to hire 30 people, (the salary of 3 maybe 4) and then they have to spend $5mil for improvements. The company would be better off closing and moving operations elsewhere as the employees here would be let go. Unfortunately the deals seems like a loss to the company.
Not a loss
The money to run the company comes from selling the product. This sounds like more of a token gesture from the city saying we want to keep you and won't regulate you out of business like some other cities might.
Smart return on investment
This is a very smart investment for the city. 140 jobs plus will more than pay back the grant through real estate taxes, sales taxes, consumer spending, etc.
hermes
I started working at Hermes in 1981 and worked there til 2000, its sad to see that the company has continued to go downhill. We had 300 people and 3 shifts back then, now they are all but gone. Good Luck Hermes!!!
moving to the US
It's kind of funny to see a plant move to the U.S. Usually it's the other way around. I guess the cheap dollar is good in some respects. The 160K incentive was probably just icing on the cake.
Not strange
That's not strange at all. I've personally worked for several companies that moved to the US because there's more money to be made here. It gets them out of heavily regulated and/or heavily populated areas with limited opportunity. It just doesn't fit the political rhetoric which is heavily fictionalized.
sounds reasonable for higher paying jobs
Sounds like a reasonable investment on keeping these higher paying jobs in the city as well as creating more. One proviso: make sure the agreement has a specific performance clause along with a strong clawback provision in case things change and the company cant make good on their agreement. Hopefully they prosper and continue their valued presence in our fair city.
Good job
Good job and a good effort by the city to keep jobs here in the region. I've used Hermes products before and they are excellent. This area has a long list of German and Austrian-based companies, Stihl, just up the street from Hermes, is one of the largest. American GFM and Plasser-American are two others I can think of. We have so many employees working for German or Austrian companies, I would think the German language would be quite popular here.
Adhesives????
Don't you mean ABRASIVES??????